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Fund manager Wilson Asset Management (WAM) has identified two top small-cap ASX shares in one of the portfolios it manages that could be investment ideas.

WAM operates several listed investment companies (LICs). Some focus on larger companies like WAM Leaders Ltd (ASX: WLE) and WAM Capital Limited (ASX: WAM).

There’s also one called WAM Microcap Limited (ASX: WMI) which focuses on small-cap ASX shares with a market capitalisation under $300 million at acquisition.

WAM says WAM Microcap targets “the most exciting undervalued growth opportunities in the Australian microcap market”.

These are the two small-cap ASX shares the fund manager outlined in its most recent monthly update:

Generation Development Group Ltd (ASX: GDG)

WAM says that Generation Development operates as a registered pooled development fund (PDF) specialising in providing development capital to financial sector businesses.

In April, the business revealed a stronger-than-expected quarter for the three months to March 2022. It reported a 33% increase in inflows into investment bonds. This made its FY22 year-to-date result the highest annual recorded sales result since the start of the business.

The small cap ASX share also revealed a 36% increase in total funds under management (FUM) year on year. This growth was supported by “significant” investment bond sale inflows.

Why does WAM like this business? The investment team believes that the company’s suite of new and existing products are continuing to gain market share in the adviser community. WAM pointed to the 56% market share of quarterly inflows into investment bonds in the three months to December 2021.

The fund manager also said that the growth underpins its view that the business has a long growth runway which is why it’s still positive on the outlook for the company.

Reject Shop Ltd (ASX: TRS)

Reject Shop is the other small-cap ASX share. The discount retailer has been around for more than 40 years. Some of the categories of products that it sells include homewares, kitchenware, hardware, petcare, household cleaning products, toiletries, and cosmetics.

WAM noted that in April, the resignation announcement of CEO Andre Reich, after two years in the role, saw the Reject Shop share price fall 24% on the day.

However, the fund manager thinks the business can keep up its momentum, maintain profitability with a lower cost base, keep its strong balance sheet and expand its store network.

The company continues to trade in line with its earnings guidance outlined in the company’s FY22 first half, according to WAM. The fund manager is also positive on the company’s next growth phase.

The post 2 buy-rated small cap ASX shares that this fund manager likes appeared first on The Motley Fool Australia.

More reading

• Is the Fortescue share price predicted to rise in June?
• Experts pick 2 ASX shares to buy that move wealth around
• Cashed up with massive dividends: Advisor reveals ASX share to hold for 4 years
• This is when the pain will end: expert
• 5 things to watch on the ASX 200 on Thursday

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

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The Fortescue Metals Group Limited (ASX: FMG) share price has seen quite a lot of volatility in 2022. But could the business see gains in June?

The company’s shares have been on an upward trajectory over the last week and have seen a rise of approximately 20% over the past six months.

But what’s next?

End of FY22

June 2022 marks the end of the current financial year. This is the last month for the business to make a difference to its operational and financial results.

The ASX mining share giant recently upgraded its iron ore shipment guidance for FY22 to be between 185Mt (million tonnes) to 188Mmt. This was up from previous guidance of between 180Mt to 185Mt.

However, the company also increased its expectations of C1 costs (mining costs) to a range of US$15.75 to US$16 per wet metric tonne (wmt), up from the previous guidance of US$15 to US$15.50 per wmt.

The final bit of guidance that Fortescue provided was that it would be spending between US$3 billion to US$3.2 billion on capital expenditure, excluding Fortescue Future Industries (FFI). That was a decrease from previous expectations of between US$3 billion to US$3.2 billion.

What are the prospects for the Fortescue share price?

Sentiment about Fortescue shares can change quite quickly as the iron ore price changes.

There are brokers that have put price targets on the Fortescue share price – that’s where the broker thinks the Fortescue share price will be in 12 months. But no one has a working crystal ball that will tell what the iron ore price or Fortescue share price will do this month or this year.

Ord Minnett recently said in a note that it thinks Fortescue shares are a ‘hold’, with a price target of $19. That implies a high single-digit decline over the next year.

Another recent rating from the broker Macquarie is ‘neutral’, with a price rating of $20. That also suggests a slight decline over the next year.

But one of the things Macquarie liked was the ongoing strength of the iron ore price. Considering Fortescue is allocating 10% of its net profit after tax (NPAT) to the green industrial business called FFI, the strong iron ore price will help Fortescue with its decarbonisation efforts.

Fortescue has appointed a number of people for the FFI business to give it a strong management team.

How big is the Fortescue FY22 dividend expected to be?

Ord Minnett has predicted that the Fortescue grossed-up dividend yield could be 14.2% for FY22.

Meanwhile, Macquarie has projected that the Fortescue grossed-up dividend yield might be 14.1%.

However, both brokers are expecting a dividend reduction in FY23.

Ord Minnett has pencilled in a grossed-up dividend yield of 12.3% in the next financial year.

However, Macquarie isn’t sure whether Fortescue will be able to maintain such a high dividend ratio while investing in its green efforts.

That’s why Macquarie is only expecting a grossed-up dividend yield of 8% from Fortescue in FY23.

Fortescue share price snapshot

Since the start of 2022, Fortescue shares have risen by 8%.

The post Is the Fortescue share price predicted to rise in June? appeared first on The Motley Fool Australia.

More reading

• 3 ASX 200 shares smashing the market today
• Why Bailador, Fortescue, Nufarm, and Telstra shares are rising
• Investing in ASX hydrogen shares? Here’s what you should know
• Iron ore price to fall 27% by end of 2022: CBA
• Why did the Fortescue share price lag the ASX 200 in May?

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

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If you’re uncertain about what will happen with inflation and the economy, maybe it’s time to get “meta”.

That is, take a look at ASX companies that handle money as their business.

After all, even if the economy comes under pressure from rising interest rates, wealth still has to move around one way or another.

A couple of experts this week recommended investors buy two such ASX shares:

Moving money overseas

Spotee Connect founder Elio D’Amato likes the look of foreign exchange services provider OFX Group Ltd (ASX: OFX).

“In its latest full-year result, it achieved 25% record growth in NOI [net operating income] to $147 million, which beat expectations by an additional 10%,” he told The Bull.

“All divisions generated growth, in particular the lucrative corporate and high-value consumer divisions.”

The cross-border payments facilitator is forecasting net operating income between $200 million and $212 million for the 2023 financial year.

It banked plenty of cash during the current period too.

“Net cash grew over the period by 39% to $84.2 million.”

The OFX share price has grown 5.7% so far this year.

Other professionals are somewhat divided over this stock, with three out of five analysts surveyed on CMC Markets rating it as a buy.

Moving money out of wallets

Medallion Financial Group advisor Jean-Claude Perrottet is currently a fan of Aristocrat Leisure Limited (ASX: ALL) shares.

“The gaming giant recently posted operating revenue of $2.745 billion in its half-year result, up 23.1% in reported terms on the prior corresponding period.”

Perrottet added Aristocrat’s earnings beearnings before interest, tax, depreciation, and amortisation (EBITDA) also saw a 30% boost, to hit $970.3 million.

“Normalised profit after tax and before amortisation of acquired tangibles rose 40.9% to $580.1 million,” he said.

“A strong recovery in North American gaming operations contributed to the result. We expect digital revenue to grow in future years.”

Aristocrat shares have plunged more than 25% year-to-date.

The stock is an absolute darling among the fund manager community at the moment. According to CMC Markets, 11 out of 15 rate Aristocrat shares as a strong buy, while another two label it a moderate buy.

The post Experts pick 2 ASX shares to buy that move wealth around appeared first on The Motley Fool Australia.

More reading

• Analysts name 2 ASX growth shares to buy with major upside potential
• Looking to secure the Aristocrat biggest-ever dividend? Here’s what you need to do
• ASX shares paid out a record $98b in dividends in the 12 months to March. Which are the star performers?
• Buy these ASX growth shares in May: experts
• Top brokers name 3 ASX shares to buy next week

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

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Ask A Fund Manager

The Motley Fool chats with the best in the industry so that you can get an insight into how the professionals think. In this edition, Shaw and Partners senior investment advisor Adam Dawes expresses his fear for a world in which the stock market closed for four years.

The ASX share for a comfortable night’s sleep

The Motley Fool: If the market closed tomorrow for four years, which stock would you want to hold?

Adam Dawes: If the stock market’s shut down for four years? I’d be out of the job! I don’t like any of that scenario.

Okay, so one stock… Look, we’re in Australia, we’re a commodity-based market. So BHP Group Ltd (ASX: BHP) would be the one stock. 

[It’s] just sold its oil and gas assets to Woodside [Woodside Energy Group Limited (ASX: WDS)]. They’ve got a lot of cash sitting on their balance sheet. That means that would continue to pay out dividends… As a private business that would continue to pay out shareholders going forward. 

I think that’s certainly something that I would look to hold for four years but, mate, that means I wouldn’t be able to pay the mortgage and we would all be in a lot of trouble.

So BHP would be that one that you would hold for those times, definitely that time.

MF: The BHP stock price has been relatively stable for a company that’s in a cyclical industry, isn’t it?

AD: Very much so. It is in the top 10 dividend-paying stocks globally.

Now you never buy a resource stock for a dividend, but Rio Tinto Limited (ASX: RIO), Fortescue Metals Group Limited (ASX: FMG), and BHP are in the top 10 dividend-paying stocks globally. 

So [that] alone, we know that there’s enough cash there to wait out any kind of commodity cycle. Albeit we’re in a good commodity cycle at the moment, but it is a cycle and that will always turn. But at the moment, there’s cash there to sit on the balance sheet to keep everything moving in the right direction.

The post Cashed up with massive dividends: Advisor reveals ASX share to hold for 4 years appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
• Top brokers name 3 ASX shares to buy today
• UBS warns of more downgrades for ASX 200 shares… but not all
• The BHP special dividend is being paid today. Here’s the lowdown
• 5 things to watch on the ASX 200 on Wednesday

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

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It’s not an easy time to be a stock investor.

The S&P/ASX 200 Index (ASX: XJO) is down almost 5% for the year. Overseas, it’s even worse with the S&P 500 Index (SP: .INX) plunging an ugly 13.9% so far in 2022.

And many experts, like AMP Ltd (ASX: AMP) chief economist Dr Shane Oliver, reckon there are more drops to come.

“Shares are yet to see clear signs of a wash out bottom, with VIX and put/call ratios yet to reach levels seen at past major share market bottoms,” he said on the AMP blog.

“There is still risk of more downside in the short term.”

So anyone with a stock portfolio is now asking: When will the pain end?

While no one has a working crystal ball, one expert stuck his neck out recently and revealed his best answer:

Market to ‘get worse before it gets better’

Wilson Asset Management portfolio manager Matthew Haupt also agrees that share markets will “get worse before it gets better”.

He explained how a previously inflated market had to endure two waves of bad news.

“The sell-off in equities we’re seeing now has been a function of interest rates going higher… that’s phase one,” he told WAM Vault Live in Sydney.

“Phase two is an earnings slowdown, which we’re seeing now, which is demand destruction through inflation.”

But Haupt sees a light at the end of the tunnel.

“The end of this year, we can start to get a lot of optimism around the scenario we’ll be facing,” he said.

“The [US Federal Reserve] would have hiked [interest rates], and they would have paused.”

Oliver also had a similar timeline in mind for the market turning from its bearish outlook to at least a neutral stance.

“The bottom line is that while we remain optimistic that recession will be avoided in the next 18 months [or] so, and therefore believe shares can rise on a 6- to 12-month view.”

‘A terrible recipe’ for ASX shares

But before the year is over, both Haupt and Oliver warned investors would have to grit their teeth through tough times.

“Rising oil and hence petrol prices are a fly in the ointment of the ‘peak inflation’ view and commodity prices generally still look strong,” said Oliver.

“Even if US inflation has peaked it will take a while before it falls back to levels where the Fed can relax.”

Haupt said that before optimism returns at the end of the year, the economy will deliberately wind down.

“Central banks are hiking into a slowdown, which is a terrible recipe for risk assets.”

“Things are dire at the moment. But we’ve been through these cycles before. We know how they play out.”

For Haupt, the southern spring will be crucial for ASX shares.

“We’re really looking for that next inflection, which I think will be when interest rates are put on hold,” he said.

“You’re starting to get some clues now… [US Federal Reserve chair Jay] Powell said in the minutes around September.”

The post This is when the pain will end: expert appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
• Here are the top 10 ASX shares today
• What’s dragging the Lynas share price 6% lower today?
• UBS warns of more downgrades for ASX 200 shares… but not all
• Here are 3 highly profitable shares I’ll be buying this month

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

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On Wednesday, the S&P/ASX 200 Index (ASX: XJO) started the month with a decent gain. The benchmark index rose 0.3% to 7,234 points.

Will the market be able to build on this on Thursday? Here are five things to watch:

ASX 200 expected to fall

The Australian share market looks set to fall on Thursday following a poor night on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 56 points or 0.8% lower this morning. On Wall Street, the Dow Jones fell 0.55%, the S&P 500 dropped 0.75%, and the Nasdaq tumbled 0.7%.

Pilbara Minerals names its new CEO

The Pilbara Minerals Ltd (ASX: PLS) share price will be one to watch on Thursday after the lithium miner named its new CEO. According to the release, Pilbara Minerals will promote its chief operating officer, Dale Henderson, to the top job. The company’s long-serving CEO, Ken Brinsden, will formally step down from the role on 30 July.

Oil prices edge higher

It could be a softer day for energy shares including Santos Ltd (ASX: STO) and Woodside Energy Group Ltd (ASX: WDS) after oil prices made modest gains overnight. According to Bloomberg, the WTI crude oil price is up slightly to US$114.79 a barrel and the Brent crude oil price is up 0.2% to US$115.82 a barrel. Optimism over demand lifted prices.

BHP given buy rating

The BHP Group Ltd (ASX: BHP) share price could be good value according to analysts at Goldman Sachs. This morning the broker reinstated coverage on the mining giant with a buy rating and $51.20 price target. Goldman highlights BHP’s attractive valuation and free cash flow, as well as upside from its ~US$20bn copper growth pipeline.

Gold price creeps higher

Gold miners Evolution Mining Ltd (ASX: EVN) and Regis Resources Limited (ASX: RRL) will be on watch after the gold price creeped higher overnight. According to CNBC, the spot gold price is up 0.3% to US$1,847.70 an ounce. The precious metal rose amid inflation worries.

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

More reading

• Here are the top 10 ASX shares today
• Top brokers name 3 ASX shares to buy today
• What’s dragging the Lynas share price 6% lower today?
• UBS warns of more downgrades for ASX 200 shares… but not all
• Here are 3 highly profitable shares I’ll be buying this month

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has 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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Are you looking for dividend shares to add to your income portfolio and beat inflation? If you are, then the two listed below could be worth considering.

These dividend shares have been rated as buys and tipped to provide investors with attractive yields. Here’s what you need to know about them:

Centuria Industrial REIT (ASX: CIP)

The first ASX 200 dividend share to look at is pure play industrial REIT, Centuria Industrial.

It could be a top option for investors, especially after a recent pullback in its share price. This is because demand for industrial properties has been very strong and looks set to remain strong for some time to come thanks to structural drivers.

To get a sense of how strong demand is, you just need to look at its half-year results. Centuria Industrial reported an 8.9-year weighted average lease expiry with a 99.2% portfolio occupancy. This underpinned strong funds from operation (FFO) and allowed management to upgrade its guidance.

Macquarie is very positive on Centuria Industrial and currently has an outperform rating and $4.27 price target on its shares. As for dividends, the broker is forecasting dividends per share of 17.3 cents in FY 2022 and 17.8 cents FY 2023. Based on the current Centuria Industrial share price of $3.42, this equates to yields of 5% and 5.2%, respectively.

Coles Group Ltd (ASX: COL)

Another ASX 200 dividend share that could be a buy in June is supermarket giant, Coles.

It could be a great option for income investors due to its defensive qualities, strong market position, solid long term growth prospects, and favourable exposure to rising inflation.

In addition, the company is working hard on its refreshed strategy, which is focusing on cutting costs with automation and efficiencies.

Analysts at Morgans are very positive on the company. They currently have an add rating and $20.65 price target on its shares. The broker is also forecasting fully franked dividends of 61 cents per share in FY 2022 and then 64 cents per share in FY 2023.

Based on the latest Coles share price of $17.80, this will mean yields of 3.4% and 3.6%, respectively, over the next two years.

The post 2 inflation-beating ASX 200 dividend shares experts rate as buys this month appeared first on The Motley Fool Australia.

More reading

• UBS warns of more downgrades for ASX 200 shares… but not all
• I’d buy these two ASX dividend shares in June 2022
• Analysts name 2 ASX dividend shares to buy with 5% yields
• Why is the Coles share price lagging the ASX 200 on Friday?
• Fundie reveals 3 ASX 200 shares with major pricing power to counter inflation

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

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If you’re interested in adding some S&P/ASX 200 Index (ASX: XJO) shares to your portfolio in June, then the three listed below could be worth considering.

These ASX 200 shares have been named as buys and tipped to generate strong returns for investors. Here’s what you need to know about them:

CSL Limited (ASX: CSL)

The first blue chip ASX 200 share to consider is CSL. It is a leading biotechnology company which owns a portfolio of life-saving and lucrative therapies and vaccines which are generating billions of dollars in sales each year. In addition, the company invests in the region of 10% to 11% of its sales back into research and development activities every year. This ensures that CSL has a pipeline of potentially lucrative products to drive its future growth.

Citi is positive on CSL and has a buy rating and $335.00 price target on its shares. This compares to the latest CSL share price of $273.50.

NEXTDC Ltd (ASX: NXT)

Another ASX 200 share that could be in the buy zone is NextDC. It is a leading data centre operator with a collection of world class centres across key locations throughout Australia. Together with its potential expansion into Asia and Edge (regional) data centres and the ongoing structural shift to the cloud, NextDC has been tipped to grow strongly in the coming years.

Citi is also positive on NextDC. The broker has a buy rating and $14.55 price target on its shares. This compares to the latest NextDC share price of $11.06.

SEEK Limited (ASX: SEK)

A final ASX 200 share for investors to look at is leading job listings company, Seek. It appears well-positioned for growth in the coming years thanks to its leadership position, pricing power, and exposure to Australia’s recovery from the pandemic.

The team at Morgan Stanley is bullish on Seek. Its analysts currently have an overweight rating and $36.00 price target on its shares. This compares favourably to the current Seek share price of $24.24.

The post Analysts name 3 ASX 200 shares that could generate strong returns appeared first on The Motley Fool Australia.

More reading

• What happened to the CSL share price in May?
• Buy these 2 impressive ASX 200 shares in June 2022: experts
• Why is the CSL share price losing ground on Friday?
• Why I think these 3 ASX shares are top-quality buying at today’s prices
• After being stuck in the mud for 3 years, are CSL shares a buy today?

Motley Fool contributor James Mickleboro has positions in NEXTDC Limited and SEEK Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL Ltd. The Motley Fool Australia has recommended SEEK 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 Qantas Airways Ltd (ASX: QAN) share price is climbing so far this week despite turbulence created by media headlines.

The company’s share price has jumped about 0.73% since market close on Friday to the current price of $5.53. The S&P/ASX 200 Index (ASX: XJO) has gained 0.44% in the same time frame.

So what has been going on at Qantas?

Qantas and REX airlines exchange harsh words

Qantas is performing slightly better than its ASX travel share peers this week. The Flight Centre Travel Group Ltd (ASX: FLT) share price has lifted 0.34% since market close on Friday while Webjet Limited (ASX: WEB) shares have fallen 0.5%.

Qantas has been hitting headlines after competitor Regional Express Holdings Ltd (ASX: REX) cut five regional flights and accused Qantas of “bullying”. Rex withdrew flights servicing Bathurst, Grafton, Lismore, Kangaroo Island, and Ballina.

In a statement to the market on Monday, Rex chairman John Sharp said:

Qantas’ well-publicised predatory actions on Rex’s regional routes have meant that Rex no longer has the ability to cross subsidise these marginal routes.

It is unfortunate that these regional communities are the collateral damage of Qantas’ bullying and heartless behaviour.

However, Qantas refuted the claims, describing them as “far fetched”, news.com.au reported. Qantas hit back by claiming Rex is not having a problem finding money to invest in more planes for capital city routes. A Qantas spoksperson added:

Rex’s claims against Qantas have become so far-fetched, we had to create a dedicated page on our website to rebut them and update it on a fairly regularly basis.

Rex has a monopoly on three of these routes it’s abandoning, so if it can’t make them work, it has no-one else to blame but itself.

In other news, a Qantas plane reportedly had to make an emergency landing at Sydney airport on Sunday night, Daily Mail reported today. Passengers claimed they were informed they “may not land on the runway” before the plane ended up landing smoothly. However, a Qantas spokesperson said:

Passengers were informed that the aircraft may need to be towed to the gate after landing due to the hydraulic issue. At no point was the aircraft at risk of not landing on the runway.

Qantas share price snapshot

The Qantas share price has surged 17% in the past year while it’s gained 10% year to date as borders reopen.

In contrast, the S&P/ASX 200 Index (ASX: XJO) has returned about 1% in a year.

Qantas has a market capitalisation of about $9.6 billion based on its current share price.

The post What’s happening to the Qantas share price this week? appeared first on The Motley Fool Australia.

More reading

• Here’s what’s impacting the Qantas share price on Thursday
• Guess which ASX 200 shares UBS just added to its ‘best ideas’ list
• Qantas share price on watch after massive acquisition
• 2 ASX blue-chip shares this top fund manager thinks are good value
• ‘Never waste a crisis’: Expert picks one ASX share he’d buy right now

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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It’s been a tough start to June and winter for the Xero Limited (ASX: XRO) share price. At market close on Wednesday, Xero shares have fallen by a nasty 2.16% and are currently going for $87.36 each. That’s certainly a lot closer to Xero’s 52-week low of $75.80 than its 52-week high of $156.65.

But this latest fall is only an extension of the falls we saw for Xero shares over the month just gone. May was a hard month for most ASX 200 shares. The S&P/ASX 200 Index (ASX: XJO) lost a hefty 3.01% over May, with many ASX 200 shares recording falls far larger than that.

Xero, as a prominent ASX 200 tech share, often tends to move in an amplified pattern to the broader ASX 200. If the ASX 200 falls, Xero shares often fall by even more. Conversely, if the markets have a good time of it, Xero is usually outperforming.

So Xero shares began May at a price of $96.35 each. Yesterday, the cloud-based accounting software company closed at $89.27 a share. That’s a rather nasty fall of 7.33% – far more than the falls of the broader market over the month.

So why was Xero left out in the cold last month?

Why did the Xero share price have such a chilly May?

Well, it looks as though the company’s full-year results that Xero posted on 12 May played a large role here.

Back then, Xero dropped its full-year results for the 12 months to 31 March 2022. As we covered at the time, Xero announced a 29% increase in revenues to NZ$1.1 billion, as well as a 28% lift in annualised monthly recurring revenue to NZ$1.2 billion. The company also revealed that its total subscribers swelled by 19% to 3.3 million.

That led Xero to report an 11% rise in earnings before interest, tax, depreciation and amortisation (EBITDA) to NZ$212.7 million, which put its net loss at NZ$9.1 million.

As my Fool colleague observed when these results were released, it seems investors were expecting to see a little more from Xero. That might explain why the company’s shares fell around 10% at the time to what is now the company’s 52-week low.

Xero spent the following weeks bouncing back slightly from this dramatic fall. But it wasn’t enough to stop Xero shares from going backwards by 7.33% over the month just gone.

At the current Xero share price, this ASX 200 tech share has a market capitalisation of $13.06 billion.

The post Why did the Xero share price go backwards in May? appeared first on The Motley Fool Australia.

More reading

• Best ASX shares to buy in June 2022
• 3 ASX shares I’m telling my clients to buy: advisor
• Xero share price charges higher: Can this tech share keep rising?
• 5 things to watch on the ASX 200 on Monday
• Here’s why I think these 2 ASX growth shares are top buys in May

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 positions in and has recommended Xero. The Motley Fool Australia has positions in and has recommended Xero. 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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