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Shares of Woodside Energy Group Ltd (ASX: WDS) struggled in May and lagged key benchmarks despite oil and gas markets rallying.

The Woodside share price has also shaved off its former high of $34.41 in early March. Woodside shares now trade at $29.76 before the open today.

What’s up with the Woodside share price?

Investors have sold off Woodside shares at pace in recent weeks. Even in yesterday’s session, trading volume was more than double that of its four-week average at more than 12.6 million shares.

Despite positive sentiment from brokers following its merger with BHP Group Ltd (ASX: BHP)’s petroleum assets and the commodity boom, the stock slipped 4% into the red last month.

Meanwhile, the S&P/ASX 200 Index (ASX: XJO) slipped just 3%, despite robust growth in the prices of oil and natural gas across the period.

Brent crude climbed another 10% last month. That’s despite slipping from a monthly high of US$123 per barrel down to US$116 per barrel in a matter of hours yesterday.

Meanwhile, US natural gas contracts extended their rally and surged 10% higher as well.

However, zooming out, the Woodside share price has been a star performer this year to date. It’s clipped a 36% gain in that time.

Investors have booked tidy gains in their Woodside positions. And that’s all whilst the benchmark ASX 200 has endured a 3% loss so far in 2022.

For Woodside, that’s driven a 35% gain in its share price over the previous year of trade as well.

That’s been backed by a 65% yearly change in Brent crude oil and a 165% gain for US natural gas prices in the last 12 months.

Around two-thirds of analysts covering Woodside also have it rated as a buy right now. Whereas 27% say its currently a hold, according to Bloomberg data.

The post Why did the Woodside share price lag the ASX 200 in May? appeared first on The Motley Fool Australia.

More reading

• Why did the BHP share price jump in May?
• Broker gives its verdict on the Woodside share price post-merger
• Why is the Woodside share price bouncing back on Monday?
• 5 things to watch on the ASX 200 on Monday
• Why we’re still buying ASX 200 shares that are ‘high emitters’: fundie

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 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 of Regis Resources Ltd (ASX: RRL) fell behind the pack in May, finishing the month more than 3% in the red.

The Regis Resources share price closed the session down on the day at $2.02 apiece yesterday.

In broader market moves, the S&P/ASX 300 Metals & Mining Index (ASX: XMM) finished the month 33 basis points in the green.

What’s up with the Regis Resources share price?

After a hot run in 2022, resource and mining shares like Regis have cooled off in recent weeks, not in the least helped by a shift in underlying markets.

The price of gold has also slipped from its former high of US$2,052 per troy ounce and now trades at US$1,837/t.oz.

Gold bullion also ended May “more than 2% lower, facing pressure in the first half of the month from expectations of aggressive Federal Reserve interest rate hikes,” according to Trading Economics.

Not only that, Regis Resources continues to be one of the top 10 most shorted stocks on the ASX, per ASIC short position data cited by TMF Australia.

Concerns over labour shortages, cost pressures, and lower grades might be spurring on the short interest, reports say.

Meanwhile, Regis still has a number of analysts urging their clients to buy its stock. According to Bloomberg data, 64% of analysts say it’s a buy, whereas 36% say it’s a hold.

Those numbers have held fairly consistently over the last 12 months despite the Regis share price sliding around 24% into the red during that time.

Bringing it all together and it appears as if a number of factors, including a softening gold price and company-specific headwinds are weighing in on the Regis Resources share price.

Regis’ 12-month return against its major ASX benchmarks is seen on the chart below.

The post Why did the Regis Resources share price struggle to gain ground in May? appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• These are the 10 most shorted ASX shares
• 5 things to watch on the ASX 200 on Thursday
• 5 things to watch on the ASX 200 on Tuesday
• These are the 10 most shorted ASX shares

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 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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Analysts covering the shares of Macquarie Group Ltd (ASX: MQG) are overwhelmingly bullish on the stock despite the volatility in its share price in recent months.

The Macquarie share price has whipsawed in 2022 alongside other ASX financial stocks, as seen below. But unlike the S&P/ASX 200 Financials Index (ASX: XFJ), Macquarie has remained bottom heavy and now rests at $185.98 before the open today.

Sentiment is tilted positive

Analysts at Bloomberg Intelligence reckon that Macquarie’s infrastructure funds are set to benefit from “raging inflation” given the current macro backdrop.

“Macquarie’s close of a $4.2 billion third Asia-Pacific infrastructure fund vs. a $3 billion target suggests its asset-management funds focused on hard assets may get a boost from raging inflation,” they said in a recent note.

Not only that, its analysts reckon the bank’s annuity business is set to lead the way this year and that’s backed by the commodity boom that continues rolling on.

“Macquarie’s annuity businesses may post another year of higher contribution… fuelled by booming commodities markets and interest-rate volatility,” they added.

Meanwhile, analysts at JP Morgan recently upped their profit forecasts for FY23 and FY24 whilst also commenting on its “earnings mix re-weight towards [the] annuity division”.

“[W]e expect annuity-style divisions to up-weight from 33% of divisional profit in FY22 to ~50% on average over the next few years,” the broker said.

“We increase our NPAT forecasts by 2% in FY23 and 4% in FY24. This reflects an increase in MacCap net interest income forecasts and investment income.”

Meanwhile, 64% of analysts covering the stock have it as a buy right now, according to Bloomberg data. Just one broker, Credit Suisse, has it rated a sell with a $150 per share price target.

Macquarie shares have clipped a 24% gain in the last 12 months despite trading 9% lower in 2022.

The post What’s the outlook for the Macquarie share price in June? appeared first on The Motley Fool Australia.

More reading

• 3 quality ASX 300 shares with dividend reinvestment plans
• Why has the Macquarie share price lost ground in May?
• Brokers name 3 ASX shares to buy today
• The ANZ share price is ‘trading at its largest discount to its peers in 15 years’: Is this justified?
• Broker names 2 ASX 200 shares with major upside potential

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Macquarie Group Limited. 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 Adore Beauty Group Ltd (ASX: ABY) share price has fallen around 20% over the last month. What happened?

The difficulty that the beauty e-commerce ASX share has seen in May has added to the decline that the business has seen since the start of the 2022 calendar year.

In the first five months of 2022, the Adore Beauty share price has fallen by 66%, or approximately two thirds.

Tech sector decline

The wider technology sector has seen a decline. And Adore Beauty hasn’t escaped the downturn.

The S&P/ASX All Technology Index (ASX: XTX) has fallen by 5% over the past month, and it has dropped by more than 30% since the start of the year.

Looking at some of the bigger declines on the ASX in 2022, the Xero Limited (ASX: XRO) share price has dropped around 40% in 2022. The Temple & Webster Group Ltd (ASX: TPW) share price has fallen by almost 60%. And the Zip Co Ltd (ASX: ZIP) share price has fallen nearly 80%.

Investors have been heavily focused on what’s happening in the local and global economy with inflation and how central banks may need to respond with rising interest rates.

In theory, higher interest rates can lead to lower asset prices.

Why do interest rates matter?

Warren Buffett, one of the world’s most accomplished and wisest investors, once said to Berkshire Hathaway shareholders about interest rates:

The value of every business, the value of a farm, the value of an apartment house, the value of any economic asset, is 100% sensitive to interest rates because all you are doing in investing is transferring some money to somebody now in exchange for what you expect the stream of money to be, to come in over a period of time, and the higher interest rates are the less that present value is going to be. So every business by its nature… its intrinsic valuation is 100% sensitive to interest rates.

Is the Adore Beauty share price decline justified?

In the company’s recent FY22 third-quarter update, Adore Beauty noted that its sales growth rate had reduced to 9% year on year. Nonetheless, it did still report revenue growth. Active customers rose 7% to 880,000 while the number of returning customers grew by 47%.

However, the ASX share did note that it had to navigate some supply chain pressures in the three months to 31 March 2022.

Management said that beauty, especially skincare, is unique within the broader retail market and is resilient to economic challenges. Its products are used daily by customers who consider those items as essential and frequently repurchase.

Adore Beauty CEO Tennealle O’Shannessy said:

The nature of premium beauty means our customers spend more as they mature on the platform, with returning customers typically contributing more than 70% of total revenue.

We are sustainably reinvesting in the business by scaling initiatives which lay the foundation for long-term growth and further strengthen our point of difference. Our native mobile app, which now accounts for more than 100% of revenue, continues to deliver elevated levels of engagement, conversion, and average order values, and we are preparing to launch our first private label products in the fourth quarter of FY22.

Adore Beauty share price snapshot

Yesterday, the Adore Beauty share price fell by over 5%. Over the last year, Adore Beauty has dropped by 67%.

The post Why has the Adore Beauty share price tumbled 20% in a month? appeared first on The Motley Fool Australia.

More reading

• 2 ASX growth shares I’d buy today with $5,000
• Glowing: The Adore Beauty share price is soaring
• You beauty! Adore Beauty share price soars 22%
• 3 quality ASX All Ordinaries shares that defied today’s sell-off
• 3 quality ASX All Ordinaries shares tumbling 10% or more today

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Berkshire Hathaway (B shares), Temple & Webster Group Ltd, Xero, and ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Adore Beauty Group Limited and 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 positions in and has recommended Xero. The Motley Fool Australia has recommended Adore Beauty Group Limited, Berkshire Hathaway (B shares), and Temple & Webster Group 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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If you’re a regular reader of The Motley Fool, you don’t need me to tell you that share markets have been in turmoil this year.

The S&P/ASX 200 Index (ASX: XJO) is down more than 4% for the year so far. But with resources and financials dragging the index up, many portfolios are looking far sicker than that right now.

So while you’re holding and waiting for the tide to turn, what do you do?

If you feel too anxious about putting more money into the business world, perhaps real estate might be an alternative.

A great feature of the ASX is that you can also invest in property through the bourse.

Here are a couple of real estate investments that experts have marked as buys this week:

High occupancy rates even through COVID

Catapult Wealth portfolio manager Tim Haselum likes commercial real estate investment trust (REIT) Dexus Property Group (ASX: DXS).

Dexus manages “high quality” property, Haselum told The Bull.

“It sustains high occupancy and rent collection rates of more than 90%, and did so during COVID-19. These metrics are testament to the quality of its assets.”

The Dexus share price has lost almost 6% this year, but over the past 12 months it’s still gained 1.9%.

That’s all while paying out a dividend yield of 4.8%.

“The company pays attractive dividends,” said Haselum.

“Cash flow offers a level of certainty.”

REIT that’s also a growth stock

Industrial real estate manager Goodman Group (ASX: GMG) is Medallion Financial Group advisor Jean-Claude Perrottet’s pick.

“This industrial property group recently released a third quarter operational update, forecasting earnings per share growth of 23% in fiscal year 2022.”

Goodman shares are going for quite a discount at the moment, having dropped almost a quarter of their value in 2022.

Despite that, the stock price is still up 4.9% over the past 12 months.

Goodman’s dividend yield isn’t as high as many other real estate stocks, but it is considered a growth business.

“It has $13.4 billion of development work in progress across 89 projects,” said Perrottet.

“Goodman has high quality tenants and an occupancy rate that increased to 98.7%. [It] is a quality business, with about $68.7 billion in assets under management.”

The post 2 ASX shares to buy if you don’t want to invest in the share market: experts appeared first on The Motley Fool Australia.

More reading

• Why has the Goodman share price tanked 14% in a month?
• Why I’d buy these 2 ASX 200 shares
• How to turn $20,000 into $180,000 in 10 years with ASX shares
• Analysts name 2 ASX 200 shares to buy after the selloff
• ASX shares paid out a record $98b in dividends in the 12 months to March. Which are the star performers?

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 was a month to forget for the S&P/ASX 200 Index (ASX: XJO) in May. During the period, the benchmark index fell a sizeable 3% to 7,229 points.

While a good number of shares fell with the market, some dropped more than most. Here’s why these were the worst performers on the ASX 200 last month:

Tabcorp Holdings Limited (ASX: TAH)

The Tabcorp share price was the worst performer on the ASX 200 last month by some distance with its 81.5% decline. This was driven by the demerger of its lottery and Keno businesses into a separate listed entity – The Lottery Corporation Limited (ASX: TLC). New Tabcorp is left with its wagering, media, and gaming services businesses.

CSR Limited (ASX: CSR)

The CSR share price was a very poor performer and sank 24% during the month. There were a couple of a catalysts for the weakness in the building products company’s shares. One was a lukewarm reaction to the company’s results, which saw both Jefferies and Macquarie downgrade their recommendations. The other was its shares trading ex-dividend for its 18 cents per share fully franked dividend.

Novonix Ltd (ASX: NVX)

The Novonix share price wasn’t far behind with a 21.8% decline in May. This was despite there being no real news out of the battery materials and technology company. Unfortunately for shareholders, this latest decline means that the Novonix share price is down 61% since the start of the year. Valuation concerns appear to be weighing on its shares.

AVZ Minerals Ltd (ASX: AVZ)

The AVZ Minerals share price was sold off and dropped 21.2% last month. Investors were selling this lithium developer’s shares after the release of an update on its Manono Lithium Project in the Democratic Republic of the Congo. Although AVZ revealed that a mining licence has been granted, it dropped a bombshell. AVZ advised that it is facing an ownership dispute for the project, which could see the company ultimately owning just 36% of it.

The post These were the worst performing ASX 200 shares in May appeared first on The Motley Fool Australia.

More reading

• These were the best performing ASX 200 shares in May
• What went wrong for the Wesfarmers share price in May?
• 5 things to watch on the ASX 200 on Wednesday
• VAS is a unique ETF on the ASX. Here’s why
• 3 junior miners with initial public offerings and ASX floats 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 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 Bitcoin (CRYPTO: BTC) price finished the final day of May on a positive note, up 4% from the previous day to US$31,685 (AU$43,865).

But that last minute rally wasn’t enough to stem some hefty losses incurred earlier in the month, leaving the Bitcoin price down 17% since 1 May. The world’s top token by market cap is now down 36% year-to-date.

In a sign of the ongoing volatility that comes with crypto investing, the Bitcoin price hit a high of US$39,903 in May and plumbed lows of US$26,350, according to data from CoinMarketCap.

So why did it end the month down 17%?

US Fed sent Bitcoin price spiralling lower

Much of the pressure facing Bitcoin and most every crypto has come from rising inflation and the resulting interest rate hikes.

This has seen risk assets, like cryptos and high growth tech shares, come under heavy selling pressure.

On 6 May, the Bitcoin price tumbled 11%. This followed on the US Fed’s 0.50% interest rate increase in the world’s biggest economy, which also saw the tech-heavy Nasdaq lose 5% in a single day.

Commenting on that selloff at the time, Valkyrie Investments head of research Josh Olszewicz said:

Bitcoin has become increasingly correlated with US trading hours and US traditional market indices, likely due to a combination of increasing US institutional presence as well as the absence of China after the sweeping bans last year.

Warren Buffett and Charlie Munger sure didn’t help

The Oracle of Omaha, Warren Buffett, and his long-time partner at Berkshire Hathaway, Charlie Munger, are well known for their general disdain of cryptos.

But with the Bitcoin price already under pressure, the closely-followed billionaire investors surely didn’t spark a bull run with their comments at their annual shareholder meeting early in May.

Munger led the charge saying:

When you have your own retirement account and your friendly adviser suggests you put all your money into Bitcoin, just say no… In my life, I try and avoid things that are stupid and evil and make me look bad in comparison with somebody else. Bitcoin does all three.

Bitcoin price fell sharply amid Terra stablecoin collapse

Another blow to the Bitcoin price in May was the collapse of Terra.

On 12 May, Australians woke to the news that a top-ranked stablecoin – TerraUSD (CRYPTO: UST) – had lost its peg to the US dollar. Over the following days, UST would drop to as low as 10 US cents.

The token meant to help UST maintain that US$1 peg – Terra (CRYPTO: LUNA) – fell even harder, losing more than 99% of its value.

The collapse sent almost every top crypto into the red. The Bitcoin price dropped 5% to US$29,830.

And with fewer tailwinds than headwinds in May, it finished the month well into the red.

The post Down 17%, what went so wrong for the Bitcoin price in May? appeared first on The Motley Fool Australia.

More reading

• Bitcoin price decouples from tech shares, but not as hoped
• Why Bitcoin, Dogecoin, and Shiba Inu are falling today
• This is the top performing crypto in 2022 so far, and it sure isn’t Bitcoin
• What do NFTs mean for the gaming industry?
• Looking to spend your crypto? Here are 5 things you can buy in 2022

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.

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The S&P/ASX 200 Index (ASX: XJO) was well and truly out of form in May. Over the month, the benchmark index fell a disappointing 3% to 7,229 points.

Fortunately, some shares were able to defy the selloff and storm higher. Here’s why these were the best performers on the ASX 200 last month:

PolyNovo Ltd (ASX: PNV)

The PolyNovo share price was the best performer on the ASX 200 last month with a 30.5% gain. The catalyst for this gain was the release of a large number of announcements revealing that the medical device company’s chairman, David Williams, was buying shares through on-market trades. However, this hasn’t spooked short sellers, who continued to increase their holdings during the month.

Allkem Ltd (ASX: AKE)

The Allkem share price was on form and charged 11.9% over the period. This appears to have been driven by optimism that lithium prices will remain higher for longer. Particularly after a rival’s spodumene concentrate digital auction received a new record winning bid. This was the fourth consecutive increase in prices and well ahead of expectations.

Codan Limited (ASX: CDA)

The Codan share price wasn’t far behind with a 10.8% gain last month. This was driven by the release of the metal detector focused technology company’s trading update and guidance for FY 2022. Codan revealed that business is booming and it expects to match its record first-half profit in the second half. This would mean a record full-year profit of $100 million, which will be a 56% increase year on year.

Mineral Resources Limited (ASX: MIN)

The Mineral Resources share price was a positive performer and rose 9.1% in May. Investors were buying this mining and mining services company’s shares due to its exposure to two hot commodities – iron and lithium. With both commanding high prices, investors appear to be betting on strong profits in the coming years. A note out of Credit Suisse is also likely to have given its shares a boost last month. The broker initiated coverage on the company’s shares with an outperform rating and $73.00 price target.

The post These were the best performing ASX 200 shares in May appeared first on The Motley Fool Australia.

More reading

• What went wrong for the Wesfarmers share price in May?
• 5 things to watch on the ASX 200 on Wednesday
• Why has May been such a great month for the Allkem share price?
• VAS is a unique ETF on the ASX. Here’s why
• 3 junior miners with initial public offerings and ASX floats in June

Motley Fool contributor James Mickleboro has positions in Allkem Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended POLYNOVO FPO. 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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Welcome to June and winter. Since it is the first day of a new month (and season in this case), it’s a good opportunity to reflect on the month that was, and see how some of the ASX’s most prominent shares fared. So today, let’s examine why the ASX 200 retail and industrial conglomerate Wesfarmers Ltd (ASX: WES) share price had such a dreary month last month.

Wesfarmers shares had a painful May, no way around it. The company began May at $49.41 a share, but finished up yesterday at a price of $47.19 apiece. That represents a one-month fall of 4.49%. Not that the S&P/ASX 200 Index (ASX: XJO) had a good month, mind you. The ASX 200 lost 3.01% over the same period. But still, that makes Wesfarmers a market-losing ASX share over the month just gone.

So what went wrong for Wesfarmers over May? Well, it’s not entirely clear. Wesfarmers released no major news, reports, or announcements over the month.

Why were ASX investors taking the Wesfarmers share price to the cleaners in May?

However, we can point to one event that may have dictated this miserly May performance. On 19 May, the Wesfarmers share price was smashed, falling almost 8% in one day. This was devoid of any company-specific news. However, it did coincide with similar moves across the ASX retail space.

As my Fool colleague Brooke dug into at the time, this sector-wide rout “[seemed] to have been spurred by United States retail monoliths Target Corporation (NYSE: TGT) and, to a lesser degree, Walmart Inc (NYSE: WMT)”.

At the time, Target (the US retailer, not the Wesfarmers subsidiary) had just dropped a disappointing quarterly earnings report. This contained a revelation that the company’s earnings per share (EPS) had dropped a staggering 48%. Walmart had also given its own investors a disappointing update the day before that.

Most US retailers were sold off heavily on this news, with the pessimism spilling over the Pacific to the ASX and our own ASX retail sector. After this mid-month drop, the Wesfarmers share price did recover somewhat. But it wasn’t enough to stem the losses from that one-day shocker. As such, this seems to be the primary reason why the Wesfarmers share price underperformed the ASX 200 over May and delivered investors such a miserly return.

At the last Wesfarmers share price, this ASX 200 retailer had a market capitalisation of $53.51 billion with a dividend yield of 3.6%

The post What went wrong for the Wesfarmers share price in May? appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• VAS is a unique ETF on the ASX. Here’s why
• 3 junior miners with initial public offerings and ASX floats in June
• Why did the BHP share price jump in May?
• Why the decision to keep AGL as one makes sense: expert

Motley Fool contributor Sebastian Bowen has positions in Walmart Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Target. The Motley Fool Australia has positions in and has recommended Wesfarmers 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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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 examines three potential bargains.

Cut or keep?

The Motley Fool: A2 Milk Company Ltd (ASX: A2M) has lost around 40% since October. Would you cut or keep it?

Adam Dawes: So A2 Milk has been a definite under-performer.

[But] I like the whole idea of Dogs of the Dow theory, where last year’s stocks that were underperforming are going to be this year’s stocks that are going to perform quite well. 

I think A2 Milk has shown to the market that potentially the daigou [Chinese reseller] channel was a lot more than what they originally expected it to be. And that daigou channel was what we thought was not going to be a lot of their revenue, but now we worked out that it is a fair bit of their revenue going forward. So I think that channel definitely has hurt them. 

And obviously COVID has definitely hurt them as well. 

I think management is very, very good in A2 Milk. So I’d be okay to hold A2 Milk going forward.

It’s a business that will continue to do well and I think it’s a business that overall has a lot of promise because now I think it’s been rebased, it’s settled down and the market has grappled with potentially that revenue from that daigou channel that’s not there anymore. 

So I’m happy to hold. I wouldn’t sell it.

MF: How about Magellan Financial Group Ltd (ASX: MFG), which has lost 65% since August?

AD: This one is an interesting one because generally there is this whole side of what goes on with the business and the re-rating. Basically it comes down to three profit downgrades, a management change, and then… potentially the new management will get all the skeletons out of the closet and then continue to move from there. 

So Magellan’s one of those ones where we’ve had that three downgrades, we’ve had the management change. So if that rebasing is about to happen. 

For me, it’s definitely a hold. 

But the concern is that when the new management comes out and potentially reduces the fees — because Magellan is quite high in their overall management fees, if Magellan reduces those fees, it’s a sell.

At the moment the funds are underperforming. There’s a lot of cash that’s sitting there as far as those funds, they’re soaking up that cash and they’re hopefully getting that performance back up and on track, but the new management potentially will come in and reduce those fees. If they do that, then it’s a sell because you are not going to get as much revenue going forward. You’re not going to get as much revenue or money coming in. 

So I’d be really cautious about Magellan. It’s a hold, definitely here for where we are around $14, $14.50, $15. I think it’s definitely a hold. 

But if new management comes in and reduces those fees, then it’s definitely a sell for me.

MF: Hold onto it, but really keep a close eye on it.

AD: Absolutely.

MF: Life360 Inc (ASX: 360) shares have been slaughtered this year. What should we do? 

AD: Look, this one’s an interesting one because Life360 is certainly back in the green, after the company redressed its 2022 guidance. And putting it out there, I think this company is a takeover target. No doubt about it.

Because of its subscription revenue, that’s grown by more than 50% this year. So I think it’s actually one of those ones that will do quite well. Life360 boasts more than 40 million active users per month and 25 million of those, which was in the US. And it’s got 1.3 million paying circles at the end of April. That’s up from the previous corresponding period. 

But it’s been a rough space and a rough time because the share price has obviously tumbled more than 60% since the start of the year. And it’s fallen 25%, since this last time, this year as well.

So I think overall Life 360 is an interesting business. I think you’ve got to be careful, but I think it’s a takeover target.

You never buy a stock for a takeover, right? You never do that, but I think [if you’ve already got it], you’d hold onto it. 

I don’t think it’s a sell because I think the tech space is definitely for a rerating at the moment, [with the] Nasdaq Composite (INDEXNASDAQ: .IXIC) down 26% or whatever it is today year to date. 

I think there’s some value that’s started to come into that space and the likes of Xero Limited (ASX: XRO), the likes of 360, there’s some value there because of what they’ve actually got, that user base. 

And [Life360] actually does make money. It’s just not what the valuations were six months ago to a year ago. So I’d be a little bit careful, but I think Life 360 has got the user base, it’s got the revenue coming through the door and is potentially a takeover target down the track.

The post What to do with these 3 pummelled ASX shares: advisor appeared first on The Motley Fool Australia.

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Motley Fool contributor Tony Yoo has positions in Life360, Inc. and Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Life360, Inc. and Xero. The Motley Fool Australia has positions in and has recommended Xero. The Motley Fool Australia has recommended A2 Milk. 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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