Tag: Motley Fool

The Bitcoin (CRYPTO: BTC) price is right about where it was this time yesterday.

At the time of writing the world’s top token by market cap is trading for US$21,144 (AU$30,711). That’s down 54% this calendar year and down a painful 68% from the 10 November record high.

But potentially of more concern to crypto investors, the Bitcoin price has now slipped below its realised price.

What is the realised Bitcoin price and why does it matter?

Blockchain data analytics firm Glassnode tracks the average price of all Bitcoin in virtual circulation, an indicator called the realised price.

Currently, the realised Bitcoin price stands at US$23,430, almost 10% above today’s price. And with the majority of holders now underwater, the leading crypto could come under new selling pressure.

According to strategist at Glassnode (courtesy of Bloomberg):

The current bear market is now entering a phase aligned with the deepest and darkest phases of previous bears. The market, on average, is barely above its cost basis, and even long-term holders are now being purged from the holder base.

Brian Nick, chief investment strategist at global investment manager Nuveen, cautioned investors about the big potential moves in the Bitcoin price.

“Bitcoin trades like a penny stock. There’s all kinds of reason to think that once it starts falling quickly, it can continue to fall. If it can move 20% in two days, it can move another 20% the next two days,” he said.

Why are crypto markets under pressure?

It’s not just the Bitcoin price that’s down sharply this year.

The entire crypto-sphere has come under selling pressure.

That’s largely been due to interest rates heading higher across much of the globe for the first time in a decade. With expectations of significantly more rate hikes to come, investors have been lightening their holdings of risk assets, like high growth tech shares and cryptos.

The Bitcoin price and cryptos more broadly have also been impacted by news that crypto lender Celsius Network has halted withdrawals this week. Investors fear that Celsius may not be able to make good on all of its high yielding products.

The post What is the realised Bitcoin price and why does it matter? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• 3 reasons Bitcoin, Ethereum and Solana just hit their lowest levels this year
• Why is the Bitcoin price crashing 16% today?
• Could cryptos be facing an upcoming wave of institutional selling?
• What crypto winter? It’s always sunny with Solana
• Is Bitcoin still worth buying to diversify your ASX share portfolio?

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

from The Motley Fool Australia https://ift.tt/pOFuc7x

The rather dire performance of the S&P/ASX 200 Index (ASX: XJO) over this week so far has understandably shocked and dismayed many investors. Over just the past one-and-a-half trading days, the ASX 200 has gone from 6,932 points to the current 6,667 points. That’s a fall of more than 4%. With such steep falls, many investors might assume the ASX is now in a bear market.

But this assumption would be incorrect (at least for now). As we covered yesterday, for bear market conditions to be met, we first need a stock market crash. That entails a fall of 20% or more from a market’s most recent high. The ASX 200 last peaked back in August last year.

That was when the ASX 200 hit 7,632.8 points. Although we have fallen considerably from that lofty high watermark, the ASX’s falls from there are still only sitting at just over 12.6%. So we aren’t quite in bear market territory yet.

But, like many things, a market crash is only obvious in hindsight. So we could well be in the first stages of one (not to sound overly pessimistic). If we do end up seeing the ASX 200 in a bear market, how long would it last?

How long do bear markets last?

Well, there’s no way of predicting this with certainty. However, we can look at how long other ASX 200 bear markets have lasted for some idea of what could be in store.

Of course, the most recent ASX 200 bear market we’ve seen was the COVID crash of 2020. Since this was the first bear market ASX investors had seen for almost a decade, it is the one that many investors now hold as the standard.

But the COVID crash of 2020 was an exceptionally short bear market (although still sharp). It saw the ASX 200 go from the peak of 7,197.1 points that we saw on 20 February 2020, to a low of 4402.5 that was hit on 23 March that year. That was a painful fall of 38.83% over those four weeks or so. But after two months or so, it was all over. The ASX 200 had risen by 20% off of its lows by early June 2020, and the bear had been replaced with a bull.

That doesn’t sound too bad in hindsight – two months to tip everything you own into shares, only to see them explode in value afterwards. But if all market crashes were over in two-and-a-bit months, then we probably wouldn’t be so scared. So let’s go back to the global financial crisis of 2007 and 2008.

Before the GFC hit with all its force, the ASX 200 peaked back in November 2007. But it took until March 2009 for the market to find its bottom. That’s almost 18 months of waiting for the share market to stop falling – nasty stuff. It was only in May 2009 that the bear market was over. But, as they say, waiting is the hardest part.

What is your average bear?

The point is that the past two decades have seen a bear market that has lasted just over two months, and a bear market that lasted almost 18 months.

But what is the length of an average bear market? According to analysis by fund manager Zurich, ASX shares have seen 11 bear markets since 1970. The average duration of these bear markets was 12 months, with an average market loss of 35.8%.

But consider this. The ASX 200 has also seen 11 bull markets over this period. And the average duration of these bull markets was 46 months (not including the most recent, post-COVID crash bull run). The average return for these bull markets was 130.1%.

So we know that the ASX 200 is in bull market territory most of the time. And we can also gather that the losses of the bear markets don’t even come close to cancelling out the gains of the bull markets. Something to keep in mind during these difficult times for ASX 200 shares.

The post How long do ASX bear markets last on average? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• This fund manager is optimistic on these 2 leading ASX 200 energy shares
• ASX 200 midday update: ResMed’s US$1bn acquisition, tech shares continue to sink
• Why I think these 2 ASX 200 dividend shares offer great buying right now
• Warning: 1970s inflation is returning. Expert reveals what to do
• 5 things to watch on the ASX 200 on Wednesday

Motley Fool contributor Sebastian Bowen 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.

from The Motley Fool Australia https://ift.tt/lF65jOd

In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to record another decline. At the time of writing, the benchmark index is down 0.4% to 6,660.3 points.

Four ASX shares that are not letting that hold them back are listed below. Here’s why they are pushing higher:

Computershare Limited (ASX: CPU)

The Computershare share price is up 3% to $24.27. This appears to have been driven by a broker note out of Ord Minnett. Its analysts have upgraded the administration services company’s shares to an accumulate rating with a $26.00 price target. The broker believes that rising interest rates will be a positive for Computershare.

Lithium Plus Minerals Ltd (ASX: LPM)

The Lithium Plus share price is up 36% to 40 cents. This morning the lithium explorer advised that its mining management plan for the flagship Bynoe Lithium Project has been approved. As a result, the company has appointed Darwin-based drilling contractor, GeoDrilling, to undertake an initial program of approximately 10,000 metres of Reverse Circulation drilling.

Lynas Rare Earths Ltd (ASX: LYC)

The Lynas share price is up 4.5% to $8.91. The catalyst for this appears to have been a broker note out of Macquarie. This morning it reiterated its outperform rating and $12.80 price target on this rare earths producer’s shares. This was in response to the company’s update on Tuesday, which revealed that it has been awarded a US$120 million contract by the US government to build a heavy rare earths facility.

ResApp Health Ltd (ASX: RAP)

The ResApp share price is up a further 6% to 17.5 cents. This digital health company’s shares have been racing higher this week after pharmaceutical giant Pfizer improved its takeover offer. Pfizer agreed to increase its offer from 11.5 cents per share in cash to either 14.6 cents or 20.7 cents per share. The ultimate price will depend on the results of a clinical validation study, which investors appear to believe will be successful.

The post Why Computershare, Lithium Plus, Lynas, and ResApp shares are pushing higher appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Guess which ASX lithium share surged 56% higher today
• ASX 200 midday update: ResMed’s US$1bn acquisition, tech shares continue to sink
• 3 ASX 200 shares that avoided today’s sell-off
• Here’s why the ResApp share price is rocketing 50% today
• Why Australian Clinical Labs, Lake Resources, PolyNovo, and ResApp are rising

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.

from The Motley Fool Australia https://ift.tt/aZbQLvB

The Commonwealth Bank of Australia (ASX: CBA) share price is in negative territory again today.

At the time of writing, shares in Australia’s largest bank are edging 0.45% lower to $90.79.

While slightly down on Wednesday, it’s worth noting that CBA shares have lost more than 15% since 1 June. This comes off the back of eight consecutive market days in the red.

For context, the S&P/ASX 200 Financials (ASX: XFJ) is also heading south on Wednesday, down 0.21% to 5,728.9 points.

Shares in other major banks, National Australia Bank Ltd (ASX: NAB) and Australia and New Zealand Banking Group Ltd (ASX: ANZ), are shedding 0.86% and 1.11%, respectively.

The Westpac Banking Corp (ASX: WBC) share price is also suffering today, down 1.1% during early afternoon trade.

Why are CBA shares faring better than the other banks?

A catalyst for CBA shares performing better than its peers today could be the attractive levels it’s currently trading at.

According to ANZ Share Investing, UBS lifted its price target on CBA shares last week by 5% to $105.00 per share. This represents an upside of 15.6% based on its current share price.

Furthermore, CBA provided an update on its $2 billion buyback program.

The bank bought back 476,595 shares between $88.92 and $91.20 per share on the previous day. This is a considerable difference to when CBA purchased 1,883,068 of its shares the day before at more than $102 per share.

Previously, management noted that the goal of the buyback program is to reduce surplus capital and increase shareholder value. Once completed, the capital management program is expected to reduce the bank’s CET1 ratio to 11.4%.

CBA share price snapshot

Adding to the already tough month it has been, the CBA share price is down 12% over the last 12 months.

When looking at year-to-date, its shares are down 10%.

Based on today’s price, CBA commands a market capitalisation of roughly $155 billion, with 1.7 billion shares on issue.

The post What’s going on with the CBA share price on Wednesday? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• ASX 200 bank shares tumble: Citi says time to buy
• The CBA share price is down 5%. Should investors jump on this?
• Waiting to start investing in ASX shares? Today could be a brilliant time to do it
• Here’s the CBA dividend forecast through to 2024
• ASX 200 has its worst week in two years

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

from The Motley Fool Australia https://ift.tt/E8RKM3o

The CSL Limited (ASX: CSL) share price is down 1.5% at $260 per share in afternoon trade on Wednesday. It has slipped 5% this week, having fallen from $271 at Friday’s market close price.

Meanwhile, the S&P/ASX 200 Health Care Index (ASX: XHJ) has fallen 3% in the same time. The correlation between the two is seen below.

CSL standout healthcare pick: fund manager

CSL’s management in particular impresses Sage Capital fund manager Sean Fenton. He said that whilst there are plenty of great Aussie healthcare companies available, CSL is his pick.

“Healthcare is really tough, in the sense that there’s actually a whole bunch of really great Australian companies that have been very successful in healthcare,” he said, speaking to Livewire’s Buy Hold Sell.

“[I]t’s hard to go past the biggest one, CSL, who have grown, exceptionally, in their area,” he told Livewire.

The fund manager went on to comment on several of CSL’s feats over the years. He noted its business strategy successfully diversified away from IVIG and haemophilia products into niche categories.

That’s led to “a lot of value add” to the CSL share price he said.

And they continue to do that. Continue to reinvest, grow their market. Yeah. Their recent acquisition hasn’t completed, Vifor, I think, will also prove to be quite an effective one. So, yeah. Really hard to go past them.

Analysts appear constructive too according to the data. Around 87% of brokers say it’s a buy, with the remaining 13% presently saying it’s a hold, according to Bloomberg data.

In the last 12 months, the CSL share price has slipped 13% into the red, or 10% this year to date.

The post Down 5% so far this week, is the CSL share price a buying opportunity? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Should you buy these top blue chip ASX 200 shares after the market selloff?
• Why is the CSL share price defying today’s sell-off?
• Top brokers name 3 ASX shares to buy today
• 2 ‘quality defensive’ ASX shares to see out rising interest rates: Wilsons
• The CSL share price has at least 20% upside: top brokers

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 positions in and has recommended 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.

from The Motley Fool Australia https://ift.tt/dirt8XI

The Bubs Australia Ltd (ASX: BUB) share price has risen by around 20% since the company announced that it was working with the United States government to lessen the infant formula crisis in the US.

Bubs is one of the largest infant formula businesses in Australia with a current market capitalisation of $358 million according to the ASX.

It now sells a variety of different products including goat milk infant formula, cow milk infant formula, goat milk products for adults, and organic snacks for toddlers.

US win

For readers who aren’t aware, Bubs Australia has committed to sending at least 1.25 million infant formula tins to the US.

The USA Food and Drug Administration (FDA) said that it would exercise its discretion for the immediate import, sale, and distribution of all six ranges of Bubs infant formula products in the US.

Last week, Bubs announced that it had expanded its US bricks-and-mortar footprint with The Kroger Co and Albertsons companies. This means Bubs infant formula and toddler products will be ranged in more than 4,000 stores across 35 states.

The first shipment of Bubs infant formula under the US infant formula plan has been purchased by Kroger and Co and Albertsons. The products are expected on the shelf starting 20 June 2022.

Bubs said it’s continuing to work with Australian and global distribution partners to ensure reliable supply for all families.

Recently, The Age reported on the positives of the move, as outlined by Wilsons Advisory analyst James Ferrier and Sam Teeger from Citi.

Optimism about the Bubs share price

Talking about the benefits of Bubs’ presence in the US market, Ferrier said that this could accelerate Bubs’ brand awareness in the US. The company was already looking to expand in the US before this initiative.

The deal would add $20 million in sales, though noted that this transaction was technically a one-off. However, the potential brand awareness boost could accelerate the trajectory of sales in the US for Bubs.

Citi rates the Bubs share price as a buy and thinks that the US is a “promising” market for the ASX share. The US government’s assistance could be “helpful for the company’s marketing efforts” and the broker believes it helps position the brand as a safe and reliable manufacturer.

Negatives to be aware of

The Age also referenced some thoughts about Bubs that could be a downside.

Jonathan Snape from Bell Potter thinks that while the US initiative is a benefit that could lead to $30 million of sales, it’s only a one-off. Indeed, the FDA’s fast-tracking process ends in November 2022. That’s why Bell Potter thinks the boost is largely temporary.

Some other potential negatives include general share market volatility and the need for capital to deliver on its strategy and growth. Snape also raised possible supply chain impacts, regulation and licence requirements, key management position risk, and competition.

After the jump in the Bubs share price, Snape downgraded Bubs to a “hold, speculative risk”.

The post Is there still money to be made from Bubs shares? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Why Breville, Bubs, Terracom, and Xero shares are pushing higher today
• Bubs share price lifts as the brand readies for debut on 4,000 US shelves
• These were the best performing ASX 200 shares last week
• Why Bubs, IGO, Strike Energy, and Woodside shares are pushing higher
• Bubs share price jumps on first US shipments

Citigroup is an advertising partner of The Ascent, a Motley Fool company. 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 recommended BUBS AUST FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/gv3CA2x

As the world frets over oversized interest rate hikes, one high-profile fund manager thinks such a move would be good for share markets.

The comment from Pershing Square founder Bill Ackman stands at odds with investor sentiment. The fear is that large rate hikes will tip the US economy into a recession, which will drag on ASX shares.

But Ackman is calling on the US Federal Reserve to lift rates by 100 basis points (bps) “tomorrow, in July and thereafter”, as reported by Bloomberg.

Are bigger rate hikes better?

The call is larger than the 50bps to 75bps increase that most economists are expecting as the Fed struggles to get on top of runaway inflation.

But, in Ackman’s opinion, the 100-point spike to the Fed Funds Rate will help restore market confidence. He said the central bank had allowed inflation “to get out of control” and called for “aggressive action” that would help restore market confidence.

The hope is that the ongoing hike risk that’s rocking share markets, including the ASX, can be more quickly passed through the system. It’s akin to ripping off the Band-Aid as quickly as possible to get the pain over with.

A crisis in confidence

Certainly, confidence is a commodity in short supply at the moment. Several market experts have voiced similar concerns to Ackman that the Fed has lost credibility given its inflation forecasts have been consistently wrong.

The thinking is only aggressive hikes will help the Fed get on top of inflation and show the market it’s serious about controlling the risk.

But as interest rates are an imprecise mechanism to control inflation, there is likely to be collateral damage to the wider economy.

Recession red flags on aggressive rate hikes

As it stands, Wall Street’s favourite recession indicator is flashing red. The bond yield curve has inverted where the short-term US government bond yield is higher than its longer-term counterparts.

Why investors are spooked is because such inversions have preceded every US recession in the past 60 years.

RBA tainted by the same brush

But it isn’t only the US Fed being criticised for being behind the eight ball when it comes to rate hikes. Several experts in Australia have levelled similar accusations at the Reserve Bank of Australia (RBA).

This could put additional pressure on the RBA to adopt an even tougher interest rate stance as some experts accuse it of being too slow to respond to surging inflation.

The new federal Labor government has promised to undertake a review of the RBA. Several prominent economists are urging it to appoint independent overseas experts for the task.

Given how rare such reviews are for the venerable institution, this is a space ASX investors should be paying close attention to.

The post Why this iconic investor believes bigger rate hikes could ‘restore’ the market, not ruin it appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Guess which ASX lithium share surged 56% higher today
• Why is the Block share price tumbling another 5%
• Worried about interest rates and your ASX shares? Here’s the latest from the RBA
• This fund manager is optimistic on these 2 leading ASX 200 energy shares
• These 2 ASX 200 shares go ex-dividend next week. Here’s what you need to know

Motley Fool contributor Brendon Lau 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.

from The Motley Fool Australia https://ift.tt/ns3jFgr

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

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

When looking for long-term stock holdings, following multi-billionaire Warren Buffett’s investments is a good place to start. He’s certainly built a long-term track record, but he’s also known for his patient approach. One of his sayings is, “Our favorite holding period is forever.”

It’s tempting to follow Buffett’s stock picks blindly, but you still should do your own homework. After all, he’s not infallible. These two stocks have been a part of Berkshire Hathaway‘s portfolio for some time. While their prices are down for the year, both offer excellent long-term growth prospects, presenting a wealth-creating opportunity.

1. Amazon

Amazon‘s (NASDAQ: AMZN) stock investors have become a little skittish this year. The stock has dropped by more than 37% since the start of 2022, making this a good time to evaluate the company’s long-term growth prospects. Fortunately, these look solid.

Looking at Amazon’s first-quarter results, sales grew 9% to $116.4 billion, excluding foreign currency exchange translations, but operating income was down by over 58% to $3.7 billion. While this isn’t great, it looks likely that Amazon will get back to growing profits down the road. That’s because higher costs weighed on profitability as management increased staffing and capacity to meet surging demand, but management has pledged to focus on higher productivity and efficiency.

Even better, its fast-growing, high-margin Amazon Web Services (AWS) business still has bright prospects. In the latest period, AWS’ sales increased by 36.6% to $18.4 billion, driving operating income 56.6% higher to $6.5 billion. It was the only segment to report a profit in the latest period.

With an over 35% operating margin, this dwarfs the North American and International segments, which are typically single-digit figures. AWS, the leader in the fast-growing cloud computing business with a 33% market share, faces little competition. Its main rivals are Microsoft‘s Azure and Alphabet. Better still, the business has significant barriers to entry due to the high cost and space needed for data centers.

The price-to-earnings ratio (P/E) of 50.4 is well below the 80 times it was selling for in April. While Amazon’s P/E is higher than the S&P 500‘s 20 times, as Warren Buffett has stated, “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”

2. Moody’s

Moody’s (NYSE: MCO) stock may have fallen by about 31% this year, but the company’s long-term competitive position remains strong. So this looks like an opportune time to purchase shares. 

The company has become known for providing ratings on debt instruments issued by corporations and countries, among other entities. Along with S&P Global, it has a dominant share of the market, with Fitch Ratings coming in a distant third place. Last year, this business produced revenue of $3.8 billion, accounting for over 61% of the total.

There’s also its analytics business, which represented the balance of Moody’s revenue. While the rating business’ results can fluctuate, depending on the economic cycle and debt issuance, this business is steadier since it charges subscription fees for items like data and information.

Moody’s first-quarter revenue fell by 4.9% to $1.5 billion. However, the period showed the benefit of having the fee-based analytics business. While the rating business’ revenue declined by 20% to $827 million, analytics increased by 9% after excluding the impact of acquired businesses.

The stock currently has a 26 P/E multiple, much lower than the roughly 32 times when 2022 began. With a strong ratings business that will certainly rebound when the markets recover and a growing analytics segment, the stock looks like a bargain for long-term stock investors.

Two stocks to celebrate down the road

Amazon has a strong brand in retailing, but it’s become so much more than an online seller. It generates considerable revenue and profits from its AWS business, which looks like it can continue growing quickly for a considerable period. Moody’s franchise includes ratings, which debt issuers pay for and many people rely on, plus a steadily growing analytics business.

When you add in that these two stocks currently sell at a much lower valuation than earlier in the year, long-term investors who purchase them likely will have a lot to celebrate when looking back to this moment. 

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

The post 2 Warren Buffett stocks to buy and hold forever appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Amazon Just Split Its Stock: Here’s What Comes Next
• Better buy: Amazon vs. Alibaba
• Amazon stock split is complete. Time to buy the stock?
• Amazon’s stock split has taken effect. Now what?
• 3 reasons Amazon stock could soar after its split

Lawrence Rothman, CFA has no position in any of the stocks mentioned. 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. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Berkshire Hathaway (B shares), Microsoft, and Moody’s. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), short January 2023 $200 puts on Berkshire Hathaway (B shares), and short January 2023 $265 calls on Berkshire Hathaway (B shares). The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, and Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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

from The Motley Fool Australia https://ift.tt/K9xhO4Q

The ResMed Inc (ASX: RMD) share price is falling on Wednesday.

At the time of writing, the sleep treatment company’s shares are down 2% to $29.12.

This is despite the release of an acquisition announcement this morning.

What did ResMed announce?

Overnight, ResMed announced an agreement to acquire Medifox Dan for US$1 billion from leading software and services investor, Hg.

The company notes that Medifox Dan is a German leader in out-of-hospital software solutions for providers in major settings across the care continuum.

The release highlights that Medifox Dan’s German customer base is complementary to the customers of ResMed’s US-based software as a service (SaaS) business. In addition, it builds on ResMed’s existing business in Germany as a leading provider of innovative cloud-connected medical devices that transform care for patients with sleep apnoea and other respiratory conditions.

Management commentary

ResMed’s CEO, Mick Farrell, was very pleased with the deal. He believes it will strengthen the company’s position as a global leader in healthcare software solutions. Farrell said:

With the acquisition of Medifox Dan, a fast-growing and innovative German healthcare software leader, we will expand ResMed’s SaaS business portfolio outside our current base in the U.S. market and strengthen our position as the global leader in healthcare software solutions for lower-cost and lower-acuity care.

Medifox Dan has a strong track record of innovation, fully aligned with our teams at Brightree, MatrixCare, and beyond. Medifox Dan’s customer centricity has built strong and ongoing, growing demand for its software solutions across Germany, and we expect that momentum to continue and strengthen as we become one global team.

Is the ResMed share price good value?

Analysts at Citi have responded to the news by reiterating their buy rating and $35.50 price target on the company’s shares.

Based on the current ResMed share price, this implies potential upside of 22% for investors.

Citi commented:

RMD announced that it will acquire Medifox Dan, a German SaaS solutions provider, for US$1bn or 29x EBITDA pro-forma CY21. This is RMD’s third big acquisition in SaaS space after Brightree (Apr 2016) and MatrixCare (Nov 2018). With this acquisition, RMD will be able to expand its SaaS business footprint outside U.S. RMD said, the acquisition will be EPS accretive in FY23. We make no changes to our forecasts pending closure of transaction (expected in 2Q FY23 end i.e. Dec’22). At current price, RMD is trading at a PE of 29x FY24E, below historical avg of 32x.

The post ResMed share price drops despite US$1bn Medifox Dan acquisition appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Broker tips ResMed share price to jump 19%
• Goldman Sachs names 3 ASX healthcare shares to buy
• 5 things to watch on the ASX 200 on Wednesday
• Experts name 2 excellent blue chip ASX 200 shares to buy
• Why the ResMed share price could jump 25% from current levels

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 ResMed Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended ResMed. The Motley Fool Australia has positions in and has recommended ResMed Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/UekMyEz

The Ampol Ltd (ASX: ALD) share price is slipping in morning trade, down 1.4%.

Ampol shares closed yesterday trading for $34.44 and are currently trading for $33.96.

The S&P/ASX 200 Index (ASX: XJO) is also in the red this morning, down 0.7% as investors eye tonight’s interest rate decision by the US Federal Reserve.

Below, we look at Ampol’s latest financing round, announced before market open this morning.

$150 million sustainable financing initiative

The Ampol share price is slipping after the company reported it will raise $150 million via a fully underwritten wholesale offering of subordinated notes. With a 60-year timeline, those come due in 2082.

The first optional redemption date comes in 2028. These are not interchangeable with Ampol’s existing $500 million of subordinated notes, issued in December.

The company plans to use the capital for general corporate purposes.

The subordinated notes are linked to the company’s sustainability ambitions.

When notes are redeemed, Ampol’s repayment will be directly linked to key elements of its Future Energy and Decarbonisation Strategy. That includes its goal to cut carbon emissions from its Fuels & Infrastructure and Convenience Retail businesses by 2025. Ampol also aims to operate or control at least 500 AmpCharge or equivalent EV charge points by 2027.

Commenting on the new notes, Greg Barnes, Ampol’s chief financial officer, said:

We’re delighted to announce this new sustainability-linked hybrid issue, which we understand is the first of its kind in global markets. The transaction supports our capital management strategy and reinforces our commitment to Ampol’s Future Energy and Decarbonisation Strategy. The issue provides further funding diversification and incremental balance sheet capacity.

Ampol expects its notes to receive a 50% equity credit from Moody’s Investors Service, which will support Ampol’s credit rating.

Ampol share price snapshot

The Ampol share price has been a strong performer in 2022, up 14%. That compares to a year-to-date loss of 13% posted by the ASX 200.

Ampol shares pay a 2.6% trailing dividend yield, fully franked.

The post Ampol share price slips amid $150 million sustainable financing initiative appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Why is this ASX travel share flying higher today?
• Why is the Bank of Queensland share price outperforming today?
• Why Macquarie shares could be set for a $570m tailwind
• Buy these 2 quality ASX 200 shares: broker
• I think these excellent ASX growth shares are buys for 2022 and beyond

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 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.

from The Motley Fool Australia https://ift.tt/SoyJxA0