Tag: Motley Fool

If you’ve been considering investing in the travel sector, then I have good news for you. The team at Morgans believes that now could be the time to pounce after the recent derating of ASX travel shares.

What did the broker say about travel shares?

While Morgans acknowledges that the travel market recovery is taking longer than expected and has reduced its earnings estimates to reflect this, it believes a lot of value has emerged and investors should act before a potential rerating happens.

The broker commented:

Despite travel demand recovering strongly, in recent months the travel sector globally has derated due to concerns about a weak macro outlook. We think share price weakness represents a buying opportunity and see the quarterly reporting season in the US and Europe during July and then the Australian reporting season in August as a catalyst for a rerating.

Which shares is the broker recommending?

Morgans’ number one pick in the sector at the moment is Corporate Travel Management Ltd (ASX: CTD). It has an add rating and $25.85 price target on the corporate travel specialist’s shares. This compares to the latest Corporate Travel Management share price of $19.67.

In second place is online travel agent Webjet Limited (ASX: WEB). It has an add rating and $6.55 price target on its shares. This compares to the current Webjet share price of $5.50.

Another ASX travel share that the broker is positive on is Helloworld Travel Ltd (ASX: HLO). It has an add rating and $2.72 price target on its shares. This is notably higher than the current Helloworld share price of $1.67.

But what about Flight Centre Travel Group Ltd (ASX: FLT)? Unfortunately, the broker only has a neutral rating and $19.60 price target on its shares. It is expecting Flight Centre’s earnings to come in below consensus estimates in FY 2023 due to “limited ANZ international airline capacity, China’s strict travel restrictions and the need to rehire and train staff.”

The post Top broker names the ASX travel shares to buy before it’s too late appeared first on The Motley Fool Australia.

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More reading

• Brokers name 3 ASX shares to buy today
• Flight Centre share price fails to lift-off amid recovering aircraft engine demand
• Flight Centre completes turbulent journey in FY22
• The Corporate Travel share price hit major turbulence in June
• Why did the Webjet share price fall 11% in June?

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 Helloworld Limited. The Motley Fool Australia has positions in and has recommended Helloworld Limited. The Motley Fool Australia has recommended Corporate Travel Management Limited, Flight Centre Travel Group Limited, and Webjet 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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Looking for dividends shares to buy for your income portfolio? Then take a look at the two listed below which are rated as buys.

Here’s what you need to know about them:

Dicker Data Ltd (ASX: DDR)

The first ASX dividend share to look at is Dicker Data. It is a leading technology hardware, software, and cloud distributor.

Dicker Data has been a real star of the Australian share market over the last decade, delivering solid earnings and dividend growth on a consistent basis whatever happens in the economy. This has been the case again in FY 2022, with the company reporting a 50.5% increase in revenue to $673.6 million and a 22.7% lift in profit before tax to $23.8 million during the first quarter.

The team at Morgan Stanley expect this positive form to continue. As such, the broker has retained its overweight rating and $16.00 price target on the company’s shares.

In addition, the broker is forecasting fully franked dividends per share of 41.4 cents in FY 2022 and 48.5 cents in FY 2023. Based on the current Dicker Data share price of $11.95, this will mean yields of 3.5% and 4.1%, respectively.

Telstra Corporation Ltd (ASX: TLS)

Another ASX dividend share that has been rated as a buy is telco giant Telstra.

It has started to gain favour in the broker community this year after returning to underlying growth following years of earnings declines. And while it may be too soon to start thinking about dividend increases, the market appears confident that the cuts are long gone.

This is thanks to the success of its T22 strategy, optimism over its impending T25 strategy, its leadership position in 5G, and rational competition in the mobile market.

Morgans is very positive on Telstra and has an add rating and $4.56 price target on its shares.

As for dividends, it is forecasting 16 cents per share dividends through to FY 2023. Based on the current Telstra share price of $3.86, this will mean a 4.15% yield.

The post Here’s why brokers rate these ASX dividend shares as buys appeared first on The Motley Fool Australia.

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More reading

• Telstra share price in the red despite taking out green crown
• What’s the outlook for ASX 200 dividend shares in FY23?
• Why did the Telstra share price beat the market in FY22?
• Telstra share price rises as Optus folds to inflation
• 2 ASX dividend shares that analysts are tipping as buys in July

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 Dicker Data Limited. The Motley Fool Australia has positions in and has recommended Dicker Data Limited. The Motley Fool Australia has recommended Treasury Wine Estates Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Mineral Resources Limited (ASX: MIN) share price endured some serious volatility in the 2022 financial year.

Shares in the S&P/ASX 200 Index (ASX: XJO) mining services company and resource producer dipped as low as $37.05 on 10 November, only to rocket to new all-time highs of $65.97 by 20 January.

As for the full 12-month period, the Mineral Resource share price ended FY21 at $53.73 and finished the last financial year at $48.27, down 10.2%. That compares to a 9% loss posted by the ASX 200.

Here’s what happened…

Iron ore and lithium

Mineral Resources is highly exposed to the prices of, and sentiment surrounding, iron ore and lithium.

The company’s Wodgina Project, located in Western Australia, is among the largest hard rock lithium deposits in the world, with a production life of more than 30 years. There’s also the Mt Marion Lithium Project along with producing iron ore mines, including its 50% interest in WA’s Marillana and Ophthalmia iron ore projects.

In its half-year report, released in February, the miner reported it exported 9.9 million wet metric tonnes (wmt) of iron ore and 207,000 dry metric tonnes (dmt) of spodumene over the six-month reporting period.

The half-year report also showed the Mineral Resources share price had come under pressure from plummeting iron ore prices. The industrial metal traded above US$219 per tonne in July then tumbled to US$92 by November. (Iron ore is currently trading for US$115 per tonne.)

Mineral Resources reported a 12% year-on-year decline in revenue, to $1.4 billion, and did not pay an interim dividend.

To give you some further idea of the big price swings impacting the ASX 200 resource producer, on 31 May, 11 months into the FY22 financial year, shares closed at $63.85, up 19%.

Then June rolled around.

The last month of FY22 not only saw another big dip in iron ore prices, it also saw investor sentiment turn skittish around ASX lithium shares. That came after analysts, including those at Goldman Sachs, reported that an overabundance of investment was likely to lead to an oversupply of the battery metal in the medium term.

Most lithium shares fell hard in June, though they’ve been rebounding strongly so far in FY23.

Mineral Resources share price snapshot

After hitting all-time highs in January, 2022 has been tough for the Mineral Resources share price, down 19% since the opening bell on 4 January. By comparison, the ASX 200 is down 12% year-to-date.

Longer-term, shares are up 293% over the past five years.

The post Why did the Mineral Resources share price fall 10% in the 2022 financial year? appeared first on The Motley Fool Australia.

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More reading

• The Mineral Resources share price is leaping higher again today. Here’s why
• Here are the top 10 ASX shares today
• Is now the time to be buying beaten down ASX 200 mining shares?
• These ASX 200 mining shares are bouncing back on Thursday
• Here’s what led the Mineral Resources share price to sink 25% in June?

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 positions in and has recommended Goldman Sachs. 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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Kermit once sang that it’s not easy being green.

If you hold shares in artificial intelligence service provider Appen Ltd (ASX: APX) you may well similarly cry it’s not easy being an investor.

That’s because the once darling tech share plummeted from $13.65 to $5.61 over the 2022 financial year.

That’s a 59% drop in valuation. 

Appen shares sank 13% just in the last month alone.

Yikes.

It was the continuation of a cliff the stock fell from its August 2020 peak, when it hit $43.66.

Those days must seem like another lifetime ago for its shareholders.

The longest day in Appen shareholders’ lives

There was a glimmer of hope on a memorable day in May though.

On the morning of 26 May, Appen management disclosed to the market that it was in discussions with Canadian giant Telus International Cda Inc (TSE: TIXT) about a takeover.

There was much excitement as the acquisition proposal was for $9.50 per share, which was a 46% premium on the price at the time.

The share price shot up 35% within minutes of the market opening.

On that same eventful day, the company released a trading update.

“That update reveals that Appen’s year-to-date revenue was lower than it was at this time last year at the end of April,” reported The Motley Fool at the time.

“In light of this, the company expects its first-half earnings before interest, tax, depreciation and amortisation (EBITDA) to be ‘materially lower than the prior corresponding period’.”

Apparently, Telus also saw that not-so-flattering projection. Because hours later the company completely withdrew its acquisition proposal and all ongoing due diligence around it.

It was a remarkable nine hours for Appen and its shareholders.

What would the experts do with Appen shares?

Datt Capital principal Emanuel Datt told The Motley Fool that he would stay away from Appen shares now on the assumption that there are no other buyers sniffing around.

“We just get the sense that there’s been a lot more competition in the particular sector,” he said last month.

“It raises questions for us because, ultimately, if revenues have fallen, that increases the probability of potentially writing down assets and making a big after-tax loss, which the market will definitely not like.”

Even if there is acquisition interest from other parties, Tribeca Investment Partners portfolio manager Jun Bei Liu warned investors to not get sucked in by that prospect.

“It’s just hard to invest something for M&A to come through,” she told The Motley Fool last month.

“This company is very difficult to hold because the earnings keep disappointing — whether it’s really caused by the COVID disruption or whether it’s just large tech companies are really cutting back on some of the spends.”

The post Tech tumble: How this ASX share plunged 59% last financial year appeared first on The Motley Fool Australia.

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More reading

• Why did the Appen share price sink 13% in June?
• What on earth happened to ASX 200 tech shares in June?
• Bargains or value traps? Expert rates 3 ASX shares that halved this year
• Why are ASX tech shares struggling today?
• Why Appen, BWX, Imugene, and Wesfarmers shares are dropping

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Appen 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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ASX buy now, pay later (BNPL) shares were hit hard over the course of financial year 2022 (FY22), with some tumbling as much as 97%.

Here’s how the market’s favourite BNPL stocks performed last financial year:

• Zip Co Ltd (ASX: ZIP) – fell 94% to 44 cents
• Block Inc (ASX: SQ2) – fell 48.76% to $90.50
• Humm Group Ltd (ASX: HUM) – fell 58.5% to 41 cents
• Sezzle Inc (ASX: SZL) – fell 97% to 26 cents
• Splitit Ltd (ASX: SPT) – fell 75% to 13 cents

For context, the S&P/ASX 200 Index (ASX: XJO) slipped around 10% in that period.

So, what exactly sent ASX BNPL shares tumbling in FY22? Let’s take a look.

What went wrong for ASX BNPL shares in FY22?

Afterpay waves goodbye

Former ASX market darling and BNPL giant Afterpay was wiped from the books in FY22 after it was snapped up by Block. The deal – once worth $39 billion – saw Afterpay shareholders offered 0.375 Block shares for each stock owned.

Afterpay left the ASX in early February after Block’s CHESS Depository Interests (CDIs) hit the market in January.

What else went on with BNPL shares?

There was plenty more major news impacting ASX BNPL players in FY22.

Zip posed a takeover offer for fellow BNPL stock, Sezzle in February. Under the deal, shareholders would receive 0.98 Zip stocks for each Sezzle share owned.

And, of course, an abundance of new competition broke out onto the scene.

Commonwealth Bank of Australia (ASX: CBA) launched its StepPay offering early in the peace. National Australia Bank Ltd (ASX: NAB) revealed a similar product in May.

But it wasn’t just ASX 200 banking giants encroaching on the space. Word that tech giant Apple may soon launch its Apple Pay Later offering hit headlines in June while PayPal scrapped late fees from its BNPL service last year.

ASX turns on BNPL shares

Though, the major driver for ASX BNPL shares’ downturn appears to be a huge shift in investor sentiment.

FY22 saw Australia’s inflation spike to 5.1%, after which the Reserve Bank of Australia implemented a series of rate hikes.

That went hand in hand with a turnaround in the tech sector. Many tech stocks derive their valuations from assumed future profitability. Thus, they can represent greater risks in inflationary environments.

At least ASX BNPL shares weren’t alone in the red. The S&P/ASX 200 Information Technology Index (ASX: XIJ) and the S&P/ASX All Technology Index (ASX: XTX) have fallen more than 30% over the last 12 months.

The post Why did some ASX BNPL shares plummet more than 90% in FY22? appeared first on The Motley Fool Australia.

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More reading

• Guess which 2 ASX shares were the best and worst All Ordinaries performers of FY22
• Here are the 3 most heavily traded ASX 200 shares on Thursday
• Why Block, Bubs, Infomedia, and Zip shares are dropping
• Zip share price cops 6% slashing as analyst fears grow
• ASX 200 midday update: Chalice Mining jumps, Zip sinks on bearish broker note

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 positions in and has recommended Apple, Block, Inc., PayPal Holdings, and ZIPCOLTD FPO. 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 Block, Inc. The Motley Fool Australia has recommended Apple, Humm Group Limited, and PayPal Holdings. 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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FY 2022, the financial year that drew to a close last month, gave ASX investors a very hard time. Between 1 July 2021 and 30 June 2022, the S&P/ASX 200 Index (ASX: XJO) lost 10.19%, which set a hard act for most ASX exchange-traded funds (ETFs) to follow.

Most ASX-based index funds would have given investors a similar return to the index. But let’s take a look at some of the funds that beat out the ASX 200.

Here are the five best-performing funds of FY 2022.

The 5 best-performing ASX ETFs last financial year

BetaShares Global Agriculture Companies ETF (ASX: FOOD)

Our first fund to take a look at today tells us most of what we need to know in its title. FOOD is an agricultural-based ETF that tracks a basket of food-producing companies from around the world. Some of its holdings include tractor maker Deere & Co, Archer-Daniels-Midland Co and Tyson Foods Inc. FOOD units gave investors a 3.5% return over FY 2022, which looks pretty good against the ASX 200.

VanEck Australian Resources ETF (ASX: MVR)

This fund from VanEck holds ASX shares, but only those in the resources sector. ASX investors will recognise most of the big names in this fund, which include Woodside Energy Group Ltd (ASX: WDS), BHP Group Ltd (ASS: BHP) and Rio Tinto Limited (ASX: RIO). MVR units managed to give an overall return of 5% over FY 2022 for investors.

ETFS S&P 500 High Yield Low Volatility ETF (ASX: ZYUS)

This ETF from ETFS is an income-focused fund that tracks a select group of American companies, picked to minimise volatility and maximise income. You might know some of its current holdings like Kraft Heinz, Chevron, IBM and Philip Morris International. ZYUS managed to give its investors a 12.7% return over FY 2022.

BetaShares Global Energy Companies ETF (ASX: FUEL)

This fund from BetaShares is similar to FOOD, except it holds a basket of global energy shares rather than agricultural ones. Once again, we see Chevron here, as well as other oil giants like Exxon Mobil, Royal Dutch Shell and BP.

Rising energy prices have been kind to these companies in the past six months, so it’s perhaps no surprise that FUEL units managed to provide a return of 27.9% over FY 2022.

BetaShares Crude Oil Index ETF (ASX: OOO)

Our final and best-performing ASX ETF of FY 2022 is another fund from BetaShares. And another energy-focused one at that. OOO is nothing like FUEL though. Instead of tracking energy companies, OOO only invests in West Texas Intermediate (WTI) crude oil futures contracts, and holds no actual shares within it.

But this has proven to be a winner over the last financial year, with OOO units giving investors a pleasing return of 60.3% over that time. Black gold indeed,

The post Here are the best-performing ASX ETFs of FY 2022 appeared first on The Motley Fool Australia.

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More reading

• Here are 3 fantastic ETFs for ASX investors to buy now
• 3 highly rated ETFs for ASX investors to buy now
• 3 high quality ETFs for ASX investors to buy now
• 3 popular ETFs for ASX investors to buy now

Motley Fool contributor Sebastian Bowen has positions in Chevron, IBM, Kraft Heinz, and Philip Morris International. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended BetaShares Global Energy Companies ETF – Currency Hedged. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Kraft Heinz and Philip Morris International. 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 can essentially be broken down into two distinct periods for cryptos.

The first period ran for some five months, from July through to November.

The second period took over in December and ran straight through to 30 June.

The biggest differentiator between the two halves was the outlook for interest rates.

Heading into November, central banks were signalling investors could expect historically low rates well into 2024 to support the global economic recovery from the pandemic. But the pace of that recovery surprised to the upside, and along with Russia’s invasion of Ukraine, inflation numbers rapidly exceeded central banks’ target ranges.

You know what happened next.

Interest rates across much of the world began to rise sharply, with more rate hikes flagged in future months.

This knocked the stuffing out of most cryptos and most other risk assets. Indeed, the tech-heavy NASDAQ lost 31% from mid-November through to the end of FY22. And Bitcoin (CRYPTO: BTC) tumbled 55% over the full 12 months.

Hence, we end the financial year with only 14 tokens significantly in the green.

With that said, these were the five best cryptos to have bought and held during the course of the financial year.

(Note, the best performers don’t include tiny altcoins. We focused solely on the list of top 100 tokens by market cap.)

FY22’s fourth and fifth best performing digital tokens

The fifth best crypto to have held in FY22 is UNUS SED LEO (CRYPTO: LEO)

Launched in May 2019, Leo kicked off the financial year trading for US$2.43. By the time we turned the calendar over to July, it was worth US$5.91, up 143% over the 12 months.

If you’re unfamiliar with Leo, CoinMarketCap tells us it’s “a utility token that’s used across the iFinex ecosystem… The cryptocurrency allows Bitfinex users to save money on trading fees. The extent of the discount depends on how much LEO that the customer has in their account.”

Leo hit all-time highs of $8.04 on 8 February, well after most cryptos peaked in November.

At the time of writing, Leo is trading for US$5.74. That gives it a market cap of US$5.5 billion and places the crypto at number 17 in terms of size.

Moving on to the fourth best crypto performer of FY22 we have Axie Infinity (CRYPTO: AXS).

Created in 2019, Axie was worth US$5.39 on 1 July 2021 and traded for US$13.34 on 30 June 2022, a gain of 148%.

Readers with some gaming experience may already be familiar with the crypto, as Axie is a “trading and battling game that is partially owned and operated by its players… [allowing] players to collect, breed, raise, battle and trade token-based creatures known as Axies”.

Like many leading cryptos, Axie hit record highs in November, peaking at US$165 on 6 November.

Axie is currently trading for $15.34, making it the number 43 crypto with a total market valuation of US$1.4 billion.

These were the second and third best performing altcoins

The third top crypto performer for FY22 is Kadena (CRYPTO: KDA).

Founded in 2016, Kadena was worth 38.7 US cents at the commencement of FY22 and ended the 12 months trading for US$1.52 cents, up 292%.

The total supply of the crypto is limited to one billion tokens.

According to CoinMarketCap, “Kadena is a proof-of-work blockchain that combines the proof-of-work consensus mechanism from Bitcoin with directed acyclic graph (DAG) principles to offer a scalable version of Bitcoin.”

Kadena also hit its record high on 11 November, trading for US$28.25.

At the current price of $1.65, its market cap stands at US$305 million, barely sneaking onto our list as the number 98 token in virtual circulation.

Coming in as the second best crypto to have bought and held during FY22 we have The Sandbox (CRYPTO: SAND), another gaming based token.

Launched in 2011, Sand uses blockchain technology to provide a virtual world that enables users to “create, build, buy and sell digital assets in the form of a game”.

Sand was trading for 24.7 US cents on 1 July 2021 and was worth 97.5 US cents on 30 June, a 12-month gain of 295%.

Any guesses when Sand hit record highs?

Yep, on 25 November the token peaked at $8.44.

At the current price of $1.28, The Sandbox has a market cap of US$1.6 billion, coming in as the 34^th biggest crypto in virtual circulation.

Which brings us to…

The best performing crypto of the 2022 financial year

And the top crypto to have held in FY22 – drum roll please – is Gala (CRYPTO: GALA).

Like two of the other top FY22 crypto performers, Gala also functions in the gaming world. According to CoinMarketCap, “Players can own non-fungible tokens (NFTs) and influence the governance of games within the Gala Games ecosystem.”

Gala started FY22 trading for 0.87 US cents and closed the financial year worth 5.2 US cents for a gain of 498%.

Gala hit record highs of 83.6 US cents on, that’s right, 26 November.

At the current price of 5.7 cents, Gala comes in at number 84 on the top crypto list, with a market cap of US$396 million.

The post The top 5 performing cryptos to hold in the 2022 financial year unmasked appeared first on The Motley Fool Australia.

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More reading

• Own BHP shares? Top broker warns of looming oversupply of iron ore in 2H 2022
• This tiny ASX share flew 14% on Friday following investment by Brickworks
• Own Sonic Healthcare shares? Here’s a look at the state of its balance sheet
• Here are the top 10 ASX shares today
• Experts name 2 ASX dividend shares to buy with big yields

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 positions in and has recommended Bitcoin and Gala. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. 

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The BHP Group Ltd (ASX: BHP) share price is recovering from its recent sell-off along with its peers. But a warning of an oversupply of the commodity could keep shareholders on edge.

This wasn’t the news investors wanted to hear as the BHP share price bounced 0.7% to $39.22 on Friday.

BHP share price holding up a little better than peers

The Big Australian is leading the recovery as the Rio Tinto Limited (ASX: RIO) share price and Fortescue Metals Group Limited (ASX: FMG) share price gained 0.3% and 0.6% respectively.

The three largest ASX iron ore miners finished the day off their intraday highs.

That could indicate a lack of confidence that the worst is over for the sector, with the BHP share price shedding 15% of its value over the past month. At least that’s a bit better than the 19% drop in the Fortescue share price and 17% decline in the Rio Tinto share price over the period.

Supply of iron ore will exceed demand in 2H 2022

What could also be dampening sentiment is a prediction by Morgan Stanley.

The broker looked at how the market behaved in the past two years, where a surplus of iron ore emerges in the second half of the year.

It believes history will repeat this year and said:

We see this dynamic playing out for the third year in a row, at a comparable if not larger scale as in 2021.

Similar to last year, we expect China’s already in excess steel production to decline, while iron ore supply appears once again on track for a much stronger 2H vs 1H.

Warning signs for iron ore market

There are early warning signs that the broker’s prediction will come through.

Inventory of the steel-making ingredient was building at China’s ports last week. This is the first time since mid-February that inventory is increasing.

It’s also worth noting that Chinese steel demand slows during the summer months, which makes the iron ore price particularly vulnerable.

Morgan Stanley noted that the risks to iron ore missing its second half base case target of US$130 a tonne is increasing.

Silver lining for the BHP share price

But it isn’t all bad news. While near-term risks remain, the broker believes that most of this bad news is already factored into the market. That’s the silver lining from the correction in the BHP share price and other ASX mining shares.

What’s more, we could see support for the iron ore price come as early as autumn. That’s when Morgan Stanley expects to see the profit margins of Chinese steel companies recover.

Ironically, the high inflationary pressure that’s driving up production costs may actually be good news for the BHP share price and that of the other big ASX miners.

This is because commodities often find a floor around the marginal cost of production. Higher costs hurt smaller miners more as the big boys have economies of scale.

Let’s hope these positives are enough to calm frayed nerves in this volatile market.

The post Own BHP shares? Top broker warns of looming oversupply of iron ore in 2H 2022 appeared first on The Motley Fool Australia.

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Motley Fool contributor Brendon Lau has positions in BHP Billiton Limited, Fortescue Metals Group Limited, and Rio Tinto Ltd. 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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Shares in FBR Ltd (ASX: FBR) went 14% higher on Friday following the robotic technology company’s announcement of a major investment from a fellow ASX-listed business.

In a statement to the ASX, FBR said it has received “a firm commitment from a wholly owned subsidiary of existing strategic investor Brickworks Limited (ASX: BKW)” to buy $1.9 million in shares via a placement.

FBR said the placement would raise $1,929,628.40 via 107,201,578 shares at a price of 1.8 cents per share.

The FBR share price closed the session on Friday at 2.3 cents, up 9.52% for the day. In earlier trading, it reached an intraday high of 2.4 cents, representing a 14.3% bounce on its previous closing price.

Why is this micro-cap ASX share raising funds?

On 17 June, FBR announced to the ASX the completion of a $4 million capital raise via a placement of 222,222,222 shares.

FBR offered the placement at the same price to existing and new institutional and sophisticated investors.

FBR said the placement was oversubscribed. Those shares began trading on the ASX on 24 June.

At the time, the placement price represented a 10% discount to the last closing price of FBR shares.

Brickworks arguably got a better deal because by the time they bought, even though it was at the same price, they got a 14% discount on the last closing FBR share price.

The new shares in both placements will rank equally with existing fully paid ordinary shares of FBR on the ASX.

In its statement to the ASX, FBR said:

The [Brickworks] placement was managed by FBR … using FBR’s full remaining placement capacity as at 24 June 2022, without Shareholder approval.

The funds will be used for working capital and commissioning of the next-generation Hadrian X®, as outlined in the latest corporate presentation.

The new shares purchased by Brickworks will commence trading on the ASX on 13 July.

Why is Brickworks buying FBR shares?

The placement will give Brickworks a 4.93% stake in FBR — just under the ‘substantial shareholder’ level of 5%.  

With no statement out of Brickworks today, we can only guess as to the reasons for the purchase.

But the products that FBR makes give us a clue as to why Brickworks wants to be a stakeholder.

Brickworks is Australia’s largest brick producer. One of FBR’s products is a bricklaying robot. It’s called Hadrian X and is powered by FBR’s core Dynamic Stabilisation Technology (DST).

According to FBR, Hadrian X “builds structural walls faster, safer, more accurately and with less wastage than traditional manual methods”.

Brickworks isn’t just a brick company either. It’s got investment savvy and owns some other assets that contribute to its profits.

This includes a 21% stake in diversified investment group Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) which is worth $2.576 billion as at 31 January 2022, according to Brickworks’s FY22 half-year report.

FBR has a market capitalisation of $56.1 million.

The post This tiny ASX share flew 14% on Friday following investment by Brickworks appeared first on The Motley Fool Australia.

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Motley Fool contributor Bronwyn Allen 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 Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Sonic Healthcare Ltd (ASX: SHL) share price had a turbulent time in FY22. After surging to 52-week highs of $46.71 on 30 December, the company’s shares then cratered to $32.22 by 8 March.

After a relief rally, Sonic was trading sideways until June, but has since walked back towards its yearly lows, as seen below.

The forward-looking climate demands more from companies in terms of cash (liquidity and working capital) management.

With that in mind, let’s take a look at Sonic’s balance sheet to gain some insight into how it might weather any potential economic storm.

Sonic balance sheet breakdown

The most recent snapshot of Sonic’s financial health was supplied within its set of half-yearly accounts back in February.

At that time, the company had cash and marketable securities of $735.3 million, down 18% from the previous year.

Shareholder equity totalled $7.26 billion, made up of $12.5 billion in total assets and $5.24 billion in total liabilities.

Let’s take a deeper dive into how Sonic is managing cash and working capital.

Sonic should meet its short-term obligations when they fall due. Short-term liabilities are covered 1.1x by short-term assets (current ratio). That’s one check for the Sonic Healthcare share price.

Meanwhile, the ratio of debt to assets is 26%, meaning debt holders have financed Sonic’s asset base by that amount.

The long-term debt to total capital ratio is 28% suggesting the company has low leverage. It also has around $1 billion in long-term lease obligations.

Further insights to consider for the Sonic share price

Linking the balance sheet with some figures on the income statement gives further insights.

Sonic turned over its inventory 6.3 times in H1 FY22 and generated 75 cents for every dollar invested into its asset base.

It also generated a 12% return on assets and return on invested capital of 16% for the half as well. This is well above the company’s cost of capital of 7%.

From this data, we can make a few inferences. First, Sonic can cover its short-term obligations when they come due.

It also is lowly-leveraged, with debt making up less than 30% of its capital structure. That’s important in a world of rising interest rates.

It is also generating a decent return on its assets and invested capital that is above what it costs to acquire that capital.

These could be defensible characteristics in the event of an economic downturn. Remember, the balance sheet illustrates the financial health of the company, and these ratios give further insights.

In the last 12 months, the Sonic share price has slipped 12% into the red.

Sonic’s asset and liability growth since 2018 is plotted on the chart below.

The post Own Sonic Healthcare shares? Here’s a look at the state of its balance sheet appeared first on The Motley Fool Australia.

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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 Sonic Healthcare 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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