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There are plenty of ASX dividend shares that everyone knows. But there are also some ideas that may be underrated for income potential.

Names like Commonwealth Bank of Australia (ASX: CBA) and BHP Group Ltd (ASX: BHP) are two of the biggest dividend payers in the country.

But these two are also expected to pay sizeable dividends in FY22 and beyond:

JB Hi-Fi Limited (ASX: JBH)

This company is one of the largest retailers in Australia with its networks of JB Hi-Fi stores and The Good Guys stores. It sells a wide range of products like computers, smartphones appliances and so on. Whilst this is often seen as discretionary spending, they are widely accepted as essential items to living in 2022.

The ASX dividend share is expected by the broker Credit Suisse to pay a grossed-up dividend yield of 7.4% in FY22.

JB Hi-Fi’s second quarter of FY22 showed sales growth of 1.2% for JB Hi-Fi Australia and 2.8% growth for The Good Guys. The company is expecting to report net profit after tax (NPAT) of $287.9 million – that would be a year-on-year decline of 9.4%, but up 68.8% over two years.

The company points to five unique competitive advantages – scale, a low-cost operating model, quality store locations, supplier partnerships and multichannel capability (which includes booming online sales).

Credit Suisse thinks the JB Hi-Fi share price is valued at 13x FY22’s estimated earnings.

Metcash Limited (ASX: MTS)

Metcash is one of the largest suppliers to independent supermarkets and liquor stores. Some of the liquor retailers it supplies includes Cellarbrations, The Bottle-O, IGA Liquor, Duncans, Thirsty Camel, Big Bargain and Porters. The supermarkets it supplies include the IGA and Foodland brands.

The ASX dividend share also has a few hardware businesses, including Mitre 10, Home Timber & Hardware and Total Tools. This hardware division is the segment that’s driving profit. The FY22 half-year result saw group earnings before interest and tax (EBIT) rise by 13.9% to $231.2 million. But the hardware EBIT jumped 53.3% to $98.9 million.

Metcash is working on a number of things to grow its profitability including improving its efficiencies, investing in distribution centres and advancing its digital sales. In HY22 it made around $60 million of online sales, up 46% year on year.

In terms of the dividend, the board has committed to a target dividend payout ratio of around 70% of underlying profit after tax. Metcash says that it has a strong focus on shareholder returns. The interim dividend was grown by 31% to 10.5 cents per share.

It’s currently rated as a buy by Credit Suisse, with a price target of $4.55. On the FY22 numbers projected by the broker, Credit Suisse reckons the Metcash share price is valued at 14x FY22’s estimated earnings with a grossed-up dividend yield of 6.9%.

The post 2 strong ASX dividend shares hiding in plain sight appeared first on The Motley Fool Australia.

More reading

• ASX retail shares have slumped in 2022. Could there be more pain to come?
• 2 ASX shares to guide you through a torrid 2022
• Well priced with a dividend yield over 5%, this ASX share ‘is a standout’: expert
• Have your cake and eat it: These ASX shares have been paying regular dividends whilst growing their share prices
• Could this be the biggest issue faced by ASX retail shares heading into earnings season?

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 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 a Westpac Banking Corp (ASX: WBC) shareholder, you may be planning to take part in its enormous $3.5 billion off-market share buyback.

The good news is that the banking giant has now released the market price for the share buyback.

Westpac share buyback price settled

According to the release, the market price for the Westpac share buyback is $22.2387.

The release explains that the market price was determined by the volume-weighted average price (VWAP) of its shares over the five trading days up to and including Friday, 11 February 2022.

However, it is worth noting that the market price is not necessarily the price that it will be buying back shares. Depending on demand, Westpac will be buying back its shares at either no discount or at a discount as great as 10%. The latter would equate to a buyback price of $20.01. This compares to the current Westpac share price of $22.78.

But don’t worry if the buyback price is lower than the current Westpac share price. That’s because, for Australian tax purposes, the buyback is expected to comprise a capital component of $11.34 per share, with the remainder deemed to be a fully franked dividend. This means that even with a 10% discount, shareholders should still be getting a better deal than if they sold them on-market.

Why is Westpac returning funds in this way?

Westpac has previously explained why it chose to return $3.5 billion to shareholders via an off-market buyback instead of other options.

It explained: “Westpac evaluated several options for returning capital to Shareholders. We believe that this Buy-Back will benefit all Westpac Shareholders. An off-market buy-back is considered an effective method to return capital and franking credits and optimise our capital structure at this time. It enables a higher number of Shares to be bought back in a shorter timeframe and it reduces our Share count faster than an on-market buy-back of Shares. In turn, a lower capital base and Share count supports Westpac’s future Return on Equity, Earnings per Share and Dividend per Share, all things being equal.”

Westpac expects to reveal the final price of the buyback on Monday. After which, payments to shareholders for the shares bought back will commence on 18 February 2022.

The post What Westpac (ASX:WBC) shareholders need to know about its $3.5bn buyback appeared first on The Motley Fool Australia.

More reading

• Why IAG, Rio Tinto, Unibail, and Westpac shares are pushing higher
• 2 buy-rated ASX dividend shares with 4%+ yields
• Will Westpac (ASX:WBC) shares give ASX 200 investors a dividend raise in 2022?
• Rising tide? Here’s why ASX 200 bank shares are having such a good run today
• ‘Future-ready’: Westpac (ASX:WBC) share price lifts following Microsoft partnership

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

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Some of the most attractive ASX shares on the stock exchange could be ones that have lower valuations. Value investors could love the two cheap ASX shares in this article.

Businesses with low price/earnings ratios (P/E ratios) don’t have much long-term growth expectation built into them. They can also offer above-average dividend yields, depending on the dividend payout ratio.

With that in mind, here are two cheap ASX share ideas:

Shaver Shop Group Ltd (ASX: SSG)

Shaver Shop is an ASX retail share that sells male and female personal grooming products and wants to be the market leader in all things related to hair removal. There are currently more than 120 stores around Australia and New Zealand. It also sells other retail products relating to oral care, hair care, massage, air treatment and beauty categories.

Despite all of the lockdowns in the first half of FY22, the company managed to achieve impressive online sales growth to make up for it. In FY22 to 7 November 2021, total sales only fell 0.9% with total online sales jumping 58.6% year on year. It was a 329.4% improvement against FY20. In FY21, it fulfilled 2.4 million customer transactions.

The company has a number of different growth plans including growing the number of returning customers, growing its brand awareness, expanding into new categories, opening new stores and driving operational efficiency. The company is proud of its customer satisfaction, with a net promoter score (NPS) of 89.1 out of 100.

The cheap ASX share is currently rated as a buy by Ord Minnett, with a price target of $1.25. On the broker’s projected FY22 numbers, the Shaver Shop share price is valued at 9x FY22’s estimated earnings with a grossed-up dividend yield of 10%.

Bapcor Ltd (ASX: BAP)

Bapcor is an auto parts business that is the leading player in the sector, with a number of different brands like Autobarn, Burson, Truckline and Midas.

The business just reported its FY22 half-year result which showed “solid financial performance” including continued revenue growth despite all of the impacts of the lockdowns during the period. The opening up of Melbourne and Sydney led to the second quarter revenue increasing materially compared to the first quarter of FY22.

In summary, Bapcor reported that HY22 revenue grew by 1.9% to $900.1 million and net profit after tax (NPAT) rose 14.7% to $57.7 million. The interim dividend was grown by 11.1% to 10 cents per share.

It has plans to grow in a number of areas. One tactic is to grow its store networks across Australia and New Zealand. It’s planning to become more efficient with its distribution centres. Bapcor wants to expand in Asia with both Tye Soon and building its own Burson network in Asia.

The cheap ASX share also wants to ‘realise’ operational efficiencies and expand its own brand product range (which has a higher gross profit margin).

Ord Minnett rates the company as a buy, with a price target of $8.60. Ord Minnett is expecting the auto parts business to be able to achieve stronger margins and good growth in Asia over time.

On the broker’s numbers for FY22, the Bapcor share price is valued at 18x FY22’s estimated earnings with a grossed-up dividend yield of 4.4%.

The post 2 cheap ASX shares value investors shouldn’t miss appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX shares today
• Why Bapcor, Mineral Resources, Nanosonics, and Syrah shares are falling today
• Down but not out: Bapcor (ASX:BAP) share price slumps on sluggish first half
• Are these 2 industry-leading ASX shares too good to ignore and now buys?
• 2 ASX shares with growing fully franked dividends

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 Bapcor. 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 are a growing number of exchange traded funds (ETFs) for investors to choose from on the Australian share market.

Three that could be worth getting better acquainted with next week are listed below. Here’s what you need to know about them:

BetaShares Cloud Computing ETF (ASX: CLDD)

With the world rapidly moving to the cloud, companies with exposure to cloud computing look well-placed for growth over the next decade. This could make the BetaShares Cloud Computing ETF worth a look. This ETF aims to track the performance of the Indxx Global Cloud Computing Index, which includes leading global companies involved in the delivery of computing services, servers, storage, databases, networking, software, analytics and other services over the internet. Through this ETF, you’ll be buying a slice of companies such as Dropbox, Netflix, Shopify, and Zoom.

BetaShares Crypto Innovators ETF (ASX: CRYP)

The BetaShares Crypto Innovators ETF could be worth looking at if you’re interested in the high risk world of cryptocurrencies. The fund manager notes that the ETF allows investors to access the growth potential of the crypto economy through exposure to a portfolio of companies at the forefront of the crypto world. This includes crypto trading platforms, crypto mining and mining equipment firms, and other companies servicing crypto-markets. Among its holdings you’ll find Coinbase, Silvergate, and Riot Blockchain.

Vanguard MSCI Index International Shares ETF (ASX: VGS)

A final ETF for investors to look at next week is the Vanguard MSCI Index International Shares ETF. This ETF provides investors with easy access to the world’s largest listed companies. Vanguard notes that this allows investors to take part in the long term growth potential of international economies. Among the ~1,500 companies included in the ETF are Apple, Johnson & Johnson, JP Morgan, Nestle, Procter & Gamble, and Visa.

The post 3 exciting ETFs for ASX investors next week appeared first on The Motley Fool Australia.

More reading

• Why Vanguard MSCI Index International Shares and this ETF could give your portfolio a boost
• 2 market-beating ETFs for ASX investors in January
• Shopping for some new ASX ETFs in 2022? Here’s what you need to know
• Is the Vanguard MSCI Index International Shares ETF (ASX:VGS) the most diversified ETF on the market?

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. owns and has recommended Betashares Crypto Innovators ETF and 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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Earnings season went up a gear last week with a large number of popular ASX 200 shares releasing their latest results.

Among the best results last week were arguably the three listed below. Here’s what these ASX 200 shares reported:

Commonwealth Bank of Australia (ASX: CBA)

Australia’s largest bank surprised the market by delivering a half year result that was well-ahead of expectations. For the six months ended 31 December, Commonwealth Bank reported a 23% increase in cash earnings to $4,746 million.

This compares to Goldman Sachs’ cash earnings estimate of $4,295 million, Morgans’ estimate of $4,320 million, and the market consensus estimate of $4,500 million.

In addition, CBA declared a $1.75 per share fully franked interim dividend and announced a $2 billion on-market share buyback. The latter is on top of the $6 billion off-market buyback that completed in October.

Macquarie Group Ltd (ASX: MQG)

Another impressive result came out of investment bank Macquarie. It released its third quarter operational update and revealed that it had a record quarter thanks to its market-facing businesses, Commodities and Global Markets (CGM) and Macquarie Capital (MacCap).

Management revealed that these businesses’ combined profit contribution was up “substantially” on the prior corresponding period. This is also the case on a financial year to date basis, which bodes well for its full year results.

The CGM business delivered strong results across its commodities platform, but particularly in global Gas & Power and Resources. This was driven by increased client hedging and trading opportunities from unusually challenging market conditions. Whereas the MacCap business completed 126 transactions valued at $105 billion globally during the quarter.

Megaport Ltd (ASX: MP1)

Another ASX 200 share that impressed investors was Megaport. While the network as a service provider had pre-released a good portion of its half year figures in January, there were still enough pleasant surprises to get investors excited.

Megaport reported a 42% increase in revenue over the previous corresponding period to $51.2 million. And while it posted a net loss of $20.2 million, this was an improvement from $38.4 million a year earlier. This was thanks to a notably higher than expected gross margin and left Megaport with a healthy cash balance of $104.6 million.

Goldman Sachs reacted very positively to the update, reiterating its buy rating with a $19.90 price target. It commented: “We believe incremental commentary today was broadly positive and supportive of our 2H22 revenue acceleration (+42%/+48% in 1H/2H), driven by MVE and Partner channel traction.”

The post 3 of the best results on the ASX 200 last week appeared first on The Motley Fool Australia.

More reading

• 2 quality ASX dividend shares to buy next week
• The Macquarie (ASX:MQG) share price has ‘run hard’: What’s next?
• Brokers name 3 ASX shares to buy today
• Why are these ASX 200 tech shares tumbling more than 6% on Friday?
• Here are the top 10 ASX shares today

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. owns and has recommended MEGAPORT FPO. The Motley Fool Australia has recommended MEGAPORT FPO and Macquarie Group 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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It has been a difficult period for investors, with many popular growth shares pulling back meaningfully in recent weeks.

While that is disappointing, it could have created a buying opportunity for the three ASX growth shares listed below. Here’s what you need to know about them:

Domino’s Pizza Enterprises Ltd (ASX: DMP)

The first ASX share to consider this month is this pizza chain giant. While rising inflation poses challenges for Domino’s and could put pressure on its margins, this is only expected to be temporary. In light of this, investors may want to focus more on the long term, which remains very positive. This is thanks to its bold expansion plans at home and overseas, acquisitions, and its focus on technology.

Goldman Sachs remains positive on Domino’s. It currently has a buy rating and $136.20 price target on the company’s shares.

Life360 Inc (ASX: 360)

Another growth share to look at is Life360. Through its Life360 app, the company operates in the digital consumer subscription services market. It has a focus on products and services for digitally native families, where all members of the household are connected by smartphones. At the last count, the company had a massive 33.8 million monthly active users are using its app and was generating US$120.1 million of Annualised Monthly Revenue (AMR) from them. In addition, Life360 has made a number of bolt-on acquisitions recently that open up material cross and upselling opportunities in the future.

Bell Potter is bullish on Life360. It currently has a buy rating and $13.51 price target on its shares.

Xero Limited (ASX: XRO)

A final ASX growth to look at is this cloud-based accounting solution provider to small and medium sized businesses. Xero has been growing at a rapid rate in recent years and continued this trend in FY 2022. For example, during the first half, it reported a 23% increase in subscribers to 3 million and a 29% lift in annualised monthly recurring revenue (AMRR) to NZ$1,132 million. Positively, Xero’s subscriber count is still only a fraction of its total addressable market of 45 million subscribers globally.

Citi is bullish on Xero. Last month the broker retained its buy rating and $160.00 price target on the company’s shares amid positive read-throughs from rival Sage’s Q1 update.

The post 3 ASX growth shares to buy after recent market weakness appeared first on The Motley Fool Australia.

More reading

• Down 24% in 2022: Is the Xero (ASX:XRO) share price a strong buy?
• Why AGL, Magellan, Xero, and Zip shares are sinking
• Top brokers say there are still ASX 200 growth shares with massive upside in 2022
• Why are these ASX 200 tech shares tumbling more than 6% on Friday?
• 3 buy-rated ASX growth shares to make you smile

Motley Fool contributor James Mickleboro owns Life360, Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Life360, Inc. and Xero. The Motley Fool Australia owns and has recommended Xero. The Motley Fool Australia has recommended Dominos Pizza Enterprises 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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If you’re wanting to boost your income with some dividend shares next week, then you might want to consider the ones listed below.

These dividend shares have recently been named as buys and tipped to provide investors with attractive yields in 2022. Here’s what you need to know about them:

Adairs Ltd (ASX: ADH)

The first ASX dividend share for investors to look at this week is leading furniture and homewares retailer, Adairs.

Although FY 2022 has been tough so far due to COVID-19 headwinds, this weakness is only expected to be temporary. This could make the recent selloff of its shares a buying opportunity for patient income investors.

Commenting on the selloff, analysts at Morgans said: “Today’s trading update was a disappointment and has led us to lower expectations for full year earnings. The share price reaction to the statement was, however, greater than we had thought appropriate. The FY23F P/E of 7.6x with a dividend yield of 8.7% are attractive enough for us to retain an ADD rating.”

The broker has retained its add rating but cut its price target to $3.70. In addition, it is now forecasting fully franked dividends of 19 cents per share in FY 2022 and 26 cents per share in FY 2023.

Based on the current Adairs share price of $3.18, this will mean yields of 6% and 8.2%, respectively, over the next couple of years.

Commonwealth Bank of Australia (ASX: CBA)

Another ASX dividend share to look at next week is Australia’s largest bank, Commonwealth Bank.

Bell Potter is a fan of the banking giant and upgraded its shares to a buy rating with a $108.00 price target last week following its half year results.

Commenting on the results, Bell Potter said: “CBA’s $4.75bn cash NPAT was 8% higher than our forecast. […] Cash NPAT was nearly on par with 2H21, a great outcome. There was also investment in operational execution (in line with the bank’s strategic priorities) coupled with a return of excess capital to shareholders of $2bn (on-market share buyback; surplus capital post buy-back would be around $4bn).”

As for dividends, the broker is forecasting CBA to pay fully franked dividends of $3.87 per share in FY 2022 and then $4.07 per share in FY 2023.. Based on the current CBA share price $98.55, this represents yields of 3.9% and 4.1%, respectively.

The post 2 quality ASX dividend shares to buy next week appeared first on The Motley Fool Australia.

More reading

• Top brokers name 3 ASX shares to sell today
• Why Motley Fool analyst Drew Flowers thinks now is a great time to furnish your portfolio with Adairs (ASX:ADH) shares
• CBA’s stunning profit, Fortescue investing $10b in renewables. Scott Phillips on Nine’s Late News
• CBA (ASX:CBA) boss Matt Comyn sounds warning on interest rate hikes
• Broker upgrades CBA (ASX:CBA) shares to buy rating following ‘great’ half

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. owns and has recommended ADAIRS FPO. The Motley Fool Australia owns and has recommended ADAIRS FPO. 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 Xero Limited (ASX: XRO) share price has seen a significant decline since the start of the year. It’s down by 24%, almost a quarter.

Considering Xero’s size, it has seen one of the biggest declines in market capitalisation in the S&P/ASX 200 Index (ASX: XJO) over the last several weeks.

What’s happening to the Xero share price?

There has been a widespread sell-off of many growth-focused names on the ASX (and around the world).

Interest rates play a key role in affecting asset valuations. That effect is felt everywhere – shares, bonds, property and so on. With so much inflation happening in the US, economists are now thinking that the US central bank, the Federal Reserve, is going to need to increase the rate significantly this year to get things under control.

For example, Goldman Sachs economists now reckon there are going to be seven interest rate increases in 2022.

Many other ASX names have also been sold off heavily. The WiseTech Global Ltd (ASX: WTC) share price is down 24.6% this year, Altium Limited (ASX: ALU) is down 22% and the Temple & Webster Group Ltd (ASX: TPW) share price is down 23%. So, Xero is not alone.

The company continues to grow

Xero’s management will continue doing what they think is right for Xero, regardless of whether the Xero share price is above $150, or around $100.

The cloud accounting software business is building a global position as a leading player. At the end of September 2021 it had 3 million subscribers, which was an increase of 23% year on year.

Xero recognises that to best support its subscribers and win new ones, it needs to keep investing in supporting customer needs and innovating for the long term. Small businesses around the world are increasingly recognising the critical importance of digital tools to help them adapt and succeed in a changing operating environment, according to Xero. That’s why its product design and development costs increased 51% to $166.8 million in the first half of FY22, representing a third of operating revenue.

Xero wants to be the world’s most insightful and trusted small business platform to make life better for people in small businesses.

Numerous financial measures improved in the first half for Xero, including average revenue per user (up 5%), annualised monthly recurring revenue (up 29%) and the gross profit margin (up 1.4 percentage point to 87.1%).

Why the Xero share price could be a major buy

Multiple brokers think the Xero share price is a buy including Citi and Credit Suisse. Both of those price targets were $160, though this was before the 2022 decline. It implies 40% upside this year, if those brokers end up being correct. They note the strength of the software as a service (SaaS) offering of the business, with an attractive rise of the average revenue per user.

After seeing the HY22 report, Macquarie rated Xero as a sell/underperform. But the price target was $130 – that’s 17% higher than where it is today. The underperform rating was because of the stretched valuation.

However, it must be noted that not every broker’s price target is higher. UBS rates Xero as a sell and the price target is $88. That implies a drop of 20% over this year. It thinks the company is growing well, but the Xero share price was too expensive.

The post Down 24% in 2022: Is the Xero (ASX:XRO) share price a strong buy? appeared first on The Motley Fool Australia.

More reading

• These were the best performing ASX 200 shares last week
• These were the worst performing ASX 200 shares last week
• Here are the top 10 ASX shares today
• Why AGL, Magellan, Xero, and Zip shares are sinking
• Here are the 3 most heavily traded ASX 200 shares this Friday

Motley Fool contributor Tristan Harrison owns Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Altium, Temple & Webster Group Ltd, WiseTech Global, and Xero. The Motley Fool Australia owns and has recommended WiseTech Global and Xero. The Motley Fool Australia has recommended Macquarie Group Limited and Temple & Webster Group 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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It’s been a rocky start to 2022 for the Coles Group Ltd (ASX: COL) share price. But a top broker believes that the supermarket chain will continue to languish.

The dour outlook for Coles stems from UBS’ latest supermarket supplier survey conducted between 13 January and 8 February.

The findings from the survey provide no relief for the Coles share price, which has fallen around 10% since the start of the calendar year. This compares to a 4.6% decline for the S&P/ASX 200 Index (ASX: XJO).

How the Coles share price compares to Woolworths share price

At least Coles shareholders are in good company. The Woolworths Group Ltd (ASX: WOW) share price and Metcash Limited (ASX: MTS) share price have also underperformed the ASX 200 this year.

UBS asked FMCG suppliers to rate Coles and Woolworths across 26 sub-categories on a scale of 1 to 10.

The broker noted that Woolies retained its leadership position in all 26 sub-categories compared to Coles.

Coles rated worse than Woolworths

It also noted that scores deteriorated in all 26 sub-categories for Coles when compared to the July 2021 survey. Having said that, Woolworths is not much better as it lost ground in 25 out of the 26 sub-categories. UBS believes this is due to the impact of the Omicron COVID-19 variant.

This could explain why supply chain and store operations, people and engagement, range and data and analytics were areas that declined most.

What could also pressure the Coles share price is that it may have lost Christmas to its archrival Woolworths.

Coles share price lost the Christmas battle

“Across survey respondents, 70% indicated Woolworths had the better Christmas, 9% Coles and 21% saying Coles & Woolworths were the same,” said UBS.

“Looking six months forward, market share gains are expected most from Woolworths (70%), then Aldi (9%), while MTS supplied IGA (52%) and Coles (42%) were most expected to lose market share.”

Inflation tailwind becomes a headwind

In further bad news, investors shouldn’t assume that supermarkets will benefit from rising inflation.

Higher prices are usually good news for the likes of Coles and Woolworths as food staples tend to be inelastic. This means consumers generally buy the same quantity even if prices rise and that will lift like-for-like sales at the supermarkets. But this may not be the case this time around.

“Yet volume and product mix is expected to be impacted, with the prospect of reduced volumes or trade down (e.g. smaller pack size, private label) expected by 79% of respondents, and only 21% expecting no impact to volumes or product mix,” added UBS.

The broker has a sell recommendation on the Coles share price. However, even though Woolies appears to be beating Coles, UBS also rates the Woolworths share price as a sell.

The post Why UBS is warning of more pain for the Coles (ASX:COL) share price appeared first on The Motley Fool Australia.

More reading

• Own Woolworths (ASX:WOW) shares? Now you also own part of this niche start-up
• Why is the Woolworths (ASX:WOW) share price trailing Coles by 5% over the past month?
• Why does the Woolworths (ASX:WOW) share price have the blues today?
• Price check: Woolworths (ASX:WOW) shares have already dropped 8% in 2022. Can they recover?
• Could this be the biggest issue faced by ASX retail shares heading into earnings season?

Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns 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 Bruce Jackson.

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Despite a disappointing end to the week, the S&P/ASX 200 Index (ASX: XJO) was able to record a strong gain last week. The benchmark index rose 1.4% to end the period at 7,217.3 points.

While a good number of shares climbed higher with the market, some rose more than most. Here’s why these were the best performing ASX 200 shares:

Flight Centre Travel Group Ltd (ASX: FLT)

The Flight Centre share price was the best performer on the ASX 200 last week with an 18.6% gain. Investors were buying the travel agent’s shares amid optimism that the reopening of Australia’s international borders will be a boost to its performance. For the same reason, the Webjet Ltd (ASX: WEB) share price rose 17.5% and the Corporate Travel Management Ltd (ASX: CTD) share price jumped 12.9% last week.

Computershare Limited (ASX: CPU)

The Computershare share price was on form last week and stormed 11.1% higher. Investors were buying the stock transfer company’s shares after its first half update impressed the market. Computershare delivered a 4.6% increase in management revenue to US$1.2 billion and a 4.5% lift in management earnings per share to 22.76 US cents. This was ahead of even the company’s expectations, which led to management upgrading its full year earnings per share growth guidance from 2% to 9%.

Viva Energy Group Ltd (ASX: VEA)

The Viva Energy share price wasn’t far behind with a 10.9% gain. This was despite there being no news out of the fuel retailer. Investors may have been buying shares ahead of its full year results release this month. Management expects to report a profit in the range of $470 million and $490 million. The mid-point of this guidance range represents a 96% year on year increase.

Graincorp Ltd (ASX: GNC)

The Graincorp share price was a strong performer and climbed 8.9% over the five days. This was driven by the release of a trading update from the grain exporter. According to the release, GrainCorp expects its underlying net profit after tax to come in at $235 million to $280 million in FY 2022. This will be up 69% to 100% over the $139 million it reported in FY 2021.

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

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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 Corporate Travel Management Limited, Flight Centre Travel Group Limited, and Webjet Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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