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The Bubs Australia Ltd (ASX: BUB) share price is on the move on Wednesday.

In morning trade, the infant formula company’s shares are up almost 4% to 55.5 cents following the release of its quarterly and full year update.

Bubs share price higher amid strong Q4 sales growth

For the three months ended 30 June, Bubs delivered a 278% increase in gross revenue over the prior corresponding period to $48.1 million.

This led to Bubs’ second half gross revenue growing 168% to $65.7 million and its full year gross revenue increasing 123% to $104.2 million for FY 2022.

Management advised that this was driven by gross across all key product segments and all key markets.

A key driver was the company’s US business which was given an almighty boost from the U.S. Government’s Operation Fly Formula.

In order to help with supply issues, Bubs’ infant formula products are now sold in over 5,400 stores across 34 US states. This includes the four largest retailers of infant formula: Walmart, Kroger, Albertsons/Safeway and Target.

In China, the company’s interesting decision to reward a key daigou seller with shares in exchange for sales appears to be working with corporate daigou sales up 1,201% during the fourth quarter.

However, taking some of the shine off the strong top line result was the company’s cash flow. Despite its sales growth, Bubs recorded an operating cash outflow of $6.7 million for the quarter and $10.2 million for the year.

Management commentary

Bubs’s CEO Kristy Carr was very pleased with the final quarter. She commented:

The last quarter has seen the business reach critical mass following exceptional growth across Australia, China, and rapid expansion in the USA with our involvement in the Biden-Harris Administrations’ Operation Fly Formula initiative aimed at helping to mitigate the ongoing infant formula shortage crisis. This business diversification and increased scale of our most profitable products and channels has flowed through to our operating margins, delivering profitability for the full year (excluding non-cash equity compensation expenses).

Carr also appears confident that the company’s US operations aren’t just benefiting from a one-time sugar hit due to supply issues.

We are confident of the long-term growth prospects for the USA now that the Food and Drug Administration has committed to a framework for suppliers like Bubs, who have already been approved to import infant formula products, to remain on shelf beyond November 2022. As a result, we envisage the USA will become a lead export market opportunity on par with China in the future.

Outlook

Bubs continues to expect to report underlying EBITDA of greater than $2.4 million. Though, this excludes non-cash equity compensation expenses such as share based payments and equity linked transactions.

Looking further ahead, Bubs’ executive chair, Dennis Lin, was optimistic on the company’s growth outlook. He said:

Now that we have achieved scale with over $100 million in gross revenue, we expect margin accretive growth to continue, and anticipate FY23 revenue and margin contribution will be largely attributed to growth in China and the USA, and across our portfolio segments, with infant formula forming a significantly higher proportion of revenue than the current 60 per cent.

The USA represents the most dynamic opportunity and long-term growth prospect for the business. The team will be singularly focused on delivering earnings accretive growth in FY23 and beyond for our existing and new shareholders.

The post Bubs share price higher after more than tripling Q4 sales appeared first on The Motley Fool Australia.

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More reading

• Why Block, Bubs, Infomedia, and Zip shares are dropping
• Bubs share price falls despite US FDA update
• Why Beach, BHP, Bubs, and Galileo Mining shares are sinking
• Why is the Bubs share price crashing 15% today?
• Why is the Bubs share price in a trading halt?

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 BUBS AUST FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Atlas Arteria Group (ASX: ALX) share price is in the green on Wednesday after the company released an update on its performance in the June quarter.

At the time of writing, the Altas Arteria share price is $8.14, 0.37% higher than its previous close.

Atlas Arteria share price gains alongside quarterly revenue

Here are the key takeaways from the S&P/ASX 200 Index (ASX: XJO) toll road operator’s quarterly update:

• Weighted average toll revenue increased 18.9% on that of the prior comparable period
• That marks a 2.4% increase on that of the same quarter of 2019
• Weighted average traffic on the toll road operator’s assets increased 21.2%
• That was around 1.7% lower than the same quarter of 2019

All four of the company’s toll road assets ­– located in France, the United States, and Germany – recorded higher revenue in the second quarter of 2022 than they did in the same quarter of 2021.

The increases were bolstered by greater tourism and employment in France and Germany and a gradual return to office-based work in the United States.

What else happened in the June quarter?

Of course, the quarter was also a brilliant one for the Atlas Arteria share price. It leapt 23% over the three months ended June.

Most of its gains came on the back of apparent takeover interest.

The IFM Global Infrastructure Fund snapped up 15% of the ASX 200 company’s stock and noted it was considering putting in an acquisition bid last month.

However, Atlas Arteria declined to provide non-public information to help the fund build a bid.  

What’s next?

Atlas Arteria didn’t provide the market with new guidance today. Though, it did provide an insight into how its toll assets have been performing year to date.

Here’s how much revenue its four major assets brought in over the six months ended June compared to the same period of 2021:

• France’s APRR brought in 1,289.6 million euros ­– a 20% increase
• France’s ADELAC brought in 29.55 million euros – a 52% increase
• The US’s Dules Greenway brought in US$32.06 million – a 20% increase
• Germany’s Warnow Tunnel brought in 6.08 million euros – an 11% increase

Atlas Arteria share price snapshot

The Atlas Arteria share price has outperformed the ASX 200 this year so far.

The company’s stock has gained 17% year to date while the ASX 200 has tumbled around 12%.

Additionally, Atlas Arteria’s stock is trading for 28% more than it was this time last year. Comparatively, the index has fallen 8% over the last 12 months.

The post Atlas Arteria share price lifts as revenue spikes 19% appeared first on The Motley Fool Australia.

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More reading

• How to beat the market with ‘boring’ ASX shares: fundie
• 5 things to watch on the ASX 200 on Thursday
• These were the best performing ASX 200 shares in June

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

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

In just a few months, Netflix (NASDAQ: NFLX) has gone from a market darling to market disaster.

The stock price is down more than 70% from its peak last fall, and it’s not just because tech stocks, in general, have pulled back. The streaming leader posted a surprise decline in subscribers in the first quarter and guided to a loss of 2 million in Q2.

A combination of pandemic hangover and rising competition seemed to zap the company’s growth, and its formerly reliable formula of plowing billions into original content is no longer paying off.

In the aftermath of the first-quarter report, Netflix announced two rounds of layoffs and signaled that it would scale back its content spending to focus on the bottom line. The company is also planning to launch an ad-based tier, a reversal from its earlier strategy, as co-CEO Reed Hastings had long dismissed ads as overcomplicated. 

There hasn’t been much good news for Netflix this year, but there may be one area that investors can take heart in. With macroeconomic conditions deteriorating, Netflix seems better positioned to weather a recession than its peers. 

Is Netflix recession-proof?

Entertainment stocks generally fit in the consumer discretionary category, which by definition sees declines in consumer spending during tough economic times. But Netflix has bucked that trend in the past. 

During the 2008-2009 recession, most companies, including its tech peers, experienced significant headwinds from the financial crisis. However, Netflix’s growth continued virtually unabated. In 2008, Netflix’s subscriber growth increased 26% to 9.3 million, accelerating from the year before, and jumped even faster in 2009, up 31% to 12.3 million.  

Netflix was a very different company back then. It was exclusively a DVD-by-mail service, only operated in the U.S., and was much smaller than it is today. During that era, the company’s primary competition was video stores like Blockbuster and kiosks like Redbox. Today, it’s other streaming services like Walt Disney‘s Disney+ and Warner Bros. Discovery‘s HBO Max. 

The same principles that helped Netflix grow through the last recession still apply today. The company offers considerable value compared to other forms of entertainment. It has raised its prices several times in recent years, and the standard package now costs $15.49 per month in the U.S. and the basic plan is just $9.99 per month. Netflix is more expensive than its peers like Disney+, but it also has a bigger library than other streamers. Importantly, the standard monthly package is still much cheaper than a traditional cable plan, and similar to a single movie ticket, or one night of entertainment. If you’re looking for value for your entertainment dollar, it’s still hard to beat a Netflix subscription, which is an advantage in a downturn.

In a recession, consumer spending tends to gravitate toward options that are cheap and convenient, which perfectly describes Netflix’s value proposition. 

Netflix vs. streaming competition

Unlike the last recession, Netflix isn’t alone in the industry. It now faces direct competition in streaming from virtually every major Hollywood studio, and many of those have undercut it on price.

Netflix doesn’t have a price advantage in streaming, but it does have an edge on its rivals in other ways. The company is still a pure-play streamer, so unlike Disney, HBO Max, or Paramount Global‘s Paramount+, it doesn’t rely on box office sales or cable subscriptions to drive revenue. That’s a clear benefit, as the transition away from cable is likely to accelerate in a recession, and tighter consumer spending could weigh on film studios’ recovery.

Netflix also doesn’t have exposure to theme parks, like Disney and Comcast, which are highly sensitive to macroeconomic conditions. Finally, Netflix derives a majority of its revenue from outside of the U.S., meaning its streaming business is much more diversified geographically, so its exposure to a U.S. recession is more limited.

Is Netflix a buy?

A recession alone isn’t a good reason to buy the streaming stock, but its ability to withstand a recession is a reminder that the risks facing the company may not be as great as the market fears.

The company is still highly profitable, it remains the leader in streaming, and it’s penetrating a huge market in Asia.

Netflix has also bounced from past growth setbacks, and the stock looks cheap at a price-to-earnings ratio of less than 20. While streaming pioneer seems unlikely to make a sudden recovery, investors are making a mistake if they forget it still has plenty of competitive advantages, including its upside potential in a down economy. 

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

The post Why a recession could be good for Netflix appeared first on The Motley Fool Australia.

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More reading

• ‘Ready to compete’: Will AMP seek out new opportunities or stick to its knitting?
• ANZ to buy Suncorp’s banking business, and real wages going backwards. Scott Phillips on Sky News First Edition
• ‘Unusually cheap’: ASX experts call out massive buying opportunity
• ‘Extraordinarily cheap’: The ASX share where 77% of its value is cash
• 5 things to watch on the ASX 200 on Wednesday

Jeremy Bowman has positions in Netflix and Walt Disney. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Netflix and Walt Disney. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2024 $145 calls on Walt Disney and short January 2024 $155 calls on Walt Disney. The Motley Fool recommends Warner Bros. Discovery, Inc. The Motley Fool Australia has recommended Netflix and Walt Disney. 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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The AMP Ltd (ASX: AMP) share price has been through a painful decline over recent years.

AMP shares are down around 80% over the past five years. That’s already a heavy decline. But they are down even further when looking at the pre-GFC share price.

After a bad showing in the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, AMP has been trying to turn things around.

Part of the strategy has been to sell parts of its business. For example, the latest is an agreement to sell Collimate Capital’s international infrastructure equity business to DigitalBridge Investment. AMP sold Collimate for an upfront consideration of AU$462 million, representing a total value of up to A$699 million.

Combined with the AU$430 million from the sale of the domestic infrastructure equity and real estate business announced on 27 April 2022 and the AU$578 million from the sale of the infrastructure debt platform completed in February 2022, this values the total Collimate Capital business at up to $2.04 billion, including the value of retained assets, and up to AU$2.5 billion when including the maximum earn-outs.

AMP intends to return the majority of net cash proceeds to shareholders. This is “likely to be via a mix of capital return and on-market share buyback.” The company will use some of that money to pay down corporate debt.

So, AMP is unlocking value for shareholders through pieces of its business. But what about what remains inside AMP?

AMP’s continuing businesses

Talking on an Allan Gray webinar, AMP CEO Alexis George spoke about how AMP has been working on its businesses:

We really had to reposition the businesses we had, which is the bank and wealth management. They weren’t competitive. They couldn’t really compete against the players in the market. I think we’ve done that now on most of those businesses, in fact, all of the businesses in wealth management and they’re ready to compete. I think we really need to explore some new revenue opportunities into new ancillary revenue and I think we’ve really committed to the retirement space.

George also says that the company has been working on its digital offering, with its direct-to-consumer ability being a key focus.

However, George went on to say that the business will be considered and focused with what it spends its money on:

I think we have just got to be careful that we don’t go chasing every bell and whistle; that we stick to our knitting – innovate where it’s necessary – but not get caught up in things that don’t really add value, either to the customers or to the advisors.

Looking at the 2022 first quarter, the company said that AMP Bank grew at two times the overall system growth. This growth came with the total loan book increasing $0.5 billion to $22.6 billion despite a highly competitive market. The total deposits increased by $1.7 billion to $19.5 billion during that first quarter.

The Australian wealth management assets under management decreased $5.8 billion to $136.5 billion, with net cash outflows of $1.3 billion. This was better than the $2 billion net cash outflows in the prior corresponding period.

North inflows from external financial advisers increased 53% to $342 million.

AMP Capital assets under management on a ‘normalised’ basis declined by 0.6% to $52.5 billion. This primarily reflects redemptions from China Life AMP Asset Management money market funds.

George says that AMP has been set up for a “strong and sustainable future, with a clear strategy to grow AMP Bank” and the wealth management businesses. As noted above, it’s seeing some areas of growth in the business.

Share price snapshot

Since the beginning of 2022, the AMP share price is virtually flat. However, it’s down 16% since 5 May 2022.

The post ‘Ready to compete’: Will AMP seek out new opportunities or stick to its knitting? appeared first on The Motley Fool Australia.

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More reading

• Own AMP shares? CEO touts its ‘digital bank’ status in competitive landscape
• ‘CBA and Westpac are too big’: One fund manager’s take on the future of ASX 200 bank shares
• AMP share price in focus as Mirvac wins control of $7.7 billion office fund
• Why interest rates need to rise despite ASX carnage: economist
• Why did the AMP share price fall 13% in FY22?

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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Motley Fool Australia Chief Investment Officer Scott Phillips joined Sky News First Edition on Tuesday morning to discuss Australia and New Zealand Banking Group Ltd‘s (ASX: ANZ) planned purchase of Suncorp Group Ltd‘s (ASX: SUN) banking business, plus the Treasurer’s admission that real wages will keep going backwards.

The post ANZ to buy Suncorp’s banking business, and real wages going backwards. Scott Phillips on Sky News First Edition appeared first on The Motley Fool Australia.

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More reading

• Is the NAB share price in danger from a resurgent ANZ?
• Top broker gives its verdict on ANZ’s Suncorp Bank acquisition
• What might ANZ’s Suncorp deal mean for competition among ASX 200 banks?
• ‘CBA and Westpac are too big’: One fund manager’s take on the future of ASX 200 bank shares
• Should owners of CBA shares be worried about ANZ’s mega deal?

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

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While the S&P/ASX 200 Index (ASX: XJO) isn’t technically in a bear market yet, for most sectors we are well and truly in one.

This is because mining and energy have carried the index upwards, so for many investors, their paper losses would be much more than the ASX 200’s 12% suffered so far this year.

Ophir Asset Management co-founders Steven Ng and Andrew Mitchell reminded investors that ASX shares bounce back the strongest after a trough.

“It is an investment truism that generally the best time to buy, and the worst time to sell, is when the market has entered bear territory,” their memo to clients read.

“This environment is throwing up opportunities and setting up stronger returns for investors.”

They analysed the historical statistics for the S&P 500 Index (INDEXSP: .INX) for the post-World War II era to prove their point.

The Ophir team found the average one-year return after a bear market is a stunning 22%, while it was 14.25% pa over three years and 13.17% over five.

It’s a scary time but investors need to act against their fears.

Small caps are out of favour, so pick them up cheap now

But which is the best buying opportunity at the moment?

Again, Mitchell and Ng suggested acting against emotions and to look forwards beyond the wisdom of the day.

“The most common strategic response to tightening financial conditions, slowing economic growth, and elevated market volatility is to shift to big cap, stable companies with robust and predictable earnings streams,” read the memo.

“But the flip side of this is that at the smaller end of the market this often creates greater mispricings that provide significant buying opportunities.”

The Ophir team, which focuses on small and mid-cap ASX shares, reckons it has witnessed “overly aggressive price falls” for such stocks.

There are now many “unusually cheap” small-cap stocks going for “a historically big discount” relative to their bigger brothers.

“We are now finding some wonderful businesses that were too expensive for us to own in the past but are now close to levels that we think provide great investment opportunities.”

Just another case of history repeating

Another expert specialising in small cap ASX shares, Cyan Investment Management portfolio manager Dean Fergie, told The Motley Fool that interest rates are still at historically low levels.

“So I’m actually pretty optimistic. I’ve been around for a long time, and I know that the market has pretty big swings,” he said.

“I’m not seeing underlying pessimism from the companies to which I’m speaking to — that gives me confidence that the underlying fundamentals are still intact. And that spells an opportunity in depressed share prices to make some good buys.”

As far as Ng and Mitchell are concerned, it’s just history repeating.

“We have seen these times before when indiscriminate and liquidity driven sell offs push down the valuations of some small cap businesses to unsustainable levels given the strength of their underlying operations,” read the memo.

“We think this bodes well for investment returns for those that fit this mould during the inevitable market recovery.”

The post ‘Unusually cheap’: ASX experts call out massive buying opportunity appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Wednesday
• Is the NAB share price in danger from a resurgent ANZ?
• Here are the top 10 ASX shares today
• ‘CBA and Westpac are too big’: One fund manager’s take on the future of ASX 200 bank shares
• Here are the 3 most heavily traded ASX 200 shares on Tuesday

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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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 discusses two micro-cap ASX shares he currently loves.

Hottest ASX shares

The Motley Fool: What are the two best stock buys right now?

Dean Fergie: We own shares in a listed investment company (LIC) called Touch Ventures Ltd (ASX: TVL), [which] is an Afterpay-backed investment or venture capital vehicle. 

Obviously, a huge amount of heat has come out of the buy now, pay later sector. Valuations are being crunched, and I think this has hurt this as an investment vehicle. 

MF: Even though Touch Ventures itself doesn’t have anything to do with buy now, pay later?

DF: They have a buy now, pay later operation in China, which is kind of a double whammy.

But that equates to about 5% of its value. And they have a newer buy now, pay later business in the UAE, which again maybe has some issues with respect to its ongoing valuation. They’ve got investments in a logistics business Sendle, open market data platform Basiq, and the like. 

But most importantly, this stock’s gone from a listing price of 40 cents back to, it’s currently trading at, 13 cents. They have, in net cash, 10 cents per share on their balance sheet. And it was trading at 10.5 only at the end of June. 

So you’re literally getting all their investments, which they’ve paid more than $100 million for, for almost nothing. And so we think that, as a pure value play, it’s extraordinarily cheap. It’s trading at 50% of its NAV [net asset value]. 

There might be some risk of its NAV, but you’re not going to mark down the value of cash on your balance sheet. So we think it’s a great opportunity.

MF: Did you buy in during the initial public offering (IPO), did you?

DF: We did, yes, unfortunately.

We also owned shares pre-IPO, which was at 20 cents. So we did see reasonable uplift when it IPOed, but then there’s been a lot of, I guess, value destruction on the way down.

MF: Fair enough. What’s the other stock you like at the moment?

DF: The other one we quite like, and I think it’s a bit topical, is a company called Mighty Craft Ltd (ASX: MCL). So they’re a boutique brewer and spirits company. And they’re also in a few venues. 

They bought a company called the Adelaide Hills Group just at the start of COVID, so early [2020]. And that sort of equates to its whole market cap at the moment. 

But probably most excitingly, they own 40% of a product called Better Beer, which is pretty much taking the market by storm in Australia. They just signed a distribution deal in New Zealand. They expect they’ll do next financial year something like 12 to 14 million litres of beer in this one product alone. 

So it’s just got a huge amount of growth and at a very, very tiny valuation. I think the total market cap of Mighty Craft now is about $50 million. So we think, again, it offers incredible value given their ongoing asset base and their products.

MF: The share price has about halved this year, hasn’t it?

DF: That’s about right. I think it’s gone from about 30 to 15 odd [cents].

So it’s capped out at about $50 million, which we think is tiny, given the amount of products that they’ve got under their banner.

The post ‘Extraordinarily cheap’: The ASX share where 77% of its value is cash appeared first on The Motley Fool Australia.

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More reading

• 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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On Tuesday, the S&P/ASX 200 Index (ASX: XJO) was out of form and tumbled into the red. The benchmark index fell 0.55% to 6,649.6 points.

Will the market be able to bounce back from this on Wednesday? Here are five things to watch:

ASX 200 expected to jump

The Australian share market looks set to have a great day on Wednesday following a very strong night of trade in the United States. According to the latest SPI futures, the ASX 200 is expected to open the day 79 points or 1.2% higher this morning. On Wall Street, the Dow Jones rose 2.4%, the S&P 500 climbed 2.75%, and the Nasdaq jumped 3.1%. Investors are betting that the market has now bottomed.

Oil prices rise

Energy producers such as Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) could have a good day after oil prices pushed higher overnight. According to Bloomberg, the WTI crude oil price is up 1.5% to US$104.10 a barrel and the Brent crude oil price has risen 1.1% to US$107.42 a barrel. Tight supply conditions boosted oil prices.

BHP rated as a buy

The BHP Group Ltd (ASX: BHP) share price remains good value according to analysts at Goldman Sachs. This morning the broker reiterated its buy rating with a trimmed price target of $40.80. In respect to its guidance, Goldman commented: “Released guidance for FY23 production is on average 2-3% below GSe, but importantly the largest and highest margin assets such as Pilbara iron ore & Escondida copper were in-line or above our estimates.”

Gold price flat

Gold miners Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) could have a subdued day after the gold price traded flat overnight. According to CNBC, the spot gold price is unchanged at US$1,710.2 an ounce. A softer US dollar was offset by rate hike bets.

Allkem quarterly

The Allkem Ltd (ASX: AKE) share price will be on watch today when the lithium miner releases its eagerly awaited quarterly update. Investors will be keen to see the price the company is commanding for its lithium and how it has handled COVID-related labour shortages.

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

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More reading

• Is the NAB share price in danger from a resurgent ANZ?
• ‘We have clearly seen the peak’: Sector veteran gives earnings season warning for ASX mining shares
• Here are the top 10 ASX shares today
• ‘CBA and Westpac are too big’: One fund manager’s take on the future of ASX 200 bank shares
• Here are the 3 most heavily traded ASX 200 shares on Tuesday

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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The ASX 200 index is home to a good number of blue chip shares. But which of these shares would make good additions to a portfolio this week?

Three blue chip shares that are highly rated are listed below. Here’s what experts are saying about them:

CSL Limited (ASX: CSL)

The first blue chip share to look at is CSL. It is a leading biotherapeutics company which owns the CSL Behring and Seqirus businesses. Combined, these two businesses have a portfolio of life-saving and lucrative therapies and vaccines which are generating billions of dollars in sales each year. But management isn’t resting on its laurels. Each year the company invests in the region of 10% to 11% of its sales back into research and development activities every year. This means it is on course to invest ~US$1 billion into these activities this year. This ensures that CSL has a pipeline of potentially lucrative products to support its long term growth.

Analysts at Citi are big fans of the company. The broker currently has a buy rating and $330.00 price target on its shares.

REA Group Limited (ASX: REA)

Another ASX 200 blue share to look at is REA Group. It is the dominant player in real estate listings in the Australian market. In fact, in the first half of FY 2022, during one month the company saw 13.2 million people visit its local site. This is the equivalent of 65% of Australia’s adult population. Furthermore, on average, there were 3.3x more visits than the nearest competitor each month. Thanks to this leadership position, new revenue streams, acquisitions, price increases, and its international operations, the company has been tipped to continue its solid growth in the coming years.

Goldman Sachs remains very positive on REA Group. Its analysts currently have a buy rating and $164.00 price target on its shares.

ResMed Inc. (ASX: RMD)

A final blue chip ASX 200 share to look at is ResMed. It is a medical device company with a focus on the growing sleep treatment market. Thanks to its industry-leading products, wide distribution network, and successful acquisitions, ResMed has been growing at a very strong rate over the last few years. Pleasingly, thanks to its significant market opportunity and the growing prevalence of sleep disorders, analysts are tipping the company to continue its growth for the foreseeable future.

Morgans is bullish and has an add rating and $37.95 price target on its shares.

The post 3 blue chip ASX 200 shares experts say are buys appeared first on The Motley Fool Australia.

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More reading

• Own CSL shares? Here’s a look at the biotech’s balance sheet
• Why cheap hamburgers could give beginner ASX share investors food for thought
• How much have REA shares paid in dividends in the last 5 years
• 2 top ASX 200 shares brokers rate as buys
• Here’s how much $20k invested in these ASX shares 10 years ago is worth today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL Ltd. and 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 Australia has recommended REA 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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Beaten-down battery technology company Novonix Ltd (ASX: NVX) extended its losses on Tuesday, closing 0.46% lower at $2.16 apiece.

This brings the company’s losses to more than 76% year to date, well ahead of sector indices and benchmarks.

For instance, the S&P/ASX 200 Index (ASX: XJO) is down 10.7% this year to date while the S&P/ASX All Technology Index (ASX: XTX) is 32% lower.

Where to next for the Novonix share price?

Novonix has given back all of its gains earned from 2021 to date. Its share price now trades back at January 2021 levels, having soared to a high of $12.16 in December last year.

Since then, shareholders have endured a one-way ticket south – at a pace much faster than the wider market.

As it stands, the Novonix share price now needs to gain 233% to return to its January 2022 levels.

To reach its all-time high, it needs to appreciate more than 460%, something that seems highly improbable in the current climate. The downtrend in the Novonix share price is shown on the chart below.

Clearly, the downside has been heavy for Novonix investors.

The company’s market capitalisation is currently valued at just over $1 billion. That’s a considerable drop from a market cap of $4.4 billion in December. This, too, on an asset base of $438 million.

Some market watchers are questioning how a $4 billion company — in December — delivered just $5 million in H1 FY22 revenue, a loss of $15 million in cash from operations (CFFO), and a net loss of $28 million.

For reference, Dicker Data Ltd (ASX: DDR) is another ASX tech company valued at around $2.1 billion. It delivered FY21 revenue of $2.5 billion, CFFO of $20 million, and an after-tax profit of $73 million.

‘Liquidity era’ closing

The ‘pandemic era’ of 2020-2021 was marked by tremendous amounts of cheap liquidity coursing throughout the veins of financial markets.

Investors were happy to pay a premium for the promise of growth and return, set to occur sometime in the future.

This resulted in an enormous upswing in speculative investing, whereby unprofitable companies were re-valued at exorbitant multiples. Record low interest rates and a ‘risk-on’ attitude helped fuel the sentiment.

But, fast forward, and the market has shied away from rewarding unprofitable companies in 2022. This is evident through the large wind-down in growth and tech stocks.

Morgans is neutral on Novonix shares, valuing them at $2.98 apiece after a roughly 40% slice to its previous valuation.

Hence, with the prospects for tech shares dwindling in FY23, it remains to be seen if Novonix can re-rate to the upside. It seems the price of lithium and graphite might not have a strong bearing on the company’s share price.

After all, Novonix touts itself as a “battery materials and technology company” and is rated in the tech sector by the Global Industry Classification Standard (GICS).

The post Down 76% this YTD, can the Novonix share price claw back gains? appeared first on The Motley Fool Australia.

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More reading

• Novonix shares: What does the next year hold in store?
• Why Costa, Domino’s, EML, and Novonix shares are dropping
• Novonix share price sinks 8% following ‘gun shy’ broker note
• These 3 ASX 200 lithium stocks are exploding on Friday
• Why was FY22 a rollercoaster period for the Novonix share price?

Motley Fool contributor Zach Bristow 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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