Tag: Motley Fool

The Accent Group Ltd (ASX: AX1) share price is on the slide on Friday morning.

At the time of writing, the footwear retailer’s shares are down 7% to $1.41.

Why is the Accent share price sinking?

Investors have been selling down the Accent share price on Friday following the release of a trading update.

According to the release, the retailer is expecting to report earnings before interest and tax (EBIT) in the range of $61 million to $63 million. This will be a significant reduction on the EBIT of $124.9 million that it reported in FY 2021.

It is also short of Bell Potter’s EBIT estimate of $70.6 million for FY 2022.

Though, it is worth noting that Accent’s FY 2022’s EBIT includes approximately $7.6 million of one-off, non-cash charges.

These charges comprise the write-down of PIVOT store fit-out costs of $5.1 million and around $2.5 million of impairment charges relating to store lease assets in a small number of stores where customer traffic levels have still not recovered.

So, when adjusting for these one-offs, Accent’s result will be broadly in line with Bell Potter’s estimate.

Reasonable start to FY 2023

The release also reveals that Accent has started FY 2023 in a reasonably positive fashion thanks to strong deliveries of new products.

However, while the company has returned to like for like sales growth for the first three weeks of FY 2023, the comparable period was disrupted by store closures and COVID restrictions. So, beating those numbers was not a challenging feat.

The company also revealed that the execution of its growth plan and key initiatives remains on track. Strong momentum is continuing in Glue and Stylerunner, and the new stores which opened across all banners are performing well, which it believes provides a growth platform for the future.

Management commentary

Accent’s CEO, Daniel Agostinelli, commented:

The disruption experienced in FY22 has been well reported. Sales across May and June continued to be subdued compared to expectations as we continued our focus on driving full price full margin sales. Pleasingly, gross margin rate was ahead of the prior year and since the back end of June we are now starting to experience more normal undisrupted trading conditions across most of the store network.

The first three weeks of FY23 have seen a return to strong deliveries of new product and a positive customer response. Like-for-like sales for this period have been positive albeit against restrictions and store closures in July last year, gross margin rate has also tracked well ahead of the prior year.

The post Why is the Accent share price sinking 7% today? appeared first on The Motley Fool Australia.

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More reading

• The Accent share price has already surged 18% in FY23. What’s next?
• Analysts name 2 ASX dividend shares to buy with 4%+ yields
• Why analysts say these excellent ASX dividend shares are buys
• 2 top ASX dividend shares that analysts rate as buys
• How much has the Accent dividend paid to shareholders in the last 5 years?

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 Accent 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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In the last few weeks, I have been buying Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) shares for my portfolio.

The investment conglomerate is not (yet) close to being my biggest position, but it’s one that I’m regularly adding to.

For my own portfolio, I’m looking for ASX shares that can hopefully deliver long-term capital growth while also paying a good stream of dividends.

I think Soul Pattinson shares have the potential to tick both of the boxes for growth and dividend.

I like the diversification and investment strategy

Exchange-traded funds (ETFs) can be very effective investments, but I think the ASX is too heavily focused on just a few banks and resource businesses.

I believe Soul Pattinson offers effective diversification in a single investment, so it can be lower risk, and the diverse investment policy means the management team can go hunting in many places for opportunities.

It aims to (and has built) a “portfolio of assets generating reliable cash through market cycles which serves to protect downside in market corrections”. It has also “partnered with attractive companies looking to access growth capital and undertake strategic acquisitions”.

Soul Pattinson aims to invest for the long term, by being disciplined and using a value-focused approach through market cycles to deliver returns.

It has a few different parts to its portfolio – a strategic portfolio, a large cap portfolio, a private equity portfolio, an ‘emerging’ companies portfolio, a structured yield portfolio and a small property portfolio.

Strategic holdings include TPG Telecom Ltd (ASX: TPG), Brickworks Limited (ASX: BKW), New Hope Corporation Limited (ASX: NHC), Tuas Ltd (ASX: TUA), Apex Healthcare, and Pengana Capital Group Ltd (ASX: PCG). It owns sizeable stakes in these businesses

The large-cap portfolio has names including Commonwealth Bank of Australia (ASX: CBA), BHP Group Ltd (ASX: BHP), Macquarie Group Ltd (ASX: MQG) and Woolworths Group Ltd (ASX: WOW).

Private equity holdings include agriculture, Ironbark, Aquatic Achievers and Ampcontrol. Soul Pattinson recently took full control of Ampcontrol, the largest privately owned engineering company. It is accelerating its strategy to be “at the forefront of developing and supplying advanced technology as well as innovative products and services that enable a competitive advantage in a net-zero carbon environment”.

Growing dividends

One of Soul Pattinson’s main aims is to grow dividends for shareholders. It has increased its annual dividend every year since 2000. Growing operating cash flow enables higher dividend payments.

The FY22 interim dividend was increased by 11.5%.

Why I bought more Soul Pattinson shares

Aside from all the elements that I’ve already outlined, one of the simplest reasons I bought more shares was the fall in the Soul Pattinson share price. At the time of writing, it is down around 20% this year to date. Though, I did buy it at an even lower price.

Also, while coal isn’t my favourite investment, the strong coal price is helping fund large dividends to Soul Pattinson from New Hope. It can then use that money to invest in more opportunities (and fund higher dividends).

The post Here’s why I just bought more Soul Pattinson shares appeared first on The Motley Fool Australia.

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More reading

• Own Soul Patts shares? Here’s what to look out for in FY 2023
• 5 worst ASX energy shares of FY22
• The rise and fall of the Soul Pattinson share price over the past year
• Why did the Soul Pattinson share price go backwards in June?
• Own Soul Patts shares? Here’s how much of its portfolio is exposed to coal

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 Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Brickworks and 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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The Alumina Limited (ASX: AWC) share price has struggled this year, but could it have better days ahead?

This ASX 200 materials share has slid nearly 24% year to date to the current share price of $1.425. For perspective, the S&P/ASX 200 Materials Index (ASX: XMJ) has dropped 11% year to date.

So what could be next for Alumina in the future?

What’s the outlook for this ASX 200 materials share?

Alumina invests in alumina and bauxite via its 40% stake in Alcoa World Alumina and Chemicals (AWAC). Pennsylvania-based Alcoa Corp (NYSE: AA) holds the remaining 60% stake. AWAC is the largest alumina company in the western world.

Allan Gray portfolio managing director and chief investment officer Simon Mawhinney believes Alumina is “very attractive” at the current share price, despite energy prices.

Speaking at an investing webinar this week, Mawhinney said: “Alumina typically is effectively hedged for high energy prices… I think it’s very attractive at these prices.”

On Thursday, Alumina provided an update on Alcoa Corp’s quarterly earnings. AWAC’s cash margin leaped to $99 per tonne in the second quarter of 2022. This was up from $88 per tonne in the previous quarter. Underpinning this result, was a higher realised price for alumina.

Commenting on the results, CEO Mike Ferraro said:

Net AWAC distributions for the first half of 2022 were $162 million, a $25 million increase over the previous corresponding period.

Alumina Limited has received further net AWAC distributions of $39 million since the end of the second quarter.

Ferraro added the outlook for the alumina market is positive in the medium term, noting growth in aluminum metal consumption amid de-carbonisation is positive for the alumina industry.

However, he said many producers faced cost pressures in the first half due to Europe and China supply disruptions.

This led to higher energy and caustic soda prices. As a result of these energy prices, AWAC will cut production at the San Ciprian refinery in Spain by 15%. This is effective immediately.

Alumina share price snapshot

The Alumina share price has lost nearly 10% in the past year, while it has shed almost 7% in the past month. However, this week, the company’s shares have gained 2.5%.

This ASX 200 materials share has a market capitalisation of about $4.1 billion based on the current share price.

The post This ASX 200 materials share is ‘very attractive’ after falling 24% so far this year: expert appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Friday
• ‘We have clearly seen the peak’: Sector veteran gives earnings season warning for ASX mining shares
• Here are the top 10 ASX shares today

Motley Fool contributor Monica O’Shea 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 Insurance Australia Group Ltd (ASX: IAG) share price will be on watch this morning.

This follows the release of the insurance giant’s preliminary full-year results for FY 2022.

IAG share price on watch following mixed result

• Gross written premium (GWP) growth up 1.9 percentage points to 5.7%
• Reported net profit after tax of $347 million, compared to a loss of $427 million in FY21
• Reported insurance profit of $586 million
• Reported insurance profit margin misses guidance and down 6.1 percentage points to 7.4%

What happened in FY 2022?

For the 12 months ended 30 June, IAG delivered a reported net profit after tax of $347 million, which is up from a loss of $427 million a year earlier.

Management advised that this reflects the strengthening of prior period reserves, a challenging operating environment with a high incidence of natural perils, volatile investment markets, and a higher inflationary environment. There was also a $200 million pre-tax release from the business interruption provision.

And while the company’s GWP growth of 5.7% was in line with its mid-single digit growth guidance, the same could not be said for its reported insurance profit margin. It came in at 7.4%, which was well short of its 10% to 12% guidance.

Management blamed this largely on its net natural peril costs of $1,119 million, which were $354 million above the original allowance of $765 million.

Management commentary

IAG’s managing director and CEO, Nick Hawkins, acknowledged that FY 2022 was a difficult year but remains positive on the future. He said:

Our preliminary FY22 financial results reflect high natural perils and volatile investment markets. We have also strengthened our reserves following adverse experience in our commercial liability portfolio from prior accident years.

The FY22 preliminary underlying results reflect the positive momentum we’ve achieved as we build a stronger, more resilient IAG. Despite the challenges we have seen in the external environment over the year, our businesses have performed well, delivering strong GWP growth.

Our direct insurance business in Australia is growing in key segments, particularly as we roll out the NRMA Insurance brand in Western Australia and South Australia.

FY 2023 guidance

IAG is expecting “strong underlying business momentum” in FY 2023.

It is aiming for mid-to-high single digit growth. This is expected to be primarily rate driven to cover claims inflation, higher reinsurance costs and an increased natural peril allowance.

Management is also guiding to a much-improved reported insurance margin in the range of 14% to 16%.

Hawkins concluded:

As we enter FY23, our guidance demonstrates both top-line and margin improvement. We have been impacted by claims inflation in our key home and motor portfolios and have significantly increased our natural perils allowance to help ensure the business can withstand the impact of increasing frequency and severity of natural perils.

In our intermediated business, the steps we’ve taken to improve the performance are showing promising signs and positions us well to deliver the targeted insurance profit of $250 million in FY24. By creating a more focused operating model, a leadership team with deep expertise, and a clear strategy for growth we have confidence in the future.

The post IAG share price on watch following FY22 profit of $347m appeared first on The Motley Fool Australia.

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More reading

• Here’s why one analyst is ‘cautious’ of the IAG share price
• Why did the IAG share price surge 5% on Thursday?

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 positions in and has recommended Insurance Australia 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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As interest rates rise, it gets harder to find the right ASX shares to buy.

This is because Australians will lock away their wallets and spend more selectively in the coming months. Less money to go around means fewer businesses will be able to continue their path of growth.

To help investors figure out what to buy in such a discriminating environment, two experts have picked out three ASX shares that they think will prove resilient even as consumers retreat:

‘Top-flight performance’ from flightless birds

Fat Prophets chief executive Angus Geddes likes the look of Collins Foods Ltd (ASX: CKF) at the moment.

“The KFC operator delivered strong revenue and net profit growth in fiscal year 2022 after successfully navigating COVID-19 lockdowns and growing inflationary pressures,” he told The Bull.

“Growth in new stores and increasing same store traffic delivered the top-flight performance.” 

Spotee Connect executive chair Elio D’Amato also picked Collins Foods shares as a buy last week.

“It grew group revenue by 11.1% on last year’s prior corresponding period. Earnings per share grew by 24.9% and its fully franked dividend was up by 17.4%.”

For Geddes, it’s not just the short-term prospect of Australians turning to fast food during an economic downturn.

“Collins Foods has the right ingredients to deliver strong performances over the longer term.”

‘A value buying opportunity’

The travel industry is dealing with such huge demand that airlines and airports are feeling the unreserved wrath of the public for lengthy queues and delays.

Considering this, Baker Young managed portfolio analyst Toby Grimm reckons the current share price for Corporate Travel Management Ltd (ASX: CTD) presents a golden entry point.

It’s fallen from $26.25 at the end of April to a Thursday closing price of $19.02.

“The business and leisure travel sector is expected to gradually recover to pre-pandemic levels,” he told The Bull.

“We believe a value buying opportunity exists, as we expect the stock to outperform in the medium term. The company is well managed.”

According to CMC Markets, seven out of 11 analysts recommend Corporate Travel shares as a buy.

A tech stock that’s gained 43% in July

Technology stocks have been on the nose all year, but Geddes has faith in Praemium Ltd (ASX: PPS).

“The board has resolved to return about $50 million to shareholders via a special dividend and on-market buyback.”

Geddes also likes Praemium’s renewed focus.

“This wealth management technology company sold its international operations for £35 million,” he said.

“Praemium will scale up in Australia in a bid to capture a bigger share of the independent advisory services market.”

It seems Geddes’ peers agree with his conviction. All five analysts surveyed on CMC Markets are rating Praemium shares as a strong buy.

The Praemium share price has lost more than half its value year-to-date, although it has gained a stunning 43% this month.

The post Food, money and travel: 3 ASX shares experts rate as buys right now appeared first on The Motley Fool Australia.

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More reading

• Why I think the Corporate Travel Management share price is too cheap to miss
• Chicken and chips: Experts name 3 ASX shares to buy right now
• Clipped wings: Why ASX 200 travel shares are having trouble getting off the ground today
• Own ASX travel shares? Here’s the outlook for FY23
• How did ASX 200 travel shares go in FY22?

Motley Fool contributor Tony Yoo has positions in Corporate Travel Management Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Collins Foods Limited and Praemium Limited. The Motley Fool Australia has recommended Collins Foods Limited, Corporate Travel Management Limited, and Praemium 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 Allkem Ltd (ASX: AKE) share price is back on form this week.

Since the start of the week, the lithium miner’s shares are up 4% to $10.11.

Where next for the Allkem share price?

The good news is that this could be the start of even greater gains for the Allkem share price according to one leading broker.

A note out of Bell Potter reveals that its analysts have responded to the company’s latest quarterly update by retaining their buy rating with a slightly trimmed price target of $17.43.

Based on the current Allkem share price, this will mean potential upside of 72% for investors over the next 12 months.

What did the broker say?

Bell Potter notes that Allkem’s Mt Cattlin operation disappointed during the recent quarter and underwhelmed with its guidance. However, the broker reminds investors that Mt Cattlin is not a major part of the company’s future and therefore investors need not be concerned. It commented:

A defining feature of AKE’s June 2022 quarterly report was weaker production at Mt Cattlin, associated higher unit costs, and a program for the asset’s FY23 performance which involves lower production and higher costs. However, Mt Cattlin is a relatively small and decreasing proportion of AKE’s future value, Olaroz performance was as expected and expansion projects are largely on track.

In light of this and strong lithium prices, the broker sees Allkem as a great option for investors looking at the lithium industry.

We expect AKE’s near term cash generation to lift substantially into 2023 with ongoing strength in lithium commodity prices and production growth. AKE is aiming to maintain 10% share of supply in a global lithium market experiencing unprecedented growth; it has a portfolio of growth projects, balance sheet strength and cash flow from existing projects to achieve this.

The post Is the Allkem share price dirt cheap? Broker tips 70% upside for investors appeared first on The Motley Fool Australia.

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More reading

• ASX 200 midday update: Megaport rockets, Allkem’s update, tech shares rally
• Allkem share price falls despite record quarter
• 5 things to watch on the ASX 200 on Wednesday
• Is Allkem a top ASX dividend share hiding in plain sight?
• What’s the outlook for Allkem shares in FY23?

Motley Fool contributor James Mickleboro has positions in Allkem 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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Everyone has a view on the Reserve Bank.

The government has even announced a review of the RBA.

Seems we love a scapegoat… and especially now we have the benefit of hindsight!

Do I seem sceptical?

Okay, maybe a little.

But here’s why:

You know all of those ‘end of season reviews’ that losing sporting clubs do?

They’re just as useless.

Because ‘after the fact’ analysis is just that – after the fact.

One: The decision makers didn’t know, in advance, how things were going to turn out.

Two: We tend to use hindsight with an ‘of course that was going to happen’ perspective. As if there were no other options at the time.

We know, now, that inflation is high, and systemic.

At the time, central bankers thought (hoped?) it would be ‘transitory’ and relatively limited.

Were they wrong? Yep.

Was that inevitable? Not a chance!

There’s an old joke that the ‘doom and gloom’ set predicted 9 of the last 2 recessions.

That is, eventually they got it ‘right’, because they just said the same thing over and over again, and eventually got lucky.

See, in a parallel universe somewhere, inflation was transitory and limited.

In that universe, maybe Russia didn’t invade Ukraine. Maybe there were no COVID lockdowns in China. Perhaps the supply chains aren’t gummed up there.

In our universe, those things did happen – but we only know that with the benefit of hindsight.

Now, I’m no apologist for the RBA.

They got it wrong.

There’s no hiding from that. Nor should there be.

But what is a review going to do?

The people appointed to the review will do a stand-up job. They’ll provide a sober and thoughtful analysis.

And then?

And then they’ll say ‘this is what we think you should do’.

Not ‘here’s the objective, evidence-based prescription that will surely make things better’.

Not because they’re not capable.

But because there is no objective, testable truth when it comes to the imperfect, squishy thing we call economic and monetary policy.

And because if you had 100 different central bankers, conducting 100 different reviews of the RBA, you’d probably get 25 – 40 different sets of recommendations, some that directly contradicted others.

Economists and central bankers don’t have access to the unalienable truth.

They have theories, informed by evidence, experience and ideology. And given no two people have the same mix of those things, they’ll end up in different places.

Imagine asking one Liberal, one Labor and one Greens MP to review the Nationals.

Imagine asking one employer, one unionist and one bureaucrat to review the minimum wage.

Imagine asking one Jew, one Muslim and one Buddhist to review the Anglican Church.

Now change that last group to a Pentecostal, an Atheist and a Sikh.

Do you reckon those reviews would make the same recommendations?

Yes, those are extreme examples.

But my point is that there is no objective reality – no scientific discovery or testable hypothesis – just a range of opinions, held by serious, well-informed, but ultimately subjective people.

I’ve seen it on Twitter, among serious, thoughtful economists, who just completely disagree on what interest rates should be, for example.

None of them are stupid, ill-informed or reckless. They just have different views on how the various stakeholders should be prioritised, what the role of interest rates (versus other policy tools) should be, and what will happen if rates are changed.

So, yes, I’m in favour of the RBA learning some lessons from the last couple of years… but I’m far from sure the ‘review’ will help us uncover some yet-unknown sacred truth, or that any recommendations will necessarily make for better decisions from our central bank.

But… I do have two very simple suggestions.

First, I tweeted this in April last year:

“I don’t do predictions as such, but call this one a long bet:

The RBA’s change in course from ‘acting in advance’ to ‘waiting for sustained data’ will come to be seen as a mistake.”

Waiting until inflation arrived, and was entrenched, before acting was a monumental mistake.

And an own-goal.

They were so scared of moving too early that they abandoned their pre-existing policy of being prepared, in favour of ‘reacting’.

As I said, a monumental mistake.

Second, they allowed themselves to be misquoted by almost everyone.

The soundbite most people heard was ‘Rates won’t move until 2024’.

What the RBA actually said was ‘Rates won’t move until circumstances warrant it… and we think those circumstances will come about in 2024’.

Again, they were wrong, but that’s life – predictions are inherently impossible.

The bigger sin was in letting people believe that they’d made some sort of promise about 2024.

Once they were misreported, they should have been faster and more vocal in clearing it up.

But third, here’s the typically-governmental missed opportunity: While they’re reviewing the RBA, they’re not reviewing other agencies or the government itself.

It’s like the old ‘let’s have a tax review, but exclude consideration of changes to the GST’.

While we’re looking at the RBA – with precisely one policy tool: interest rates – the government isn’t looking at the completely-entwined impact of fiscal policy (tax and spending decisions), or the role of the banking regulator in changing bank lending rules – or the banks themselves.

COVID relief actually boosted household incomes, for example.

Negative gearing and capital gains taxes policies impact(ed) property prices.

Bank lending buffers were lowered at the same time as rates were at emergency lows – greatly boosting borrowing capacity and pushing up house prices.

(When banks lend money, they start with the current interest rate, then add a ‘buffer’ to make sure the loan can be still repaid if rates go up.)

So, fourth, I’d institute a policy of raising the lending buffer when rates fall (limiting over-borrowing) and lowering it when rates rise (limiting the damage done by rising rates).

That way higher rates will slow the economy (as intended) without crushing house prices, and lower rates will stimulate the economy (as intended) without creating a house price bubble.

Makes sense, no?

But back to my point: all of these different considerations, and we’re just reviewing the central bank?

To reuse one of my favourite analogies, the RBA is in a biplane, with a joystick (interest rates) that goes up, down, or level.

The federal government (of either and both stripes) is in a state-of-the-art fighter jet, with knobs, dials, buttons, levers, guidance systems, radio contact with the ground and more weapons than you can poke a stick at.

And the RBA is the (only) one being reviewed?

Can you imagine reviewing the Air Force’s air capability but limiting yourself to the WWII biplane fleet and ignoring the modern fighter aircraft?

Me either.

I hope the review of the RBA is useful. I hope the outcomes improve policy.

But until the government includes all policy tools in a review, it’s likely to be an opinion-driven sideshow, unfortunately.

Meanwhile, real policy change remains a pipe-dream.

Treasurer, over to you.

Have a great weekend!

Fool on!

The post Why the RBA review will be a waste of time… appeared first on The Motley Fool Australia.

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• Is the Allkem share price dirt cheap? Broker tips 70% upside for investors
• Buy and hold this ‘incredibly undervalued’ ASX share for 4 years: fundie
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• 3 fantastic ASX tech shares experts say are buys
• Analysts name 2 top ASX 200 dividend shares to buy

Motley Fool contributor Scott Phillips 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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Ask A Fund Manager

The Motley Fool chats with the best in the industry so that you can get an insight into how the professionals think. In this edition, Cyan Investment Management portfolio manager Dean Fergie nominates a bargain ASX share that he’d buy and put away for four years.

The ASX share for a comfortable night’s sleep

The Motley Fool: If the market closed tomorrow for four years, which stock would you want to hold?

Dean Fergie: I think at the current levels, I think Alcidion Group Ltd (ASX: ALC), which is a hospital software business, has got some very strong commercialised products. 

They’re rolling their software out globally to government and private-backed defensive industries. It’s well-capitalised, growing strongly, we think incredibly undervalued, and in three or four years’ time will be a lot more valuable than it is today.

MF: It’s derated a fair bit this year, hasn’t it? The share price has almost halved.

DF: Yeah. It really has, surprisingly. You look at comparison stocks like Pro Medicus Limited (ASX: PME), it hasn’t been hit nearly as hard. Alcidion’s off probably close to 75% off its highs, but we don’t really understand it because they’ve won a number of contracts recently. 

We feel like they’re doing all the right things. Their revenue’s increasing. It’s becoming a serious business. They’ll do sort of $35 million in revenue this year, a lot of which is recurring. And we think paying a bit over $100 million in enterprise value for a business like that is great value.

MF: Is it out of favour because it’s not a profit maker yet?

DF: Look, I mean, it’s not horrendously unprofitable. It’s running very close to break-even. So, that’s reassuring. 

If it was running at a big loss, we wouldn’t be invested. I think maybe the issue with Alcidion has been just a little bit market-related. But they raised quite a bit of money to buy another competitor in the UK at the end of last year [via] a 25% raising. And they raised a lot of money.

Then the market turned a little bit, and I think just a lot of stock came out. And the new investors that had bought in at 25 [cents] and saw it trading at 22, 19, and 18 just, at the end of the financial year, went, “Stuff it. I’m going to take my losses and move on.” 

So from what we’ve seen, if you click on Alcidion and the reports they’ve released in the last few months, they’re all very positive. There’s about six announcements of them winning new contracts or extending existing contracts. So we’re a little bit confused as to why it’s not moving up in share price. 

But that’s the market, so that’s what we have to deal with.

The post Buy and hold this ‘incredibly undervalued’ ASX share for 4 years: fundie appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX shares today
• Why has the Pro Medicus share price surged 32% in a month?
• 5 small-cap ASX shares sitting on a pile of cash: experts
• 2 ASX shares we’re sticking with after 60% falls: fund managers
• Why Pro Medicus, St Barbara, Vulcan, and Whitehaven Coal are pushing higher

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 positions in and has recommended Alcidion Group Ltd and Pro Medicus Ltd. The Motley Fool Australia has positions in and has recommended Pro Medicus Ltd. The Motley Fool Australia has recommended Alcidion Group 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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On Thursday, the S&P/ASX 200 Index (ASX: XJO) had a good session and charged higher. The benchmark index rose 0.5% to 6,794.3 points.

Will the market be able to build on this on Friday and end the week on a high? Here are five things to watch:

ASX 200 expected to rise again

The Australian share market looks set to end the week with another gain following a strong night of trade on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open 11 points or 0.15% higher this morning. In the United States, the Dow Jones rose 0.5%, the S&P 500 climbed 1%, and the Nasdaq jumped 1.35%.

Oil prices tumble

Energy producers including Beach Energy Ltd (ASX: BPT) and Woodside Energy Group Ltd (ASX: WDS) could have a tough finish to the week after oil prices tumbled. According to Bloomberg, the WTI crude oil price is down 3.4% to US$96.44 a barrel and the Brent crude oil price is down 2.7% to US$104.00 a barrel. Rising gasoline stockpiles, rate hikes, and resuming supply weighed on prices.

Life360 rated as a buy

The Life360 Inc (ASX: 360) share price may be up 66% in a month but one leading broker believes it can keep climbing. According to a note out of Bell Potter, its analysts have reiterated their buy rating and $7.50 price target. Bell Potter believes the location technology company will report another strong quarter. It said: [We] forecast global paying circles and AMR (excl. Jiobit and Tile) increase 40% and 46% y-o-y in Q2 which is not dissimilar to the growth rates achieved in each of the last three quarters.”

Gold price rises

Gold miners Newcrest Mining Ltd (ASX: NCM) and St Barbara Ltd (ASX: SBM) could have a good finish to the week after the gold price pushed higher overnight. According to CNBC, the spot gold price is up 1.1% to US$1,718.70 an ounce. A softening US dollar boosted the precious metal.

Alumina rated as a sell

The Alumina Limited (ASX: AWC) share price is overvalued according to analysts at Goldman Sachs. This morning the broker reiterated its sell rating and cut its price target by 10% to $1.35. It said: “At spot alumina of US$330/t, AWC is set for a near US$0/t margin, which would be a record low since starting refining operations before 1990.”

The post 5 things to watch on the ASX 200 on Friday appeared first on The Motley Fool Australia.

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More reading

• 3 fantastic ASX tech shares experts say are buys
• Here are the top 10 ASX shares today
• Got $1,000? You can buy 85 Treasury Wine shares… or one bottle of Penfolds Grange!
• Here are the 3 most heavily traded ASX 200 shares on Thursday
• Why Leo Lithium, Rio Tinto, Santos, and Woodside shares are dropping today

Motley Fool contributor James Mickleboro has positions in Life360, Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Life360, Inc. 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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There are a good number of ASX tech shares to choose from on the Australian share market.

Three that come highly rated are listed below. Here’s why these tech shares are being tipped as buys right now:

Altium Limited (ASX: ALU)

Altium is a leading printed circuit board design software provider. It could be a top tech share for investors due to its strong long term growth potential thanks to its exposure to the rapidly growing Internet of Things and artificial intelligence markets. These are driving increasing demand for its Altium Designer and Altium 365 software and also its other businesses such as the Octopart search engine.

Bell Potter is very positive on Altium and has a buy rating and $34.00 price target on the company’s shares.

Life360 Inc (ASX: 360)

Another ASX tech share to look at is Life360. It operates in the digital consumer subscription services market with a focus on products and services for digitally native families. At present, there are 30 million+ monthly active users of its app, which is generating stellar recurring revenue growth. But management isn’t settling for that. It is aiming to monetise its user base further through cross and upselling opportunities and acquisitions.

Bell Potter is also very bullish on Life360. It has a buy rating and $7.50 price target on the company’s shares.

Xero Limited (ASX: XRO)

A final ASX tech share to look at is Xero. It is a provider of a cloud-based business and accounting solution. It has been growing strongly over the last few years and looks well-positioned to continue doing so in the years to come. This is thanks to its international expansion, the shift to the cloud, and its burgeoning app ecosystem. The latter, which is similar to Apple’s App Store, has significant monetisation potential according to analysts at Goldman Sachs.

It is partly for this reason that Goldman is so positive on Xero and believes it is capable of delivering strong revenue growth over multiple decades. Goldman has a buy rating and $113.00 price target on its shares.

The post 3 fantastic ASX tech shares experts say are buys appeared first on The Motley Fool Australia.

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More reading

• Own Altium shares? Here’s what to expect from its FY22 results
• The Life360 share price has rocketed 69% in a month. Is it too late to buy?
• Here are the top 10 ASX shares today
• ASX 200 midday update: Megaport rockets, Allkem’s update, tech shares rally
• Xero share price rises 8%: Can it keep climbing?

Motley Fool contributor James Mickleboro has positions in Life360, Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Altium, Life360, Inc., and Xero. The Motley Fool Australia has positions in and has recommended Xero. 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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