Tag: Motley Fool

Last week saw a number of broker notes hitting the wires once again. Three buy ratings that investors might want to be aware of are summarised below.

Here’s why brokers think investors ought to buy them next week:

Costa Group Holdings Ltd (ASX: CGC)

According to a note out of Goldman Sachs, its analysts have retained their buy rating but trimmed their price target on this horticulture company’s shares to $3.65. This follows the release of a trading update which didn’t go down well with the market but was well-received by Goldman Sachs. Its analysts believe that the company’s pricing is outpacing cost inflation and will support margin expansion. All in all, the broker believes Costa is well positioned to deliver strong earnings growth through to FY 2024. The Costa share price ended the week at $2.54.

Domino’s Pizza Enterprises Ltd (ASX: DMP)

A note out of Citi reveals that its analysts have retained their buy rating but cut their price target on this pizza chain operator’s shares to $92.95. While Citi acknowledges that inflation and labour shortages could impact the company’s performance, it remains positive. Its bullish view is predicated on potential upside from possible M&A activity, upside to long term store rollout plans, and sales rebounding later in 2022 once it has cycled through abnormal comps. The Domino’s share price was fetching $71.13 at the end of the week.

Santos Ltd (ASX: STO)

Analysts at Morgans have retained their add rating but cut their price target on this energy producer’s shares to $9.30. According to the note, the broker has lifted its oil price forecasts for the coming years. However, this has been offset by higher weighted average cost of capital assumptions. Nevertheless, the broker remains positive and has named Santos as a key sector pick. The Santos share price ended the week at $6.99.

The post Top brokers name 3 ASX shares to buy next week appeared first on The Motley Fool Australia.

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More reading

• 2 highly rated ASX dividend shares that brokers say are buys
• Why this broker is bullish on the Santos share price
• What I’d do with 3 ASX shares that have plunged this year: expert
• 5 things to watch on the ASX 200 on Thursday
• Here are the top 10 ASX shares 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 no position in any of the stocks mentioned. The Motley Fool Australia has recommended COSTA GRP FPO and Dominos Pizza Enterprises 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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Are you looking for shares to buy next week when the market reopens? If you are, then you may want to consider the two listed below.

Here’s what you need to know about these ASX shares that have been rated as buys:

Breville Group Ltd (ASX: BRG)

The first ASX share that has been rated as a buy is leading appliance manufacturer, Breville.

As well as the eponymous Breville brand, the company has a growing portfolio of brands including Kambrook, Lelit, and Sage. Thanks to the popularity of these brands, its international expansion, and management’s relentless investment in research and development, Breville has been growing its sales and earnings at a solid rate for a decade.

The good news is that the team at Morgans believe Breville is well-placed to continue its growth in the coming years. It commented:

In our opinion, BRG deserves to trade at a premium multiple. It is positioned to deliver double-digit sales growth consistently over the next few years as it grows its market share, notably in geographies into which it has recently launched.

The broker currently has an add rating and $25.00 price target on its shares.

NextDC Ltd (ASX: NXT)

Another ASX share that has been named as a buy is NextDC. It is a data centre operator providing scalable, on-demand services to support outsourced data centre infrastructure and cloud connectivity for enterprises of all sizes.

Thanks to increasing demand driven by the structural shift to the cloud, it has been growing at a rapid rate for a number of years. Goldman Sachs expects this trend to continue and notes that it has a “compelling” growth profile. It commented:

Although acknowledging the ongoing rotation towards value may impact NXT shares, we believe the company has a compelling growth profile, a proven and profitable business model, and digital infrastructure characteristics that continue to attract significant strategic interest. Hence we re-iterate our Buy (on CL) for NXT.

Goldman Sachs currently has a conviction buy rating and $14.20 price target on its shares.

The post Looking for ASX shares to buy? Here are two analysts rate as buys appeared first on The Motley Fool Australia.

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More reading

• Top broker names the best ASX 200 retail shares to buy now
• Experts name 3 ASX 200 shares to buy now
• Has a turnaround already begun for ASX tech shares? Experts reveal the outlook for FY23
• Top broker says Breville share price weakness is a buying opportunity
• Here’s why experts are tipping these ASX growth shares as buys

Motley Fool contributor James Mickleboro has positions in NEXTDC 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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In troubled times such as now, it can be helpful to narrow one’s focus.

One way an investor could do this is to concentrate on buying ASX shares of companies that are absolutely dominant in their field.

Having a monopoly or near-monopoly allows a business more flexibility to increase prices if inflation pressures force their supply costs to surge.

The IML Australian Smaller Companies Fund this week revealed two such players it holds that are seeing their share prices start to move upward.

‘A very strong market position’

In the June quarter when the S&P/ASX 200 Index (ASX: XJO) lost a painful 12.4%, Tassal Group Limited (ASX: TGR) shares amazingly gained more than 33%.

According to IML, multiple takeover offers from Canadian suitor Cooke Inc pushed up the demand for the ASX share. 

“Cooke is now a significant shareholder in the company,” read an IML memo to clients.

“Tassal, which is based in Tasmania, has a very strong market position as the number one salmon producer in Australia.”

IML analysts said that after “investing heavily” in the business over the past few years, Tassal is now in a position to start a new era of “significant free cash flow“.

The business will also enjoy a couple of external tailwinds.

“The company has also been successfully raising its prices as global demand for protein increases and salmon producers are set to benefit from this increased demand,” read the memo.

“Tassal’s position as the largest salmon producer in Australia has been underpinned by Tasmania’s announcement that no new fish leases will be permitted for at least the next 12 months.”

Tassal shares also pay out a handy dividend yield of 3.1%.

Bouncing back after the pandemic

New Zealand casino operator SkyCity Entertainment Group Limited (ASX: SKC) did well to see its share price remain flat during a quarter when the rest of the market was absolutely punished.

IML analysts reckon conditions can only get better from here on.

“The company’s Auckland casino property has been materially impacted by COVID restrictions over the last 2 years but has bounced back after the NZ government announced an easing of COVID restrictions in March.”

SkyCity’s financial guidance last month showed the strong comeback, the memo stated. 

“The company released earnings guidance in mid-June which confirmed a stronger than expected recovery in Auckland gaming revenues and increased EBITDA guidance for financial year 2022 of NZ$135 million, which was significantly higher than expectations.”

The price of this ASX share looks attractive, according to IML analysts.

“[SkyCity is] trading on a FY2023 dividend yield of 5%, a PE multiple of 15 times and a free cash flow multiple of less than 10 times, given it has largely completed its significant capex programme.”

The post 2 rising ASX shares of companies with a market stranglehold appeared first on The Motley Fool Australia.

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More reading

• What’s in store for the BetaShares NASDAQ 100 ETF in the next 12 months?
• Own Soul Patts shares? Here’s what to look out for in FY 2023
• Here are the top 10 ASX shares today
• Here are the 3 most heavily traded ASX 200 shares on Friday
• Australia’s unemployment rate is at a 48-year low. What’s this mean for ASX 200 shares?

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 2022 financial year that has just wrapped up was not a great one for ASX investors. Between 1 July 2021 and 30 June 2022, the S&P/ASX 200 Index (ASX: XJO) fell by 10.19%. But investors in the BetaShares Nasdaq 100 ETF (ASX: NDQ) had an even worse time.

As we discussed earlier this month, the NDQ exchange-traded fund (ETF) fell by a painful 20% or so over the 2022 financial year. So now we have turned the page on such a depressing 12 months, what might FY 2023 hold in store for this popular ETF?

Of course, it’s impossible to know for sure. NDQ’s performance is determined by approximately 100 individual shares on the US’s NASDAQ exchange. But we can look at what might move this ETF over the next 12 months.

There are dozens and dozens of underlying companies held within this ETF. Even so, NDQ is still dominated by a handful of companies. Those are the largest shares on the NASDAQ exchange and would be familiar to almost every reader today.

They include Apple Inc (NASDAQ: AAPL), Microsoft Corporation (NASDAQ: MSFT), Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL), Amazon.com Inc (NASDAQ: AMZN), and Tesla Inc (NASDAQ: TSLA).

Together, these five US tech titans make up almost 42% of NDQ’s entire portfolio weighting.

What does FY 2023 hold in store for the NDQ ETF?

The valuations of these companies have all fallen significantly over the past year. This is the primary reason why NDQ itself has had such a tough time.

Of course, each company is individual. But it’s fair to say all of them have been impacted by rising interest rates, investors’ concerns over inflation, and fears over a possible global recession.

Thus, it’s a reasonable bet that these factors will be at the forefront of what drives these companies’ valuations over FY 2023.

So for any investor who wants to keep track of this ETF over the current financial year, keeping an eye on those macro factors is a good place to start.

It’s hard to know how FY 2023 will treat these shares. And by extension, the NDQ ETF. But the next step for any current or would-be NASDAQ investors might be to look at these companies’ upcoming earnings. The US has just started its quarterly earnings season.

Despite the past year’s poor performance, NDQ units have still managed to keep a five-year average return of 18.22% per annum (as of 30 June).

The BetaShares NASDAQ 100 ETF charges a management fee of 0.48% per annum.

The post What’s in store for the BetaShares NASDAQ 100 ETF in the next 12 months? 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
• Here are the top 10 ASX shares today
• Here are the 3 most heavily traded ASX 200 shares on Friday
• Australia’s unemployment rate is at a 48-year low. What’s this mean for ASX 200 shares?
• Down 23%, should investors buy Alphabet before its stock split?

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Sebastian Bowen has positions in Alphabet (A shares), Amazon, Apple, Microsoft, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, BETANASDAQ ETF UNITS, Microsoft, and Tesla. 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 BETANASDAQ ETF UNITS. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, and Apple. 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 Magellan Financial Group Ltd (ASX: MFG) share price has had a terrible time over the past month, falling by around 75%.

But, can the next 12 months create a turnaround for the business?

It’s probably a good idea not to anchor our thoughts about where share prices have been in the past. Just because the Magellan share price was above $40 a year ago doesn’t mean it’s going to get back there any time soon. If it did, that would be a rise of more than 200%.

The underperformance of Magellan’s main investment funds and the loss of funds under management (FUM) may explain the downward plunge of the Magellan share price.

But, can things turn around?

Performance

Magellan operates many different funds, But let’s look at one of the biggest funds – the Magellan Global Fund (Open Class) (ASX: MGOC) which is $10 billion in size.

At 31 March 2020, close to the bottom of the COVID-19 crash, the Magellan Global Fund told investors it had produced a net return per annum of 16.1% over the prior three years, outperforming its global share benchmark by an average of 9.7% per annum.

However, by 31 May 2022, the Magellan Global Fund showed a net return of 4.9% per annum over the prior three years, underperforming the global share benchmark by an average of 6.5% per annum.

While investing is about the long-term, a heavy underperformance in a relatively short period of time has led to the loss of tens of billions of dollars of funds under management (FUM).

If Magellan can produce some outperformance then it may be able to slow or even reverse the FUM net outflows.

At 30 June 2022, it had $61.3 billion of FUM, down from $65 billion at 31 May 2022. For the three months to June 2022, the business suffered $5.2 billion of FUM outflows ($1.7 billion of retail FUM and $3.5 billion of institutional FUM).

Broker thoughts on the Magellan share price

The broker Morgan Stanley currently has an underweight rating on the business, with a price target of $11. It did note that investment performance had improved in June.

Morgans is neutral on the business with a price target of $13.43, which implies an upside of around 10%.

The broker Macquarie is neutral on the Magellan share price, though the price target is $11.50. It thinks there will be more outflows over the next three months.

Finally, Credit Suisse is neutral on the business, with a price target of $12. It thinks Magellan needs to deliver better fund returns before positive market sentiment can return.

The post Is the Magellan share price on course for a recovery in FY23? appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX shares today
• Why Collins Foods, GQG, Magellan, and SkyCity shares are dropping
• Here’s why the Magellan share price is sinking 6% today
• 5 ASX dividend shares with the highest yields in FY22
• Here are the top 10 ASX shares today

Motley Fool contributor Tristan Harrison has positions in Magellan Financial Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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If you’re on the lookout for ASX 200 shares to add to your portfolio, then the two listed below could be worth a closer look.

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

Altium Limited (ASX: ALU)

The first ASX 200 share that could be in the buy zone is Altium. It is an electronic design software provider that is best-known for its Altium Designer and Altium 365 platforms. These platforms are regarded as the best in the industry and are used by many of the world’s largest companies for electronic/printed circuit board design. Among its growing user base are the likes of BAE Systems, Microsoft, and Tesla.

In addition, the company has a parts search engine called Octopart that is performing exceptionally well thanks to supply chain disruption. All in all, the company appears well-placed for growth over the next decade. Particularly given the booming internet of things and artificial intelligence markets. These are driving strong demand for electronic design software.

Bell Potter currently has a buy rating and $34.00 price target on Altium’s shares.

CSL Limited (ASX: CSL)

Another ASX 200 share that could be a buy for investors this month is CSL. It is one of the world’s leading biotechnology companies, comprising the CSL Behring and Seqirus businesses. These businesses are leaders in their respective fields – plasma therapies and vaccines.

And while plasma collection headwinds have been weighing on sentiment in 2022, industry data appears to show that collections have finally returned to pre-COVID levels. Combined with the impending blockbuster acquisition of Vifor Pharma and its huge annual investment in research and development, the future looks bright for CSL.

Citi currently has a buy rating and $330.00 price target on the company’s shares.

The post 2 top ASX 200 shares brokers rate as buys appeared first on The Motley Fool Australia.

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More reading

• Here’s how much $20k invested in these ASX shares 10 years ago is worth today
• CSL shares ‘well-positioned to deliver double-digit earnings growth’: expert
• Could FY23 be a good year for the CSL share price?
• 3 ASX shares to buy in a sector suddenly soaring this month: expert
• Why is the CSL share price up 11% in a month?

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 Altium and CSL Ltd. 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 Westpac Banking Corp (ASX: WBC) share price ended Friday in the red, down 0.2% to $19.90. It comes as a number of bidders are reportedly lining up to acquire the bank’s investment platform business, when it attempts to sell in August.

Reports have surfaced suggesting Westpac has various finance giants interested, ranging from asset managers and investment banks to private equity.

Westpac’s $1 billion divestment

It’s understood that non-binding bids for the bank’s planned divestment of its investment platform segment have come in at around $1.2 billion.

This was below Westpac’s expectations of around $1.5 billion, The Australian reports.

Meanwhile, the intended sale – planned for next month – is facing inquisitions from a number of players interested in participating in the bid.

Bain Capital and Colonial First State are purportedly interested, while Macquarie Group Ltd (ASX: MQG) and AMP Ltd (ASX: AMP) were reported to be “best-placed to buy the unit”, The Australian said.

The planned sale comes at the same time rival banking giant Australia and New Zealand Banking Group Ltd (ASX: ANZ) looks to acquire accounting software firm MYOB in a $4.5 billion transaction.

ASX-listed banks had a tough day on Friday after US investment banking giant JPMorgan Chase & Co posted weaker earnings overnight and announced it was set to wind back its buyback program. The S&P/ASX 200 Financials Index (ASX: XFJ) ended the day’s trading down 0.39%.

However, the Westpac share price has been on a downward trend for the past 12 months and now rests around 20% in the red over that period (see graph below). It has also fallen 8% so far this year.

The post Own Westpac shares? The plan for a $1 billion division sale appeared first on The Motley Fool Australia.

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More reading

• Top ASX dividend shares to buy in July 2022
• Setting the pace: Why ASX 200 bank shares are feeling the pinch on Friday
• Surprise US inflation pumps the brakes on ASX 200 bank shares
• Will Westpac shares really offer a 7.8% dividend yield this year?
• Analysts name 2 ASX 200 dividend shares to buy now

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. 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 recommended Macquarie Group Limited and 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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If you’re looking for exchange traded funds (ETFs) to buy, then you may want to look at the two listed below.

These exciting ETFs have recently been rated as buys. Here’s what you need to know:

ETFS S&P Biotech ETF (ASX: CURE)

The first ETF to look at is the ETFS S&P Biotech ETF. This ETF provides investors with exposure to U.S. healthcare biotechnology companies. These are companies that are engaged in the research, development and manufacturing of products based on genetic analysis and genetic engineering. This includes vaccine manufacturers and immunotherapy treatment developers.

Among its holding are promising biotechs such as Arrowhead Pharmaceuticals, Beam Therapeutics, Global Blood Therapeutics, and Twist Bioscience.

Felicity Thomas from Shaw and Partners is positive on the ETF. She recently told Livewire:

I’m going to go with a buy. Look I like to buy ETFs for the long term. We have an ageing population, and what’s the most important thing in the world? Your health. Biotech, healthcare, and life sciences, that’s where you want to be invested over the next couple of decades.

VanEck Vectors MSCI World ex Australia Quality ETF (ASX: QUAL)

Another ETF for investors to look at is the VanEck Vectors MSCI World ex Australia Quality ETF. It provides investors with access to a portfolio of high quality shares outside Australia that pass certain criteria.

Companies deemed to be high quality enough to be included in the fund are the likes of Apple, Mastercard, Microsfot, Nestle, Pfizer, and Visa.

Sarah Gonzales from Apt Wealth is a fan of the ETF. She also told Livewire:

My preferred ETF is the VanEck MSCI International Quality ETF. I think it provides exposure to that quality factor, which tends to outperform in market downturns. It does focus on factors like return and equity, year-on-year growth of earnings and also levels of debt. These are proxies for profitability, earnings variability, and the level of debt of companies. Particularly if we are going into a recession,  I think these are really the factors that I think we should focus on.

The post 2 top ETFs tipped as buys by experts for ASX investors appeared first on The Motley Fool Australia.

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More reading

• I think these 2 ETFs are long-term buys
• Why analysts say these top ETFs are buys
• Here are 2 buy-rated ASX ETFs for casting a wider net during uncertainty
• Here are 2 high quality ETFs analysts rate as buys

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Kogan.com Ltd (ASX: KGN) share price has been sold off heavily. It’s down around two thirds in the 2022 calendar year to date. But is this an opportunity?

The e-commerce retailer has been through a lot of volatility since the start of COVID-19. But, it’s currently down more than 30% from the bottom of the COVID-19 crash. In other words, the market seems to be pricing the business as having less favourable prospects now than at the worst point of the pandemic uncertainty.

It’s certainly true that the company’s profitability has significantly reduced.

Let’s look at the FY22 third quarter numbers, which is the most recent update.

Quarterly update

Total gross sales were $262.1 million, which was a reduction of 3.8% year on year. Gross profit fell 11.2% year on year to $41 million. Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) sank 110.5% year on year to a loss of $0.8 million. Reducing profitability may have had a big impact on the Kogan share price.

Active customers grew 3.6% year on year to 4.1 million, while Kogan First members jumped 264% year on year to 328,000.

Kogan explained that there was a decline in both exclusive brands and third-party brand sales, cycling “extreme growth” in the prior year.

Consumer demand did not meet management’s expectation of continuing growth. It had $193.9 million of inventory at the end of the quarter. The company has an intention to “progressively recalibrate” its baseline level of inventory over the coming year.

Can things get better in FY23?

Management certainly thinks so.

In terms of sales, the business is quite a bit bigger than it was two years ago. FY22 third quarter gross sales were 42.6% higher than the third quarter of FY20.

If Kogan can improve its profit margins, then the profit numbers may look a bit better.

Kogan.com founder and CEO Ruslan Kogan said:

While market conditions are challenging at present, the foundations laid over the last 16 years are holding us in good stead. Our current focus on recalibrating inventory levels and core operational costs is aimed at returning the company to its historical margins and also to position the business for its next phase of growth.

Kogan didn’t spell out what profit margin the business would be aiming for, but a return to profitability could go some way to reassure the market of its future prospects.

Looking at the earnings estimate on CMC Markets, Kogan is expected to return to making a net profit after tax (NPAT) in FY23, with a projection of 6.5 cents of earnings per share (EPS). This puts the Kogan share price at 42 times FY23’s estimated earnings.

The FY24 profit projection is 14 cents of EPS, meaning it’s valued at 20 times FY24’s estimated earnings.

Broker rating

UBS rates Kogan as a sell because of the lower profitability and inventory level. The economic environment could also make it tricky for retailers. There is an ongoing impact on supply chains.

However, the Kogan share price has fallen so much that the price target of $2.90 represents a small rise over the next 12 months.

The post Can the Kogan share price turn over a new leaf in FY23? appeared first on The Motley Fool Australia.

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More reading

• Why Allkem, Kogan, Metcash, and Sezzle shares are sinking
• Does the FY23 outlook make ASX retail shares look like bargains?
• Why are these 2 ASX ecommerce shares hitting two-year lows?
• These are the 10 most shorted ASX shares
• Why did the Kogan share price go backwards 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 positions in and has recommended Kogan.com ltd. The Motley Fool Australia has positions in and has recommended Kogan.com 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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Are you looking for some dividend shares to add to your income portfolio when the market reopens next week? If you are, then the two listed below could be worth considering.

Here’s why these dividend shares have been rated as buys:

Coles Group Ltd (ASX: COL)

Coles could be an ASX dividend share to buy next week even if it has just hit a 52-week high.

Investors have been buying the supermarket operator’s shares on the belief that the company is well-placed for growth in the current environment. That’s due to its strong market position, defensive qualities, and favourable exposure to inflation.

The good news is that the team at Morgans still see room for the Coles share price to rise further. Its analysts currently have an add rating and $20.65 price target on its shares.

As for dividends, the broker is forecasting fully franked dividends of 61 cents per share in FY 2022 and then 64 cents per share in FY 2023. Based on the latest Coles share price of $18.95, this will mean yields of 3.2% and 3.4%, respectively, over the next two financial years.

It commented:

We continue to see COL as offering good value with the company possessing defensive characteristics and a strong balance sheet (1H22 net cash $54m) allowing ongoing investment for growth.

Costa Group Holdings Ltd (ASX: CGC)

Another ASX dividend share for investors to consider is horticulture company Costa.

Unlike Coles, its shares were sold off and hit a 52-week low last week. This was driven by concerns over Costa’s citrus operations and the impact they could have on its full-year earnings.

One leading broker that remains positive is Goldman Sachs. In response to its trading update, the broker retained its buy rating with a slightly trimmed price target of $3.65.

It also continues to forecast attractive yields in the coming years. Goldman is expecting fully franked dividends of 10.5 cents per share in FY 2022 and then 11.5 cents per share in FY 2023. Based on the latest Costa share price of $2.54, this will mean yields of 4.1% and 4.5%, respectively.

Goldman commented:

We believe price strength has outpaced cost inflation and forecast margin expansion in the current year. CGC continues to effectively manage labour costs, which accounts for c.40% of total costs. We believe CGC is well positioned to deliver strong earnings growth in CY22/CY23/CY24.

The post 2 highly rated ASX dividend shares that brokers say are buys appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX shares today
• Coles share price claims new 52-week high, could it still be a buy?
• Why experts have named these ASX 200 dividend shares to buy
• ASX 200 supermarket shares lead as household spending jumps
• Costa Group shares down, responds to ASX query. What happened?

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 COLESGROUP DEF SET. The Motley Fool Australia has recommended COSTA GRP 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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