Tag: Motley Fool

Telstra Group Ltd (ASX: TLS) stock and Woodside Energy Group Ltd (ASX: WDS) stock both have their positives. But which is a better choice for passive income?

Telstra is the biggest ASX telco share, while Woodside is a major ASX energy share – it’s one of the biggest operators in the region.

I’m going to compare them on three key points that would help me choose between them.

Dividend yield

As industry giants already, their growth prospects are less than when they were first starting out as much smaller businesses. That’s why I think the dividend returns are an important part of the picture.

Both of these ASX blue-chip shares are known for their dividends, so let’s look at which one might pay better dividends in FY24 and beyond.

Telstra has recently returned to dividend growth with its profit returning to sustainable increases. According to the estimates on Commsec, Telstra could pay an annual dividend per share of 18 cents in FY24 and 20 cents per share in FY26, translating into a grossed-up dividend yield of 6.75% and 7.5%, respectively at the current Telstra stock price.

With significant exposure to energy volatility, the Woodside dividend can be quite volatile and follow the direction of oil and LNG prices.

Based on the projections on Commsec, owners of Woodside stock could get a grossed-up dividend yield of 7.9% in FY24 and 6.4% in FY26.

While Woodside may offer slightly larger income in FY24, Telstra’s dividend could keep climbing while Woodside’s may fall.

Growth

Revenue and profit growth are driven by different factors for each business.

Telstra is seeing steady subscriber growth as more Aussies sign up with the country’s biggest telco. More users means the infrastructure is being better utilised, which can lead to rising profit margins. The Telstra FY24 first-half result saw total income growth of 1.2% to $11.7 billion while net profit after tax (NPAT) rose 11.5% to $1 billion.

The telco is investing in things like cybersecurity and digital health, which is helping it diversify earnings and open up more growth avenues. Expanding its 5G network is a key focus.

Woodside has a different reporting calendar and recently reported its 2023 full-year result. It reported a 17% drop in operating revenue to US$14 billion, a 37% decline in underlying NPAT to US$3.3 billion and a 74% plunge in reported NPAT to US$1.66 billion.

No one can truly know what’s going to happen with energy prices, but Woodside continues to work on new projects that can grow its production. Trion, a “large, high-quality resource” is one example, it will be Mexico’s first deepwater oil development.

Defensive earnings?

The decisive factor for me is how predictable and defensive Telstra’s earnings are – I’d guess nearly all households and businesses would choose to keep paying for their internet connection if they can afford it. The profit is predictable and growing, making Telstra stock very appealing.

However, Woodside is heavily reliant on energy prices for its annual profit and we really don’t know what’s going to happen next. Its profit could rise 20% next year or halve, it’s unpredictable. If I’m looking for income, I’d rather know what I’m roughly going to receive next year.

The only time I’d personally consider Woodside shares for my own portfolio as a possible market-beating investment is when energy prices are really weak, which could open up a cyclical rebound opportunity.

However, remember the world is looking to decarbonise and reach net zero by 2050, so I’m not sure when the right time to invest in an oil and LNG producer is in the coming years if demand is going to slow. It would be beneficial for Woodside if its hydrogen efforts are successful in the future.

The post Better ASX stock: Woodside vs Telstra appeared first on The Motley Fool Australia.

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More reading

• In this bull market, where are the bargain buys to be found?
• 5 things to watch on the ASX 200 on Monday
• Here’s how the ASX 200 market sectors stacked up last week
• Buy Telstra and these ASX dividend shares next week
• 3 ‘forever’ ASX dividend shares to build your wealth

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Telstra 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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Two S&P/ASX 200 Index (ASX: XJO) shares just received some sizeable upgrades from leading brokers.

Health and safety products company Ansell Ltd (ASX: ANN) closed on Monday trading for $23.89 a share.

A number of brokers are forecasting a significant potential uplift from here, according to The Australian.

Jeffries is among the most bullish on the ASX 200 share. The broker’s analysts raised the Ansell stock to a buy rating with a price target of $30.85 a share. That’s more than 29% above Monday’s closing price of $23.89.

Ansell shares are up 11.1% today, currently trading for $26.53 a share.

The second ASX 200 share receiving an upgraded outlook is agribusiness Elders Ltd (ASX: ELD).

Elders stock was raised to an add rating by Morgans Financial with a price target of $9 a share. That represents a potential 21% upside from Monday’s close of $7.43.

Elders shares are up 5.7% today, currently trading for $7.85 per share.

Here’s what’s been happening with the two upgraded ASX 200 shares.

ASX 200 shares tipped for outsized gains

Turning to Elders first, the ASX 200 share had an absolute horror day yesterday, with the share price crashing 24.4% by Monday’s closing bell.

This followed on a disappointing trading update that came in significantly below consensus expectations.

The company’s trading performance has been hampered by uncooperative weather conditions and lower-than-expected sheep and cattle prices. This saw management dial down full-year earnings estimates, now expected to be around 18% to 30% lower than the prior year.

Turning back the clock to Friday prior to the update’s release, the Elders share price closed at $9.83. Meaning the upgrade from Morgans Financial really values the stock at some 8% less than at Friday’s close.

Still, if the broker has this right, it could prove to be a profitable ‘buy the dip’ scenario.

As for Ansell, the ASX 200 share was in a trading halt yesterday ahead of reporting on a new acquisition and capital raise.

The company revealed it has entered into a binding agreement to acquire 100% of the assets of United States-based Kimberly-Clark’s Personal Protective Equipment (KCPPE) business.

You may not have heard of Kimberly-Clark. But you’ve likely heard of some of their global brands, like Huggies and diapers and Kleenex tissues.

That announcement was released this morning and looks to be fuelling today’s rocketing Ansell share price.

The ASX 200 share reported it has successfully completed a $400 million (US$263 million) fully underwritten institutional share placement at a price of $22.45 per share.

Management said the proceeds will be used to partially fund the acquisition of 100% of the assets that constitute KCPPE from Kimberly-Clark Corporation for US$640 million.

The post These 2 ASX 200 shares just got big upgrades from top brokers appeared first on The Motley Fool Australia.

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More reading

• Are Elders shares a bargain following Monday’s crash?
• Ansell shares jump 14% amid blockbuster acquisition
• Why APM, Azure Minerals, Beach Energy, and Elders shares are crashing today
• Ansell share price hits pause as company gloves up for $975 million acquisition
• Why is this ASX 200 share plunging 29% after a trading update?

Motley Fool contributor Bernd Struben 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 Ansell and Elders. 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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Elders Ltd (ASX: ELD) shares were crucified by investors in response to a trading update yesterday. Having erased most of its 2024 gains, brokers are again running the ruler over the Australian agribusiness.

In the early moments of trading today, shares in the billion-dollar business are up 5.3% to $7.82.

What happened?

Before yesterday’s destruction, the Elders share price had rallied 77% from its 52-week low. For the most part, the market had been willing to look past weak business, believing better times were around the corner.

Then arrived the FY24 trading update.

As reported by my colleague, James Mickleboro, Elders disclosed trading below expectations in the first half of FY24 for several reasons. Factors ranging from El Niño-induced client sentiment pressure to lower crop protection prices.

Furthermore, one of Elders’ largest contributors to gross margin is its agency services. With cattle and sheep prices remaining ‘significantly below’ the 10-year average, this segment took a hit during the first half.

In short, it no longer looks like the first half of FY24 will be when Elders turns that corner.

The company’s management now expects underlying earnings before interest and taxes (EBIT) between $120 million and $140 million in FY24. Additionally, the impacted EBIT means Elders’ leverage ratio will exceed the targeted 1.5 times to 2 times bounds during the financial year.

Is it time to buy Elders shares while fear is rife?

A change in expectations has prompted some brokers to refresh their views on Elders and its share price.

Surprisingly, many brokers are taking a positive perspective after Monday’s 24% collapse. Here are the most recent revisions on Elders shares:

• CLSA: buy rating on Elders — $9 price target
• Morgans: add rating on Elders — $9 price target
• Citi: buy rating on Elders — $8.50 price target
• Shaw and Partners: buy rating on Elders — $9 price target

The team at Citi don’t foresee the first-half weakness in FY24 to hang around in FY25. Citi analysts forecast underlying EBIT of $179 million in FY25 and $193 million in the following financial year.

Meanwhile, the team at Shaw and Partners are expecting ‘more normal’ conditions from here, stating:

The more positive ABARES outlook released in March 2024 and higher livestock prices suggest more normal conditions for Australian agriculture in calendar 2024.

Around 15% upside could be on the table if Elders shares were to reach $9 apiece once again.

The post Are Elders shares a bargain following Monday’s crash? appeared first on The Motley Fool Australia.

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More reading

• Why APM, Azure Minerals, Beach Energy, and Elders shares are crashing today
• Why is this ASX 200 share plunging 29% after a trading update?
• Here are the top 10 ASX 200 shares today
• Why Aurelia Metals, Elders, GQG, and Telix shares are storming higher today
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Mitchell Lawler has positions in Elders. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Elders. 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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Ansell Ltd (ASX: ANN) shares have returned from their trading halt on Tuesday with a bang.

In morning trade, the health and safety products company’s shares are up 14% to $27.20.

Why are Ansell shares jumping?

Investors have been buying the company’s shares this morning after it released a big announcement.

According to the release, Ansell has successfully completed a A$400 million (US$2631 million) fully underwritten institutional placement of approximately 17.8 million new fully paid ordinary shares to eligible institutional investors.

The placement was undertaken at a price of A$22.45 per new share, which represents a 6% discount to where Ansell shares last traded.

Ansell advised that it received strong interest in the placement from existing and new institutional investors.

The company will now push ahead with its share purchase plan (SPP), which is aiming to raise a further $65 million. The SPP will be priced at the lower of the placement price and a 2% discount to the five-day volume weighted average price of Ansell shares up to and including the closing date of the SPP. This is currently scheduled for 6 May 2024.

Why is Ansell raising funds?

As we covered here on Monday, Ansell is raising funds for a blockbuster acquisition.

The company has entered into a binding agreement with Kimberly-Clark Corp (NYSE: KMB) to acquire 100% of the assets of its Personal Protective Equipment (PPE) business.

Kimberly-Clark is the US-based consumer staples giant behind popular products such as Huggies, Kleenex, and Viva.

Ansell will acquire this company’s PPE business for US$640 million (A$970 million) in cash. This business includes brands like Kimtech and KleenGuard, as well as glove, mask, apparel and eyewear manufacturing facilities.

Management believes the deal will accelerate the delivery of Ansell’s growth strategy, enhancing its global position in attractive and growing segments. It also expects the transaction to generate economies of scale with a focus on combined supply chain and organisational efficiency.

One thing that could be lifting Ansell shares today is management’s financial expectations. It expects the acquisition to be mid-to-high single-digit earnings per share accretive pre synergies and low-teens earnings per share accretive including run-rate net cost synergies on a FY 2024 pro forma basis.

‘Delighted’

Ansell’s managing director and CEO, Neil Salmon, revealed that the company has had its eye on this business for some time. He said:

For many years, we have assessed a combination with KCPPE as one of our most attractive acquisition opportunities and I’m delighted that we have now reached agreement with K-C that the optimal path forward for this business is under Ansell ownership.

With this Acquisition we are enhancing our sales of specialist products designed for clean room applications and recorded today under the Life Sciences SBU, while also widening our portfolio of products sold into Scientific verticals which include manufacturing of pharmaceuticals, medical devices and semi-conductors, and laboratories for academic and industrial research.

The post Ansell shares jump 14% amid blockbuster acquisition appeared first on The Motley Fool Australia.

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More reading

• Ansell share price hits pause as company gloves up for $975 million acquisition
• Here are the top 10 ASX 200 shares today
• Here are the top 10 ASX 200 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 Ansell. 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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We are indisputably in the midst of a bull market on the S&P/ASX 200 Index (ASX: XJO). Technical definitions aside, it’s hard not to call ‘bull… market’ when the ASX 200 has hit multiple new record highs over the past month or two alone.

If you want a number to go off, the ASX 200 has gained an impressive 14.9% or so since the beginning of November 2023. That’s more than one-and-a-half times the index’s average gain for a year, let alone five months.

Most investors can’t help but love a bull market. After all, who doesn’t enjoy the feeling of becoming wealthier, even if it’s only ‘on paper’?

But it does make the whole investing process a little more taxing, both mentally and financially. It’s harder to buy ASX shares, again both financially and mentally, when their prices have appreciated meaningfully. After all, we’re all taught to ‘buy low and sell high, not buy even higher.

However, I would argue that there are almost always bargains to be found in any market, especially for small, nimble retail investors.

So how does one find these said bargains?

How to find ASX share bargains in a bull market

I think there are two strategies that investors can use to find bargain stocks during a bull market.

The first is to look for cheap ASX shares on a sector-by-sector basis. The big money funds that tend to move the stock market day to day and week to week are always looking to ‘rotate money out of what they might perceive as poor sectors into more lucrative ones.

We, as small investors with long time horizons can take advantage of this.

For example, right now, real estate investment trusts (REITs) and gold stocks are hot. But mining and energy shares? Less so.

Iron ore miners like BHP Group Ltd (ASX: BHP) and Fortescue Ltd (ASX: FMG) have lost quite a lot of steam in recent months, perhaps thanks to falling iron ore prices and expectations of a slowing global economy. Ditto with energy stock Woodside Energy Group Ltd (ASX: WDS).

Now I’m not saying that I would buy any of these shares right now. But investors seem to be rejecting these companies in favour of others right now. As such, this would be an ideal hunting ground for a bargain.

Be greedy when others are fearful

The second way you can find an ASX bargain in my view is by looking for quality companies that have temporary issues. Many investors (particularly large fund managers) are impatient. If a company is having an issue that might be affecting its short-term sentiment or financials, it is often sold off, even if its long-term future still looks unchanged.

I think a good example of this right now is Telstra Group Ltd (ASX: TLS). Last year, Telstra disappointed the market by revealing that it would not be selling off some of its highest-quality assets that are housed in its InfraCo Fixed division. These include fibre optic cables and data centres.

Many investors seemed disappointed by this news, and the company has missed out on the recent share market bull run as a result. Telstra shares fell from a high of $4.46 in June last year to the ~$3.80 levels we see today.

However, as a Telstra shareholder, I am happy to forgo a short-term sugar hit from selling off these jewels and am happy that the company still owns and will continue to profit from them. As such, I think Telstra is an example of a cheap ASX share and a bargain buy in the current bull market.

Foolish takeaway

Sure, bull markets and record ASX highs do make investing more difficult for thrifty investors. But there are ways to find cheap ASX shares regardless. You just might need to look a little deeper and think outside the box.

The post In this bull market, where are the bargain buys to be found? appeared first on The Motley Fool Australia.

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More reading

• The BHP share price is down 12% in 2024. What’s next for the iron ore price?
• Why I’d confidently buy these 3 ASX blue-chips while others grow fearful
• Fortescue shares climb amid Australian first for clean energy
• The pros and cons of buying BHP shares right now
• 5 things to watch on the ASX 200 on Monday

Motley Fool contributor Sebastian Bowen has positions in Telstra 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 positions in and has recommended Telstra 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Tesla (NASDAQ: TSLA) stock is enjoying what feels like a rare “up” day Monday morning, as investors parse some confusing news. Last week Reuters reported that Tesla has abandoned its plans to build a Model 2 electric car priced at less than $25,000, in order to focus its efforts on building “robotaxis” instead.

CEO Elon Musk quickly dismissed the rumor on social media platform X, saying Reuters was “lying.”

But Tesla stock still took a hit on Friday, falling nearly 4%. Today, however, Tesla is winning back its losses — and more — as its stock bounces 4.2% through 10:05 a.m. ET.

Tesla tweets

Citing unnamed sources, Reuters reported last week that Tesla has entirely “canceled” plans to build the Model 2 electric car — which at a rumored price of $25,000 could be key to Tesla’s efforts to compete with low-priced electric cars from China. Musk was quick to dismiss the report in part, but he did seem to endorse the other half of what Reuters was saying — the bit about the robotaxi.

In a tweet following up on Reuters’ article, Musk confirmed that Tesla will announce a new self-driving electric vehicle (EV), which he called his “robotaxi,” on Aug. 8.

Tesla Robotaxi unveil on 8/8

— Elon Musk (@elonmusk) April 5, 2024

Is Tesla stock a sell?

And that’s really all he said on the matter. So what are investors supposed to make of these dueling Tesla reports, one from a respected news organization quoting inside sources at Tesla, and the other from Tesla’s CEO himself?

Clearly, nothing’s 100% clear right now. But the most likely scenario seems that Tesla has made robotaxis its new top priority, while pouring money into developing a cheap EV is now taking a back seat. In the middle of an EV price war, that seems a sound strategy that could preserve profit margins for Tesla. It’s not a reason to sell Tesla stock.

But it might be a reason to buy. 

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

The post Why Tesla stock put pedal to metal today appeared first on The Motley Fool Australia.

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More reading

• 3 ASX shares boasting better revenue growth than Tesla
• Why Tesla stock was climbing today
• 1 Wall Street analyst thinks Tesla stock is going to $125. Is it a sell?

Rich Smith 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 Tesla. 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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Life360 Inc (ASX: 360) shares were on form yet again on Monday.

The ASX tech stock started the week with a 17% gain to $14.18.

This means that the location technology company’s shares have now risen 88% since the end last year.

To put that into context, if you had invested $20,000 into Life360’s shares on the final trading day of 2023, your investment would now be worth almost $38,000.

Why is this ASX tech stock rocket on Monday?

Investors were fighting to get hold of the company’s shares following the release of a trading update.

That update revealed that Life360 had a record first quarter with global Monthly Active Users (MAU) reaching 66.4 million at the end of the first quarter.

This represents an increase of 4.9 million since the end of the fourth quarter and means a record for a first quarter. It is also more than double the net additions of 2.2 million the company recorded in the prior corresponding period.

The company also reported record first quarter net additions to global paying circles of approximately 96,000. This was split approximately 65%/35% between its U.S. and International operations.

Finally, also catching the eye was news that the ASX tech stock has its eyes on a dual listing on Wall Street. It is looking to make some changes to its Certificate of Incorporation to bring the company in line with typical U.S. corporate practices. This is something which could pave the way to a listing in the United States.

Broker response

Analysts at Goldman Sachs were blown away by the quarterly update. While the broker doesn’t do quarterly estimates, it highlights that this update is run-rating significantly ahead of expectations for the first half. Goldman said:

Life360 has provided a trading update for 1Q24. We do not model Life360 quarterly but note that the company is run-rating well ahead of our 1H24 expectations, particularly for U.S. subscription net adds (most important driver of Life360’s revenue/earnings). Operating metrics can be volatile quarter to quarter, and we note that this follows a relatively softer 4Q23, however in our view Life360 has started FY24 strongly and should be comfortably tracking to meeting revenue guidance and potentially exceeding EBITDA guidance.

The team at Bell Potter was equally impressed with the update. The broker said:

Life360 provided a positive and unexpected market update with two key metrics in 1Q2024 materially exceeding both our and market expectations. […] Both metrics are clearly very strong but in our view the growth in paying circles is key as this metric disappointed somewhat in 4Q2023 with an increase of only 55k – albeit after very strong growth in 3Q2023 – so growth of 96k in 1Q2024 signals a strong rebound.

In response, Bell Potter has reiterated its buy rating on the ASX tech stock with an improved price target of $16.25. This implies potential upside of almost 15% for investors from current levels.

The post This hot ASX tech stock can keep rising: Bell Potter appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Tuesday
• Here are the top 10 ASX 200 shares today
• Why Life360, Qantas, Qoria, and Silver Lake shares are racing higher today
• Why is the Life360 share price rocketing 22% to a record high?
• Buy this high-flying ASX 200 tech stock for a big return

Motley Fool contributor James Mickleboro has positions in Life360. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group and Life360. 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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Qantas Airways Limited (ASX: QAN) shares were on form on Monday and raced higher.

The airline operator’s shares ended the day almost 5% at $5.69.

Investors were fighting to get hold of the Flying Kangaroo’s shares amid news that it is making “one of the biggest ever expansions” of its frequent flyer program.

This will see Qantas add 200 million more reward seats with the launch of Classic Plus Flight Rewards.

Qantas’ CEO, Vanessa Hudson, commented:

The Qantas Frequent Flyer program is an integral part of Qantas and has always been about recognising our customers for their loyalty. The widespread availability of Classic Plus means that frequent flyers have more options to fly where they want, when they want and more often, using their points.

Are Qantas shares a buy?

Analysts at Goldman Sachs have responded to the news. And while the broker expects the change to have a slightly negative impact on its earnings this year, this will be offset by positive impacts down the line. The broker said:

We update our FY24E-26E estimates to reflect the latest updates in the Loyalty Program. Overall, our FY24E NPAT estimate reduces by 2%, while our FY25E estimate remains unchanged. Our FY26E NPAT estimate increases by 2%.

In light of this, Goldman has reiterated its buy rating and $8.05 price target on Qantas’ shares. This implies potential upside of approximately 41% for investors over the next 12 months.

Why is the broker so bullish?

Goldman continues to believe that Qantas’ shares are severely undervalued at current levels based on its structurally improved earnings. It also highlights that its market capitalisation remains lower than pre-COVID times despite this. Goldman explains:

Qantas Airways is the flagship carrier of Australia and is the largest airline in Australia by capacity share, serving destinations domestically and internationally. As a key beneficiary of the re-opening of the world post-COVID, we expect the airline’s traffic capacity to return to 95% of pre-COVID levels by FY24e, with the airline’s earnings capacity (EPS) expected to exceed that of pre-COVID levels by ~52%. We forecast a ~24% FY19-24e cumulative uplift in unit revenues (c. 4.4%pa), and ~50% drop-through of QAN’s A$1bn+ structural cost-out program. QAN’s current market capitalisation and enterprise value are 10% below and 11% below pre-COVID levels. As such, we believe QAN is not priced for a generic recovery, let alone prospects for improved earnings capacity. We continue to see upside associated with substantially improved MT earnings capacity.

The post Why Qantas shares are a buy and could rise 40% appeared first on The Motley Fool Australia.

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• Why Life360, Qantas, Qoria, and Silver Lake shares are racing higher today
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. 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 plenty of options for investors to choose from in the lithium industry.

But according to Goldman Sachs, there’s only one ASX lithium stock worth buying right now.

What is the broker saying?

Ahead of the release of quarterly updates this month, the broker has been running the rule over the industry.

This has seen its analysts declare three ASX lithium stocks as sells and one as a buy.

Let’s take a look and see what Goldman is saying about these miners and the lithium industry.

Bear market is not over

Firstly, Goldman Sachs has warned investors that the lithium bear market is not over despite a recent uptick in prices. In fact, it believes that a larger surplus is looming in 2025, which could weigh heavily on prices and sentiment. It said:

Our global team highlights that the recent rally in lithium prices should not be interpreted as the end of the bear market, where further supply rationing is needed to reduce both the 2024E surplus and now larger surplus in 2025E, with the top end of the integrated cash cost curve dominated by Chinese lepidolite (US$8k-12k/t LCE) and integrated African concentrates (US$7k-13k/t LCE).

Buy this ASX lithium stock (and sell these)

The one lithium miner that Goldman is recommending as a buy despite its bleak view for the battery making ingredient is IGO Ltd (ASX: IGO). It has a buy rating and $7.50 price target on IGO’s shares.

Goldman likes IGO due to its low cost Greenbushes operation, which remains profitable in the current environment. It said:

We are Buy rated on: (1) Valuation, trading on ~0.9x NAV and pricing ~US$1,080/t spodumene (peers ~1.2x NAV and ~US$1,300/t), where near-term FCF yields remain attractive vs. peers; (2) Greenbushes is one of the lowest cost lithium assets (production growth more than offsets increasing strip ratio), where we reiterate further Greenbushes expansion remains one of the most economically compelling brownfield lithium projects with a breakeven/incentive LT spodumene price of ~US$400-500/t, with further optionality from the addition of ore sorters; (3) TLEA dividends support growing net cash.

The broker thinks investors should be selling Core Lithium Ltd (ASX: CXO, Mineral Resources Ltd (ASX: MIN), and Pilbara Minerals Ltd (ASX: PLS) shares. It has sell ratings and price targets of 12 cents, $48.00, and $2.90, respectively. It adds:

We remain Sell on PLS/CXO/MIN, continuing to prefer IGO (Buy) on valuation/FCF, and see increasing corporate positioning for lower lithium prices for longer (reaffirmed by our recent Perth trip) with an increasing focus on reducing costs and upfront capex at projects via purchases of legacy infrastructure from other commodities (MIN, WR1, and others).

The post Sell these ASX lithium stocks and buy this one instead appeared first on The Motley Fool Australia.

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More reading

• Here is the earnings forecast to 2026 for Pilbara Minerals shares
• The best ASX shares to buy with $1,000 right now
• The ASX 200 lithium stock this fundie is backing for the global lithium comeback
• These are the 10 most shorted ASX shares
• Bell Potter names more of the best ASX 200 shares to buy

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 Goldman Sachs Group. 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 plenty of ASX dividend shares for investors to choose from on the local market. So many, it can be hard to decide which ones to buy.

But don’t worry, in order to narrow things down for you, I have picked out a couple of dividend shares that analysts have recently named as buys and tipped to provide income investors with some juicy dividend yields.

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

APA Group (ASX: APA)

Income investors might want to take a look at APA Group if they are looking for some new additions to their portfolio this month.

APA Group is an energy infrastructure business that owns, manages, and operates a diverse, $27 billion portfolio of gas, electricity, solar and wind assets.

It caught the eye of analysts at Macquarie last month when it released its half-year results. APA Group delivered revenue, earnings, and distribution growth. The latter builds on 19 years of distribution growth.

Macquarie responded to the results by upgrading APA Group’s shares to an outperform rating with a $9.40 price target. This implies potential upside of approximately 11% for investors over the next 12 months.

In addition, the broker is expecting its shares to provide investors with some great yields in the near term. Macquarie is forecasting dividends per share of 56 cents in FY 2024 and then 57.5 cents in FY 2025. Based on the current APA Group share price of $8.48, this equates to 6.6% and 6.8% yields, respectively.

Aurizon Holdings Ltd (ASX: AZJ)

Another ASX dividend share that could be a buy for income investors this month is Aurizon.

It is Australia’s largest rail freight operator. Each year, its network transports more than 250 million tonnes of Australian commodities and connecting miners, primary producers, and industry with international and domestic markets.

The team at Ord Minnett thinks investors should be snapping up its shares. In response to its half-year results in February, the broker put an accumulate rating and $4.70 price target on its shares. This suggests potential upside of approximately 17% for investors over the next 12 months from current levels.

In respect to income, the broker is forecasting partially franked dividends of 17.8 cents per share in FY 2024 and then 24.3 cents per share in FY 2025. Based on the latest Aurizon share price of $4.02, this will mean attractive dividend yields of 4.4% and 6%, respectively.

The post Buy these ASX dividend shares in April for very big returns appeared first on The Motley Fool Australia.

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More reading

• Here’s how the ASX 200 market sectors stacked up last week
• Does a 6.5% yield with relative stability sound good? Consider this ASX energy giant
• 3 lower-risk, high-yield ASX dividend shares to consider buying now
• 3 ASX dividend stocks with good yields to buy now
• 13 ASX 200 shares at 52-week highs

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 Macquarie Group. The Motley Fool Australia has positions in and has recommended Apa Group and Macquarie Group. The Motley Fool Australia has recommended Aurizon. 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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