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Is the Woodside share price cheap following its recent dip?

Worker at a gas and oil pipeline.

Worker at a gas and oil pipeline.

The Woodside Energy Group Ltd (ASX: WDS) share price is up 1.8% in early afternoon trade today after falling 2.6% on Friday.

Today’s rebound comes on the back of higher crude oil prices. Brent crude gained 1.9% overnight amid news that China is rolling back its economy, hampering COVID zero policies.

Brent is currently trading for US$87.23 per barrel. That’s a 5.1% increase since last Tuesday.

However, oil and gas prices have remained sharply down over the past month. And the Woodside share price is also down 7% since this time last month.

Which brings us to…

Is the Woodside share price cheap following its recent dip?

Whether the Woodside share price represents good value at current levels depends on who you ask.

A number of analysts were disappointed after the S&P/ASX 200 Index (ASX: XJO) oil and gas stock released its FY23 guidance on 29 November.

In its first full year of production since its petroleum transaction with BHP Group Ltd (ASX: BHP), Woodside forecast production of 180 – 190 million barrels of oil equivalent (MMboe).

That figure came in lower than consensus expectations.

UBS counts amongst those with a bearish near-term outlook for the oil and gas giant, reducing its target for the Woodside share price to $34 from $34.40 That’s some 5% below the current price of $36.23 per share.

According to UBS (courtesy of The Australian Financial Review):

Despite a miss to 2023 production & capex, valuation still appears very full at current prices with WDS implying $78/bbl oil prices vs peers at low $60s/bbl.

Barrenjoey has also downgraded Woodside shares to underweight, dropping its price target from $35.80 per share to $35.20. Barrenjoey’s analysts had forecast FY23 production of 203MMboe.

According to Barrenjoey analyst Dale Koenders (quoted by The Australian):

We think the cracks from execution risks are starting to show for Woodside given the Sangomar start-up has been delayed from 2023 to 2H23 in August and as MODEC is shifting Flotation and Production Storage Offloading Unit construction / commissioning from China to Singapore to mitigate COVID-related labour constraints.

Sounding off for the Woodside bulls

Coming in with a positive view on the Woodside share price after the past month’s dip is Evans & Partners.

Its analysts, Adam Martin and Branko Skocic, kicked off Woodside Energy’s research coverage with a positive rating, valuing the company at $40 per share.

With new energy projects still lacking investment, they said the recent dip in Woodside “could provide an attractive entry point”.

According to the analysts (courtesy of The Australian):

For LNG markets in particular, there appears no easy solution to bring on new global supply, with lead times five years plus. This is coupled with demand growth across Europe – replacing Russian pipeline gas – and further growth out of Asia. We believe LNG will remain critical in the initial stages of the Energy Transition.

The Woodside share price is up 60% in 2022.

The post Is the Woodside share price cheap following its recent dip? appeared first on The Motley Fool Australia.

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

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The BrainChip CEO has sold $700,000 worth of his shares in a week. What’s going on?

People sitting in rows in a meeting with one person holding their hand up as if to ask a question.

People sitting in rows in a meeting with one person holding their hand up as if to ask a question.

It’s rarely a good look to see an ASX CEO sell shares of their company, let alone $700,000 worth of shares. Yet that is the situation that Brainchip Holdings Ltd (ASX: BRN) investors appear to find themselves in.

Last week, ASX investors were treated to not one but two ASX notices regarding Brainchip CEO Sean Hehir.

The first, which dropped on 30 November, revealed that Hehir had received 2 million fully paid ordinary shares. Those resulted from the vestiture of 2 million restricted stock units. These are issued to management under Brainchip’s employee share plan trust.

That left Hehir with 2 million ordinary shares and another 5.01 million in restricted stock units. But that wasn’t to last.

On 2 December, another ASX notice revealed that Hehir had gone on to sell 917,025 of those ordinary shares he had just received. This was executed at a share price of between 72.5 cents and 76.5 cents, meaning it would have netted Hehir between $664,843 and $701,524.

So why has the CEO immediately sold out of almost half of his total ordinary shareholding?

Why is the Brainchip CEO selling his shares?

Well, the Brainchip release stated that the on-market sale was “for the purpose of meeting taxation obligation as a result of previous vesting of RSUs [restricted stock units]”.

It leaves Hehir with a total of approximately 1.08 million Brainchip shares. Those would have a value of just over $812,000 today.

Earlier last month, another Brainchip director, Antonio Viana, sold 125,000 ordinary shares for an average price of 63 cents each. That left him with 561,66 shares. The reasons given for the sale were identical to that of Hehir.

Shareholders don’t typically like to see these kinds of trades. Investors feel more confident when the well-payed executives running their company have some skin in the game, that their fortunes ride or die alongside those of ordinary shareholders.

So no doubt the news of these sales has delighted few. But CEOs have bills to pay, just like everyone else. So it’s up to investors to decide whether these sales are justified or if they leave Brainchip’s management conveniently unexposed to the fortunes of the company they are running.

The Brainchip share price is now down 6.3% year to date in 2022.

The post The BrainChip CEO has sold $700,000 worth of his shares in a week. What’s going on? appeared first on The Motley Fool Australia.

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*Returns as of December 1 2022

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

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It took me years to realise I’m no investing genius like Warren Buffett

A head shot of legendary investor Warren Buffett speaking into a microphone at an event.A head shot of legendary investor Warren Buffett speaking into a microphone at an event.

1) Despite a choppy session on Wall Street on Friday, the S&P/ASX 200 Index (ASX: XJO) rose in lunchtime trading on Monday in yet another show of resilience for the local stock market.

Once again, as has been the case for most of the year, materials and energy stocks are getting the job done today, with the Fortescue Metals Group (ASX: FMG) share price leading the way higher. It’s up 7.67% on the day so far after the iron ore price posted a hefty one-month gain. 

The ASX 200 index has fallen just 3.3% so far in 2022, an outstanding return given the Reserve Bank of Australia (RBA) has hiked the cash rate from just 0.1% in April to its current level of 2.85%. 

By contrast, although they’ve enjoyed a nice bounce since the beginning of October, US markets have endured a painful year, the S&P 500 Index down 15% and the Nasdaq Composite plunging almost 28%.

2) Local eyes are on the RBA’s final meeting of the year, with consensus expectations the central bank will tomorrow raise the cash rate by another 25 basis points as it continues the fight against inflation.

Financial markets are pricing a peak in the cash rate of about 3.6% early in the second half of 2023, although Bank of America expects the RBA to follow up tomorrow’s rise with four consecutive 25 basis point hikes, bringing the terminal rate to 4.1%.

According to the AFR, Bank of America thinks “the RBA is underestimating wage pressures and that its slow hiking pace means more work will need to be done to rein in inflation.”

Whichever way you look at it, we’re closer to the end of the heavy lifting on interest rates than the start. That’s good news for equity markets.

The bad news for equity markets is higher interest rates will put the brakes on economic growth. According to Rate City, monthly repayments on a $500,000 mortgage have increased by $834 since May. 

That’s a LOT less money that can be spent on discretionary items such as clothing, gadgets, and couches. It explains why the share price of JB Hi-Fi (ASX: JBH) trades on a fully franked dividend yield of 7% and a price-to-earnings (PE) multiple of just nine times profits. 

3) Although inflation may have peaked, a mild recession is the base case scenario for the US economy. It’s going to be hard for many companies to grow their profits, with many going into reverse as profit margins also come under pressure. 

It’s why investing into the teeth of a bear market is so hard. Companies like JB Hi-Fi might look cheap today, but less so based on next year’s earnings. As predicting the near-term future is virtually impossible, investing in individual companies today means taking a leap of faith.

Buying quality companies with strong balance sheets and minimal debt – and JB Hi-Fi certainly fits that bill – is one way to mitigate the risk. But will that stop you bailing out if/when: a) a bout of stock market volatility hits and b) a subdued trading statement smacks the share price lower?

Many investors fail to enjoy the attractive long-term returns on offer from investing in the stock market because they interrupt the effects of compounding. They may buy a stock with the intention of holding it for five years or longer, but there’s a heck of a lot that can happen to a company and its share price over that time period, likely including a peak-to-trough fall of around 50%.

Investing regularly into a few low-cost index-tracking exchange-traded funds (ETFs) is a great option for most stock market investors. It takes stock picking out of the equation, and volatility is greatly reduced. 

My favoured option is the Vanguard MSCI Index International Shares ETF (ASX: VGS). If you want to throw in a local flavour, consider adding the Vanguard Australian Shares Index ETF (ASX: VAS). You’ll get exposure to the big miners, the big banks, and the big supermarkets.

4) If you are a stock junkie like me, and you have ambitions of outperforming the market, investing in individual companies can be interesting, fun, and rewarding.

That said, it can also be very challenging, as it has been for many investors over the past 15-odd months. 

The very best stock pickers only get it right six times out of ten, because when they do pick a big winner, the upside is unlimited. Imagine putting $5,000 into one stock and 10 years later, look back and see it has appreciated 2000%, turning that one investment into over $100,000. 

Fun, right? 

Not so much fun are the inevitable losers, the four out of ten you’ll get wrong. Although a few of the stocks I highlighted a month ago have had good recent runs, I’m still in the hole on a number of my small and microcap holdings, including Plenti Group (ASX: PLT) shares and Bluebet (ASX: BBT) shares.

On those latter two, hopefully, it’s a case of waiting for the market to appreciate their growth prospects and modest valuations. Although it could also be a case of me being wrong and their share prices never recovering, or worse, declining further, ultimately potentially leaving me sitting on losses of around 80%. 

5) It’s why portfolio sizing is key. I try not to chase my losers, especially ones whose share price is declining at the same time as the growth of the underlying business is slowing. That’s the case with Plenti and Bluebet, and why I’m not adding to my holdings despite the share price weakness. 

It took me many years to realise I’m no investing genius like Warren Buffett, someone who takes huge high conviction bets on a very small number of companies. For mere mortals, hedge your bets by spreading your bets across 20 or 30 different stocks. The winners will inevitably rise to the top, the losers slowly disappearing into tiny, inconsequential holdings.  

I also realise I’m no Warren Buffett when it comes to investing returns. He’s compounded at an average annual return of 20% for 56 years. If you can do between 8% and 12% for 20 or 30 years – including regularly adding money to the market over that period – you’ll do very well as an investor.

The post It took me years to realise I’m no investing genius like Warren Buffett appeared first on The Motley Fool Australia.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the ‘five best ASX stocks’ for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now

See The 5 Stocks
*Returns as of December 1 2022

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Motley Fool contributor Bruce Jackson has positions in BlueBet and Plenti Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Vanguard Msci Index International Shares ETF. The Motley Fool Australia has recommended BlueBet, Jb Hi-Fi, and 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 Scott Phillips.

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ASX index beaters: 5 shares that have supercharged portfolios in 2022

A woman with strawberry blonde hair has a huge smile on her face and fist pumps the air having seen good news on her phone.

A woman with strawberry blonde hair has a huge smile on her face and fist pumps the air having seen good news on her phone.It certainly has been a year for stock picking rather than index investing.

Although the ASX 200 index is on course to record a 3% decline in 2022, some ASX shares have absolutely smashed the market with supercharged returns.

This means that if you had one or more of these ASX index beaters in your portfolio, there’s a good chance that you’ll have outperformed the benchmark this year.

What are the ASX index beaters of 2022?

Five standout ASX index beaters are listed below. Here’s how they have performed in 2022:

Mineral Resources Limited (ASX: MIN)

The Mineral Resources share price is up 56% in 2022. This has been driven largely by the the company’s exposure to lithium and the sky high prices the battery making ingredient is commanding right now.

Myer Holdings Ltd (ASX: MYR)

The Myer share price has been an ASX index beater this year with its gain of 61%. Investors have been buying the department store operator’s shares following the release of an impressive full year result in September. Thanks to its successful focus on profitable sales, Myer reported a 103.8% increase in net profit to $60.2 million during FY 2022.

Origin Energy Ltd (ASX: ORG)

The Origin share price has been a strong performer in 2022 and is up 47%. The catalyst for this was the receipt of a takeover approach in November. The energy company received an indicative, conditional, and non-binding proposal from Brookfield Asset Management and MidOcean Energy to acquire it for $9.00 cash per share. This represents a premium of almost 55% to its share price at the time.

Pilbara Minerals Ltd (ASX: PLS)

The Pilbara Minerals share price is another ASX index beater in 2022 with a gain of almost 34%. This has been driven by the lithium miner’s strong performance and positive outlook. In fact, the company’s outlook is so positive thanks to production growth plans and high prices, that management expects to be able to pay its maiden dividend this financial year.

Sayona Mining Ltd (ASX: SYA)

The Sayona Mining share price is the best performer in the group. In 2022, this lithium developer’s shares are up 66%. Sayona Mining, the third ASX lithium share in the list, is an index beater thanks to excitement around its North American Lithium (NAL) project. Management expects NAL to be producing lithium in the first quarter of 2023.

Time will tell if 2023 is just as successful for these shares.

The post ASX index beaters: 5 shares that have supercharged portfolios in 2022 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 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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