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The Wesfarmers Ltd (ASX: WES) share price is on watch this morning after the release of the company’s results for the first half of financial year 2022.

As of Wednesday’s close, the Wesfarmers share price is $54.92.

Wesfarmers share price in focus on challenging first half

• Revenue came to around $17.75 billion – a 0.1% drop on that of the first half of financial year 2021
• Earnings before interest and tax (EBIT) reached $1.9 billion, representing a 12.3% fall
• Net profit after tax (NPAT) reached $1.2 billion – down 14.2%
• Basic earnings per share (EPS) came to 107.3, also representing a 14.2% drop.
• Operating cash flows fell 29.8% to $1.5 billion
• The company announced an 80 cent, fully franked interim dividend – 9.1% lower than that of financial year 2021

The first half of financial year 2022 was the “most disrupted period for our businesses since the onset of COVID-19“, said Wesfarmers’ managing director Rob Scott.

The company’s retail businesses saw around 34,000 store trading days – representing 20% – being impacted by closures during COVID-19 outbreaks.

Wesfarmers was also impacted by supply chain issues and staff absenteeism due to the virus’ spread.

Over the half year, Wesfarmers’ Bunnings business saw its revenue increase 1.7% to $9.2 billion. Its earnings, however, fell 1.2% to around $1.2 billion.

It wasn’t such a good half for Kmart. The business’ revenue dropped 9.6% to $4.9 billion. Kmart and Target combined saw earnings fall 55.8% to $222 million for the half year.

Catch saw its gross transaction value increase 1% for the half and 97.5% on a two-year basis. Its lower earnings were born from investment into its long-term growth.

Meanwhile, Officeworks saw revenue grow 3.7% to around $1.5 billion and earnings drop 18% to $82 million.

WesCEF‘s fertilisers revenue grew 29.8% to $1 billion while its earnings increased 36.3% to $218 million, supported by higher commodity prices.

Wesfarmers’ industrial and safety business‘ revenue increased 5.1% to $944 million, and its earnings grew 10.8% to $41 million.

Wesfarmers had net debt of $2.6 billion at the end of the half.

What else happened during the half?

The biggest news from Wesfarmers last half was its proposed acquisition of Australian Pharmaceutical Industries Ltd (ASX: API).

The company placed a bid for API in July. It has offered to pay $1.55 per API share and, as of early January, is the only entity vying from the company.

Over the half year, Bunnings was hit with extra costs to ensure safety and manage COVID-19-related supply challenges.

It also completed its acquisition of Beaumont Tiles during the half and expanded Tool Kit Depot into Western Australia.

Officeworks, meanwhile, was hampered by COVID-19 restrictions, costs from more ‘click and collect’ style online orders, and its move to a new customer fulfilment centre.

In the non-retail side of the company’s businesses, construction activity ramped up at the Mt Holland Lithium Project.

Finally, Wesfarmers also saw its scope 1 and 2 carbon emissions fall 14.3% under the Market-Based Emissions Standard during the half.

What did management say?

Scott commented on the company’s first half results saying:

The first half of the 2022 financial year was the most disrupted period for our businesses since the onset of COVID-19, with extended government-mandated store closures and trading restrictions in Australia and New Zealand.

The group recognises the alignment between long-term shareholder value and progress on key sustainability metrics, and good progress was made on diversity and inclusion, emissions reduction, and operational waste during the half.

Wesfarmers continued to manage its balance sheet to maintain a high degree of flexibility during the half, and took opportunities to optimise the group’s debt maturity profile and cost of borrowing, including through the issue of a EUR600 million sustainability-linked bond with targets aligned to the Group’s decarbonisation strategies.

What’s next?

Wesfarmers hasn’t given any guidance for the rest of financial year 2022.

However, it has noted ongoing COVID-19 impacts and uncertainty.

Additionally, supply chain issues will continue to hamper many of its businesses with higher expenses expected.

The company is also keeping an eye on inflation, labour availability, and commodity prices.

Wesfarmers recently rebranding the Club Catch subscription program to OnePass. The program’s expansion will continue into the rest of the financial year.

Wesfarmers share price snapshot

The Wesfarmers share price has fallen 8.5% since the start of 2022.

Though, it is 1.4% higher than it was this time last year.

The post Wesfarmers (ASX:WES) share price on watch after ‘most disrupted period’ since COVID onset appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
• Own Wesfarmers (ASX:WES) shares? Here’s what to watch when the company reports this week
• Here’s how rich Lynas Rare Earths (ASX:LYC) shares have made ASX 200 investors over the past 2 years
• Wesfarmers (ASX:WES) share price lower despite API takeover update
• 2 ASX dividend shares that could provide steady income in retirement

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns and has recommended Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Yesterday, we looked at the latest data on the ASX exchange-traded fund (ETF) sector and the gyrations it has experienced in 2022 so far. ETF demand remains robust over the year to date. That’s despite the fact that the sector has experienced some loss of funds under management. Largely due to the volatility and losses we have seen over the past few months.

But looking closer at the data, an interesting trend emerges. And it’s one that is well worth a deeper dive.

So according to ETF provider BetaShares’ Australian ETF Review for January 2022, the ETFs that received the most fund inflows over January were the ones we might expect. Namely index funds like the Vanguard Australian Shares Index ETF (ASX: VAS) and the Vanguard MSCI Index International Shares ETF (ASX: VGS). But it’s the fourth and fifth ETFs in this list that represents an interesting trend.

Cash is king for ASX ETF investors

So below three index funds, the next ETFs receiving the most in fund inflows last month were the iShares Enhanced Cash ETF (ASX: ISEC) and the BetaShares Australian High Interest Cash ETF (ASX: AAA). These ETFs experienced approximately $107.5 million and $100.2 million in fund inflows over January respectively.

Now those ETFs, if you didn’t notice, are both cash-based ETFs. A cash-based ETF has more in common with a bank account than an index fund like VAS. They don’t hold any underlying shares at all. Instead, each unit represents a cash-based asset, which is not too much more than money in a bank account. For example, BetaShares tells us that its AAA ETF “aims to provide exposure to Australian cash deposits, with attractive monthly income distributions… Assets are invested in deposit accounts held with selected banks in Australia”.

So it appears ASX investors are looking to increase their cash exposure via ETF products like AAA and ISEC. This is perhaps not such a surprise. After all, many investors like to move their capital to ‘safe’ assets like cash during periods of market volatility. An interesting insight into how some ASX investors are coping with the recent volatility. 

The post Why are ASX investors flocking to cash ETFs? appeared first on The Motley Fool Australia.

More reading

• Hold the phone! Telstra (ASX:TLS) delivers solid underlying growth and declares 8cps dividend
• 3 ASX shares to buy before the market rockets up again
• The Webjet (ASX:WEB) share price has climbed 17% so far this year. Is it still a bargain?
• 2 ASX dividend shares that could provide steady passive income
• Broker warns that Fortescue (ASX:FMG) share price could fall 30%

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. owns and has recommended Vanguard MSCI Index International Shares ETF. The Motley Fool Australia has recommended Vanguard MSCI Index International Shares ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Telstra Corporation Ltd (ASX: TLS) share price will be one to watch on Thursday.

This follows the release of the telco giant’s half year results this morning.

Telstra share price on watch after delivering solid result

• Revenue down 4.4% to $10.5 billion
• Operating expenses down 6.7% to $7.4 billion
• Reported EBITDA down 14.8% to $3.5 billion
• Underlying EBITDA up 5.1%
• Fully franked interim dividend maintained at 8 cents per share
• FY 2022 guidance reaffirmed

What happened during the first half?

For the six months ended 31 December, Telstra posted a 4.4% decline in revenue to $10.5 billion and a 14.8% decline in reported EBITDA to $3.5 billion. However, it is worth noting that the prior corresponding period had a number of one-offs such as the sale of the Velocity and South Brisbane exchange assets. This means its underlying result is more reflective of its performance.

On an underlying basis, thanks to a 6.7% reduction in its operating expenses to $7.4 billion and positive momentum in the mobile business, Telstra’s EBITDA came in 5.1% higher year on year. This was ahead of what analysts at Morgans were expecting. They had pencilled in a 4% increase in underlying EBITDA for the period.

This puts the company on track to achieve its full year underlying EBITDA guidance of $7 billion to $7.3 billion in FY 2022.

Also largely on track is its free cash flow. On a guidance basis, Telstra’s free cash flow after lease liabilities came in at $1.7 billion. This compares to its full year guidance of $3.5 billion to $3.9 billion.

This allowed the Telstra board to declare an 8 cents per share fully franked interim dividend, which is flat on the prior corresponding period.

Management commentary

Telstra’s CEO, Andrew Penn, was pleased with the half and believes its results reflect the positive momentum delivered through the company T22 strategy. He also believes it puts the company in a strong position as it transitions into T25.

Mr Penn commented: “This was the second consecutive half of underlying growth. The results show we have stayed disciplined and focussed on delivering what we said we would. The benefits of T22 are flowing through for our customers and our shareholders. As the nation has developed an ever-increasing reliance on digital connectivity, we are well placed to deliver the infrastructure, solutions and security needed to support Australia’s aspiration to become a world leading digital economy.”

“Our continued focus on mobile network leadership and building value resulted in five percent post-paid handheld ARPU growth, 6.3 percent mobile services revenue growth and $392 million mobile EBITDA growth. We added 84,000 net retail post-paid mobile services including 62,000 branded with a strong contribution from Enterprise. Our branded performance reinforces the benefits of our clear leadership in 5G.”

Outlook

Management didn’t provide any commentary relating to the second half, but Telstra has reaffirmed all aspects of its FY 2022 guidance.

This includes full year underlying EBITDA of $7 billion to $7.3 billion and free cash flow after lease liabilities of $3.5 billion to $3.9 billion.

The post Hold the phone! Telstra (ASX:TLS) delivers solid underlying growth and declares 8cps dividend appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
• Own Telstra (ASX:TLS) shares? Here’s what to watch when the ASX 200 telco reports this week
• These are some of the top performing ASX 200 value shares of the past year
• Should Telstra (ASX:TLS) really ‘be worried’ about its major competitor’s new asset?
• Telstra (ASX:TLS) targets government’s deep cyber-crime pockets

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 owns and has recommended Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The S&P/ASX 200 Index (ASX: XJO) has recovered somewhat this month after tanking almost 10% in January.

But it’s still close to 5% down for the year.

Shaw and Partners senior investment advisor Adam Dawes reckons ASX shares will bounce back.

“It’s what I’m calling a mid-cycle correction,” he told Switzer TV Investing.

“We’re going to see some more volatility around these levels before we start to move again.”

The way inflation and interest rates move will have a big impact on the near-term fortunes of the ASX 200, he added.

“Most people don’t really understand what inflation means, but they can see it in their petrol prices, they can see it in their fruit and veg,” said Dawes.

“That’s where it’s going to hurt the back pocket of the normal public and investors.” 

But with a medium-term rebound in mind, Dawes named 3 ASX shares that he’d pick up right now for a nice return in the months to come:

COVID or not, the planes are packed

One of the most obvious losers out of COVID-19 and its repeated waves is Qantas Airways Limited (ASX: QAN).

But Dawes notes that Australians’ behaviour during the Omicron outbreak has been different to the previous waves.

“I took a plane ride last week for the first time in 2 years. And let me tell you, these planes are absolutely jam-packed,” he said.

“I’m thinking Qantas is a good value play at the moment.”

With Australians getting accustomed to the idea of “living with the virus”, Dawes predicted domestic travel will do well for Qantas.

“The stock has been beaten around but they’ve come out of it — they’ve reduced costs, their labour figures are okay,” said Dawes.

“Oil is probably a bit of a concern for the input costs, but really they’ve left Virgin battered and bruised.”

Qantas shares closed Wednesday at $5.36. The price is up more than 7% this month.

The ASX share that loves when interest rates rise

Dawes admitted insurance is a tough game, but likes the upside in QBE Insurance Group Ltd (ASX: QBE).

“QBE does have a lot going for it at the moment,” he said.

“Management is really picking themselves up and I think there’s value there.”

The share price has already picked up almost 14% this month. It has now grown in excess of 43% over the past 12 months.

He’s not the only one who currently favours QBE. Burman Invest chief investment officer Julia Lee likes how the economic circumstances could give the insurer a real push this year.

“QBE’s investment portfolio benefits when interest rates rise. And, the market is pricing in higher interest rates,” she told The Bull.

“Premium revenue has been growing. Margins have been increasing.”

Coal prices are shooting up

Rail freight provider Aurizon Holdings Ltd (ASX: AZJ) is the third stock in Dawes’ sights.

“Coal is one of those things that’s on the nose, but if you actually look at a coal chart lately, that coal price has really started to move north,” he said.

“That will bode well for Aurizon.”

Dawes also liked last year’s $2.4 billion acquisition that diversifies Aurizon’s haulage. 

Aurizon shares have not recovered as spectacularly as Qantas and QBE, only up 0.84% for the year so far.

It does pay out a tidy 6.9% dividend yield though. 

“Aurizon, in that big-cap space for the income going forward, I think it’s a good play for value.”

Investors Mutual Limited director Anton Tagliaferro last week also singled out Aurizon for praise, saying cash flow is king when interest rates shoot up.

“With interest rates rising, these stocks suddenly don’t look so boring or dull as things normalise,” he said.

“And as investors begin to appreciate real cash flows generated by companies in the next 2  to 3 years, as opposed to hoped-for cash flows in 10 or 20 years time.”

The post 3 ASX shares to buy before market rockets up again appeared first on The Motley Fool Australia.

More reading

• Why are ASX travel shares taking flight today?
• Border drama: Qantas (ASX:QAN) faces continued challenges on ‘kangaroo route’
• Deal or no deal? Aurizon (ASX:AZJ) share price falls amid sale rumours
• Qantas (ASX:QAN) share price slips amid Bonza plans to launch ‘something very different to the market’
• 2 ASX shares to buy that are perfectly set up to rally

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 recommended Aurizon Holdings Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Webjet Limited (ASX: WEB) share price has taken off in 2022 despite volatility impacting the S&P/ASX 200 Index (ASX: XJO).

Since the beginning of the year, the online travel agent’s shares have risen by 17% following positive investor sentiment. In contrast, the benchmark index has fallen by 2% over the same time frame.

At yesterday’s market close, Webjet shares finished the day 4.83% higher to $6.08 a pop.

What’s driving Webjet shares higher?

With the re-opening of Australian borders for fully-vaccinated tourists set on 21 February, the Webjet share price has soared.

The announcement made on 7 February by the Morrison government sent Webjet shares 6.17% higher on the day. This was followed by another 7.44% gain on 8 February.

While COVID-19 continues to be on a steady decline, there is hope that the world is starting to move to a post-pandemic phase.

Some countries like Denmark and Sweden have even completely removed restrictions and accepted to live with the virus.

In the United Kingdom where Webjet operates, the British government ended the mask mandate and vaccine passports. Fully vaccinated travellers are no longer required to take a test on or before arrival. This means that passengers can freely travel to the country, encouraging a resurgence in the tourism industry.

Looking ahead, Webjet is scheduled to report its FY22 results towards the backend of May 2022.

Is this a buying opportunity?

The good news for investors is that a number of brokers believe that the Webjet share price is attractively valued.

The team at Morgans raised its price target by 6.5% to $6.60, which implies a potential upside of 8.5%.

In addition, Ord Minnett also lifted its outlook by 2.7% to a more bullish price of $7.31 apiece. This represents a potential upside of 20% from where it trades today.

Lastly, Swiss investment firm, UBS increased its appraisal on Webjet shares by 1.5% to $6.95. Its analysts clearly believe that there is still significant value in the online travel agent and that a recovery is inevitable.

Webjet share price summary

It’s been a rollercoaster 12 months for Webjet investors, with its shares up 27% over the period.

Based on valuation grounds, Webjet has a market capitalisation of around $2.31 billion, with approximately 380.51 million shares on issue.

The post The Webjet (ASX:WEB) share price has climbed 17% so far this year. Is it still a bargain? appeared first on The Motley Fool Australia.

More reading

• Why are ASX travel shares taking flight today?
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• Why the Webjet (ASX:WEB) share price is a seriously undervalued ASX share: expert
• These were the best performing ASX 200 shares last week
• Broker says buy Webjet (ASX:WEB) instead of Flight Centre shares

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 Webjet Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The ASX share market is known for being more volatile than other asset classes like term deposits and bonds. But ASX dividend shares may be able to provide a steady stream of passive investment income over time.

Some businesses have quite volatile dividend movements like Fortescue Metals Group Limited (ASX: FMG) and Woodside Petroleum Limited (ASX: WPL).

But, there are others which are building a reputation for consistent dividends and long-term growth. These two ASX dividend shares may be options for steady passive income:

Pacific Current Group Ltd (ASX: PAC)

Pacific Current describes itself as an asset management outfit that aims to apply its strategic resources, including capital, institutional distribution capabilities and operational expertise to help its partners grow. At the end of January 2022, it had investments in 16 boutique asset managers globally.

One of the most important investments in the portfolio is its holding of shares of the now-listed GQG Partners Inc (ASX: GQG).

The business regularly tells investors about the total funds under management (FUM) managed by the asset managers within the portfolio. In the three months to 31 December 2021, the total FUM rose from A$150.1 billion to $165.4 billion. Excluding the new investment in Banner Oak, FUM grew by 5%. GQG growth continued, while Victory Park and EAM posted “particularly strong” inflows.

The ASX dividend share said it was expecting A$3 billion to A$8 billion of gross new commitments/inflows over the next 18 to 24 months for non-GQG boutiques when it released its FY21 result. In the first half of FY22, these boutiques had already received A$2.2 billion of gross new commitments. This caused Pacific to increase its estimate of new commitments to a range of $5 billion to $8 billion.

Pacific is expecting 2022 to be another strong year for many of its investments.

It’s currently rated as a buy by the broker Ord Minnett. With FY23 projections in mind, the Pacific Current share price is valued at 11x FY23’s estimated earnings with a potential grossed-up dividend yield of 8.7%.

Charter Hall Long WALE REIT (ASX: CLW)

This real estate investment trust (REIT) has one of the longest weighted average lease expiries (WALE) on the ASX. This means that its tenants are signed up for the long-term.

At 31 December 2021, it had a WALE of 12.2 years. The REIT noted that this provides long-term income security.

Charter Hall Long WALE REIT was one of the few S&P/ASX 200 Index (ASX: XJO) shares that increased its payment to shareholders during the difficult economic COVID times of 2020.

But the growth has continued. The Charter Hall Long WALE REIT’s operating earnings per security (EPS) increased 5.6% in the first six months of FY22, funding a 5.1% increase of the distribution to 15.24 cents per security.

The property portfolio is now worth $7 billion, with 46% of leases being inflation-linked and achieving a 3.3% weighted average increase of 3.3% in the first half of FY22. The other 54% of leases have fixed increases – the average fixed increase was 3.1%.

Management say that the ASX dividend share continues to grow, diversify and improve the quality of the portfolio with a view to providing reliable and growing returns to investors. Minimal rental relief has been required since the onset of COVID-19. The net tangible assets (NTA) per unit is now $5.89, which is materially above the current Charter Hall Long WALE REIT share price.

FY22 operating EPS is expected to be no less than 30.5 cents, reflecting growth of no less than 4.5% over FY21.

It’s currently rated as a buy by Citi, with a price target of $5.71. The broker is expecting the REIT to pay a distribution yield of 6.2% in FY22.

The post 2 ASX dividend shares that could provide steady passive income appeared first on The Motley Fool Australia.

More reading

• Is BHP (ASX:BHP) the best ASX dividend share?
• 5 things to watch on the ASX 200 on Thursday
• Here are the top 10 ASX shares today
• Losing sleep over falling ASX share prices? Here’s how one expert says investors can ‘take advantage of sell-offs’
• These 3 ASX 200 shares are topping the volume charts on Wednesday

Motley Fool contributor Tristan Harrison owns 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 Bruce Jackson.

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The Fortescue Metals Group Limited (ASX: FMG) share price could be vastly overvalued and heading sharply lower.

That’s the view of one leading broker which has reiterated its sell rating this morning.

Why is the Fortescue share price overvalued?

According to a note out of Goldman Sachs, in response to the mining giant’s softer than expected half year results, its analysts have retained their sell rating and cut their price target to $14.70.

Based on the current Fortescue share price of $21.15, this implies potential downside of 30% over the next 12 months.

What is the broker saying?

Goldman has warned that Fortescue’s dividend cut with its half year results might be something that investors need to get used to.

Its analysts commented: “The interim dividend of A86cps was a 70% payout, in-line with GSe, but is the start of lower payout ratios going forward (GSe 50% from FY23) in our view, with FMG indicating iron ore sustaining capex will remain elevated at US$1.5bn (US$8/t) in FY23 and Fortescue Future Industries (FFI) spend will likely increase as projects advance (Pilbara decarbonisation and green hydrogen).”

In addition, the broker continues to believe that the Fortescue share price trades on unreasonably high multiples compared to peers BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO).

Goldman explained: “The stock is trading at a significant premium to BHP & RIO; c. 1.9x NAV vs. RIO at c. 1.0x NAV, c. 5x EBITDA (vs. BHP & RIO on c. 4x), and c. 5% FCF vs. BHP & RIO on c. 10%, which we think is unwarranted considering the lack of diversification and risks around future capital spend and returns.”

Combined with widening low grade iron ore discounts, execution risks on the Iron Bridge project, and uncertainties around the FFI business, Goldman sees the Fortescue as a clear sell.

The post Broker warns that Fortescue (ASX:FMG) share price could fall 30% appeared first on The Motley Fool Australia.

More reading

• Is BHP (ASX:BHP) the best ASX dividend share?
• Why BHP, Fortescue, Netwealth, and Santos shares are falling
• Why has the Fortescue (ASX:FMG) dividend tumbled 40%?
• ASX 200 (ASX:XJO) midday update: CSL upgrades guidance, Treasury Wine jumps
• Fortescue (ASX:FMG) share price slips on FY22 half-year results

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 Bruce Jackson.

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The fund manager Wilson Asset Management (WAM) has told investors about two compelling ASX shares that it has in its portfolio.

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

There’s also one called WAM Capital Limited (ASX: WAM) which targets “the most compelling undervalued growth opportunities in the Australian market”.

The WAM Capital portfolio has delivered an investment return of 15.9% per annum since its inception in August 1999, before fees, expenses and taxes. This gross return outperformed the All Ordinaries Total Accumulation Index (ASX: XAO) return of 8.4% per annum over the same timeframe.

These are the two ASX shares that WAM Capital outlined in its most recent monthly update:

Champion Iron Ltd (ASX: CIA)

Champion Iron is headquartered in Canada. It is described by WAM as a premium iron ore miner which is exploring the Bloom Lake and Fire Lake projects in the Canadian province of Quebec.

The fund manager pointed out that in January, Champion Iron announced its third quarter update, which showed that its growth project ‘phase II’, remained on track for completion in April.

The ASX share also announced its first dividend of C$0.10 per share, whilst also investing for growth.

Champion Iron has increased its leverage to higher iron ore prices as it progresses its growth projects, which are expected to double output this year.

WAM is bullish on Champion Iron and expect “considerable” free cash flow to be generated by the completion of the phase II project.

BWX Ltd (ASX: BWX)

BWX is an Australian-based company that is engaging in developing, manufacturing and marketing beauty and personal care products.

The ASX share has a number of brands in its stable – Sukin, Andalou Naturals, USPA, Mineral Fusion, Flora & Fauna, Nourished Life and now Go-To Skincare.

WAM says that the company’s expansion in the US and UK is gaining traction. Coupled with new products and a large distribution network, this is driving growth in their share of the market.

The fund manager is unfazed by the resignation of the CEO David Fenlon, who is moving into a non-executive director position on the BWX board.

Business continuity has been demonstrated by the appointment of the successor – the BWX chief operating officer – Rory Gration.

The post 2 ASX shares this expert rates as a buy appeared first on The Motley Fool Australia.

More reading

• AFIC (ASX:AFI) is the biggest LIC on the market. But how does its performance stack up?
• 2 ASX shares that this top fund manager rates as a buy
• What happened to the Champion Iron Ltd (ASX:CIA) share price today?
• ‘Solid performance’: WAM Capital (ASX:WAM) share price spikes after portfolio update
• Here are the top 10 ASX shares 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 no position in any of the stocks mentioned. The Motley Fool Australia has recommended BWX Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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There is an ASX share that’s plunged this year that still has plenty of supporters among professional investors.

The IDP Education Ltd (ASX: IEL) share price has nose-dived almost 20% so far this year, and almost 30% since its high in mid-November.

The company is in the international student placement and English testing industry, which understandably has been pummelled by the COVID-19 pandemic.

Montgomery Investment Management chief investment officer Roger Montgomery, for one, believes this depression is temporary.

“IDP has a solid pipeline of leads and, with borders reopening, the future is looking bright,” he said in a blog post.

“We believe IDP is a very high-quality company.”

A victim of its own success?

Montgomery attributed the recent poor stock performance to the half-year results, which didn’t meet analyst expectations.

In this instance, he thought that IDP might have been a victim of its own past success in exceeding previous guidance.

“The initial market reaction was quite severe, pushing the share price well below its November 2021 high,” he said.

“Broker expectations were arguably optimistic… When a company misses analyst expectations, who’s fault is it – the company’s or the analysts’?”

Montgomery feels that, once the market catches up with the scale of opportunities that IDP can adopt, analysts will change their minds.

“From raising prices and margins in the India International English Language Testing System (IELTS) business, and from growing student placement volumes as Australian, UK, Canadian and US borders reopen fully, and universities chase international student revenue – we believe more optimistic forecasts will be re-integrated into analyst thinking.”

Plenty of tailwinds for IDP Education

In the testing business, recovery of lost business in China and increasing revenue per student in India are two possible tailwinds.

“The above factors point to meaningful upside potential for the IELTS operation’s earnings over the next 3 to 5 years.”

Over in the student placement division, the business actually grew 62.3% year on year. But Montgomery feels like the market wanted more.

“IDP management noted they have never seen such a supportive environment for chasing student volumes, one where all destination markets have very pro-student visa and work-rights regulations.”

Montgomery is not the only one who is bullish.

Goldman Sachs this week lifted its stock price target for IDP Education to $35, a 24% premium on the current level.

UBS is even more generous, setting a price target of $35.90.

In its report, Goldman Sachs stated there were one-off costs in the last half that shouldn’t repeat in the future.

“We expect a stronger than usual second half for IDP, driven by an emerging recovery in Australian student placements, continued strength in multi-destination student placements and greater than initially forecast synergies in the Indian IELTS operations.”

IDP Education shares closed Wednesday at $28.34.

The post This unloved ASX share can only shoot up from here appeared first on The Motley Fool Australia.

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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. owns and has recommended Idp Education Pty 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 Bruce Jackson.

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If you’re in the process of building an income portfolio, then you might want to look at the shares listed below.

Here’s why these ASX dividend shares could be in the buy zone right now:

Accent Group Ltd (ASX: AX1)

The first ASX dividend share to look at is this footwear focused retailer. It is the company behind a collection of popular retail brands including HYPE DC and The Athlete’s Foot. In addition, Accent has the exclusive licence for a number of brands in Australia such as Reebok.

It could be a top option for income investors following a recent pullback which has left it trading close to 52-week lows. This has been driven by concerns over its performance in FY 2022 due to lockdowns and other COVID headwinds.

And while its underperformance is expected to impact its profits and therefore its dividends this year, analysts at Bell Potter expect a big rebound in FY 2023. It is for this reason the broker has a buy rating and $2.75 price target on the company’s shares.

Its analysts are also currently forecasting dividends per share of 5.4 cents this year and then 11 cents in FY 2023. Based on the current Accent share price of $2.05 this will mean yields of 2.6% and 5.4%, respectively.

Charter Hall Social Infrastructure REIT (ASX: CQE)

Another ASX dividend share for investors to consider is the Charter Hall Social Infrastructure REIT. It is a high quality real estate investment trust with a focus on properties with specialist use, limited competition, and low substitution risk.

Among its portfolio you will find bus depots, police and justice services facilities, and childcare centres. The latter is the company’s main focus. In fact, the Charter Hall Social Infrastructure REIT is the largest owner of early learning centres in Australia.

Goldman Sachs is a fan of the company and currently has a conviction buy rating and $4.17 price target on its shares.

It is also forecasting dividends per share of 17.1 cents in FY 2022 and 17.5 cents in FY 2023. Based on its current share price of $3.87, this implies yields of 4.4% and 4.5%, respectively.

The post Analysts name 2 ASX dividend shares to buy with attractive yields appeared first on The Motley Fool Australia.

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• 2 buy-rated ASX dividend shares with 4%+ yields
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• Analysts rate these ASX dividend shares as buys
• ASX retail shares have slumped in 2022. Could there be more pain to come?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Accent Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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