Tag: Motley Fool

Pilbara Minerals Ltd (ASX: PLS) shares are charging higher on Wednesday.

In morning trade, the lithium miner’s shares are up 4% to $3.41.

Why are Pilbara Minerals shares rising?

Investors have been buying the company’s shares today after responding positively to its quarterly update.

According to the release, Pilbara Minerals delivered a 22% quarter on quarter increase in spodumene concentrate production to 176kt during the three months. This was achieved through improved processing plant availability with one less shut down in the December quarter compared to the prior quarter.

Also heading in the right direction were its sales volumes, which increased 9% quarter on quarter to 146.4kt.

However, heading very much in the wrong direction was the price of its lithium. Pilbara Minerals reported a 50% decline in its realised price to US$1,113 per tonne.

The good news is that it was able to reduce its unit operating costs (FOB) to US$416 per tonne, which means it is still generating plenty of cash flow despite the lower prices. Unit cost reductions were underpinned by higher sales volumes that were enabled by increased production volume.

Management revealed that it had a cash margin from operations of $176 million. Though, due largely to tax payments, its cash balance had declined almost $900 million to $2,144 million at the end of December.

In light of this, the company has warned that it is unlikely to pay a dividend for the first half of FY 2024.

Cost and capital investment review

Pilbara Minerals believes that the strength of its balance sheet is a significant competitive advantage. As a result, it is focused on preserving that advantage through rationalising non-essential spend that does not impact on expansion or further improve unit operating costs.

With that in mind, management has increased its focus on unit-cost efficiency and conducted a review of capital spend.

Based on this review, it is decreasing its FY 2024 capital expenditure guidance range from $875 million to $975 million to a new range of $820 million to $875 million. This reflects a number of non-essential new projects and enhancements being deferred.

Pleasingly, this reduction in capital expenditure is not expected to impact the timing of the P680 or P1000 expansion projects, which remain on schedule. All other FY 2024 guidance has been reaffirmed.

Outlook

Management remains very positive on the company’s long term outlook thanks to the its low costs and the strength of its balance sheet.

The long-term outlook for lithium remains strong based on compounding growth in EV production and other energy storage applications. However, as with many emerging sectors, the industry has seen pricing volatility including periods of lower pricing.

With a low unit-cost structure and strong balance sheet position, Pilbara Minerals is uniquely placed relative to many of its competitors in the lithium sector to withstand and capitalise on a period of lower prices that could rationalise the market. With increasing production capacity, the Group is also uniquely positioned to take advantage of an improvement in market conditions when the pricing cycle turns.

Pilbara Minerals shares are down 30% over the last 12 months.

The post Pilbara Minerals shares charge higher on rock solid Q2 update appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• 5 things to watch on the ASX 200 on Wednesday
• Why is the Pilbara Minerals share price rebounding on Tuesday?
• Here’s the lithium price forecast through to 2027
• Why has the Pilbara Minerals share price just tanked 6%?
• Mineral Resources shares tumble 9% on unfavourable broker rating

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.

from The Motley Fool Australia https://ift.tt/IzaWd5h

If you’re on the lookout for exposure to the banking sector, then it could be worth looking outside the big four.

Especially when one ASX 300 bank stock has been tipped to rise 50% from current levels by analysts at Goldman Sachs.

Why ASX 300 bank stock is a buy?

The bank stock in question is small business lender Judo Capital Holdings Ltd (ASX: JDO).

Earlier this week, it released its unaudited half year results and revealed a significant jump in earnings.

Judo posted an unaudited profit before tax (PBT) of $67 million for the first half, which was up 24% on the prior corresponding period. This was underpinned by continued above-system lending growth, strong net interest margins, continued investment in growth, and minimal write offs.

Looking ahead, it is forecasting a second half PBT of $40 million to $45 million, resulting in FY 2024 PBT of $107 million to $112 million.

This strong update caught the eye of analysts at Goldman Sachs. They commented:

JDO has pre-released its 1H24 results, with net profit before tax of A$67 mn, up from A$54 mn in 2H23, and 32%/20% above prior GSe/company compiled consensus (CCC). The beat was driven by lower-than-expected expenses and higher revenues (we expect non-interest income). BDDs were broadly in-line with GSe — but lower than CCC — and as such 1H24 PPOP was 19%/6% higher than GSe/CCC.

And while the broker acknowledges that the update didn’t provide much information on its outlook beyond FY 2024, it is feeling confident about the future and feels that the market is being too negative. It summarises:

While the update will be positive for sentiment, we think it contained very little new information in relation to our outer year earnings, which remain broadly unchanged. With valuations still pricing in too negative an outcome around the sustainable profitability of the business model, our Buy rating is unchanged.

Goldman has a buy rating and $1.63 price target on the ASX 300 bank stock’s shares. This implies potential upside of approximately 50% for investors over the next 12 months.

The post This dirt cheap ASX 300 bank stock has 50% upside: Goldman Sachs appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Why Boss Energy, Cooper Energy, Judo Capital, and Polynovo shares are racing higher
• Guess which ASX All Ords stock is surging 14% on soaring profit

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 positions in and has recommended Goldman Sachs Group and Judo Capital. 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.

from The Motley Fool Australia https://ift.tt/QHzg7MJ

If you’re looking for a combination of capital gains and attractive dividend yields, then look no further.

That’s because analysts at Bell Potter have just named an ASX 300 share that offers both as a buy.

Buy this ASX 300 share

The share in question is agribusiness company Elders Ltd (ASX: ELD).

According to the note, the broker believes that the good times are almost here for the ASX 300 share. It commented:

Our Buy rating is unchanged. Since reporting FY23 results in Nov’23 soil moisture profiles in key summer cropping regions have improved (with NOAA long range forecasts shifting to ENSO neutral by April-June) and livestock prices have firmed, with volumes generally continuing to demonstrate high single-to-double digit YOY gains in both cattle and sheep/lamb markets.

While the broker doesn’t expect this to lead to earnings growth in FY 2024, it is forecasting strong growth in the next two financial years.

It expects earnings per share to fall 13% this year before rebounding 22% in FY 2025 and then 11.5% in FY 2026.

Big returns ahead

The note reveals that Bell Potter has retained its buy rating on Elders’ shares and increased its price target to $9.50 (from $8.35).

Based on where this ASX 300 share currently trades, this implies potential upside of more than 13% for investors over the next 12 months.

In addition, the broker is forecasting a 34 cents per share partially franked dividend in FY 2024. This represents a 4.1% dividend yield at current prices, which boosts the total potential return comfortably beyond 17%.

And thanks to that forecast earnings rebound in FY 2025, the broker expects a dividend increase to 41 cents per share next year. This equates to a generous 4.9% dividend yield for investors to look forward to receiving.

The post Buy this ASX 300 share for 13% upside and a 4% dividend yield appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Here are the top 10 ASX 200 shares today
• A 5.8% yield but down 21%! Time for me to buy more of this ASX gem?
• Here are the top 10 ASX 200 shares today

from The Motley Fool Australia https://ift.tt/YIzxXT2

CSL Ltd (ASX: CSL) shares have soared 27% since 30 October 2023, significantly outperforming the S&P/ASX 200 Index (ASX: XJO) which has only gone up by 11% in the same time period.

The ASX healthcare giant‘s shares have struggled since the onset of the COVID-19 pandemic, as we can see on the chart above.

This company is undoubtedly one of the ASX’s best success stories. It has grown from a decently-sized business when it listed into a company with a market capitalisation of $140 billion.

CSL has invested many billions into research and development to create new healthcare treatments and new products, which can then unlock larger earnings. But its historic success doesn’t mean the future performance will be great.

Is it overpriced?

It’s possible that a company’s share price can run ahead of what’s a fair price. One expert certainly seems to think the business has gone too far.

Writing on The Bull, Braden Gardiner from Tradethestructure called CSL shares a sell. He pointed out CSL has guided that revenue is expected to grow by between 9% to 11% in constant currency terms compared to FY23.

Gardiner wrote:

In my view, the [CSL] share price is trading in extended territory, which may trigger some profit taking. Investors may want to consider cashing in some gains.

He had that opinion when the CSL share price was trading at $283.97. It’s even higher now, with the share price currently at $293.34, so he might think the business is even more of a sell than before.

My take on the CSL share price

The company is priced quite highly, on a price/earnings (P/E) ratio basis. According to Commsec, the business is valued at 31 times FY24’s estimated earnings. Considering how large the business is, that’s a lofty valuation and assumes a fair bit of profit growth in the coming years.

It’s facing increased competition for some of its product base, though its R&D may help it stay ahead of the game in most areas of its product range.

I’m not an expert on biotechnology, and I’d guess many other Aussies aren’t either. That makes it harder to evaluate the strength of its economic moat, and how damaging a competitor’s progress might be.

This is the sort of business that could keep growing for many years into the future. Ageing demographics are a useful tailwind for healthcare demand. Governments and individuals are generally willing to spend on healthcare because of the positive effects it can have, so it’s quite a defensive business in my eyes.

I’m not excited about the company at the current CSL share price, but it’s appealing that the business is expected to grow its profit in FY24, FY25 and FY26, according to Commsec. It’s valued at 24 times FY26’s estimated earnings. I’d prefer to buy at a cheaper price though, if we’re talking about investing in the next 12 months.

The post Is now the right time to buy CSL shares? Here’s my take appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• I’m buying cheap ASX shares to build my wealth in 2024 and beyond
• Experts tip very big returns from these outstanding ASX 200 blue chip shares
• Is 2024 the year that CSL shares finally hit a new high?
• 2 Warren Buffett tips I’ll be following when buying ASX shares in 2024
• Aiming to get richer in 2024? I’d buy cheap ASX shares in January

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 CSL. The Motley Fool Australia has recommended CSL. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/qcpWIzL

If you’re an income investor looking for dividend shares to buy, then you might want to read on.

That’s because listed below are three top ASX dividend shares that analysts are recommending as buys.

Here’s what you need to know about them:

ANZ Group Holdings Ltd (ASX: ANZ)

If you’re looking for banking sector exposure, then ANZ could be a good ASX dividend share to buy. That’s the view of analysts at Goldman Sachs, which like the bank due to its exceptionally strong institutional operations.

Goldman Sachs currently has a buy rating and $27.85 price target on its shares.

In respect to income, the broker is forecasting fully franked dividends per share of $1.62 in both FY 2024 and FY 2025. Based on the current ANZ share price of $26.62, this will mean dividend yields of 6.1%.

Healthco Healthcare and Wellness REIT (ASX: HCW)

Another ASX dividend share that has been named as a buy is Healthco Healthcare and Wellness REIT.

It is a leading health and wellness focused real estate investment trust. It offers investors exposure to a diversified portfolio underpinned by attractive megatrends.

Morgans is positive on the company and has an add rating and $1.67 price target on its shares.

In addition, it is forecasting dividends per share of 8 cents in FY 2024 and FY 2025. Based on the current Healthco Healthcare and Wellness REIT unit price of $1.28, this will mean yields of 6.3% in both years.

Telstra Group Ltd (ASX: TLS)

A final ASX dividend share that analysts rate as a buy is telco giant Telstra.

Goldman Sachs is also a fan of Telstra and has a buy rating and $4.70 price target on its shares. It likes the company’s low risk earnings and dividend growth over the coming years.

As for dividends, the broker is forecasting fully franked dividends of 18 cents per share in FY 2024 and then 19 cents per share in FY 2025. Based on the current Telstra share price of $3.99, this equates to fully franked yields of 4.5% and 5%, respectively.

The post Brokers name 3 ASX dividend shares to buy now appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• How I’d build a backup superannuation fund with $10,000 and 5 ASX shares
• The pros and cons of buying Telstra shares right now
• Buy Endeavour and these ASX dividend stocks
• Top ASX shares to buy in 2024 instead of investing in a term deposit
• Which had the better year in 2023: Telstra, Woodside or Wesfarmers shares?

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 positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has positions in and has recommended Telstra Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/ULZ8INl

Karoon Energy Ltd (ASX: KAR) shares took a bit of a hit on Tuesday.

The ASX 200 energy stock’s shares fell as much as 8% to a 52-week low of $1.71 before settling the day at $1.79.

Investors were hitting the sell button after the company downgraded its production guidance following complications with the FPSO Cidade de Itajai’s gas injection dehydration unit.

While this decline is disappointing, Goldman Sachs believes it is a buying opportunity for investors and is tipping big returns.

What is Goldman saying about this ASX 200 energy stock?

According to the note, the broker has revised its earnings estimates to reflect Karoon Energy’s lower oil production in Brazil.

And while this has led the broker to trim its valuation, it doesn’t make an investment any less attractive according to Goldman.

Its analysts have retained their buy rating with a $2.41 price target, which implies potential upside of 35% for investors over the next 12 months.

Three reasons to buy

Goldman has laid out three reasons why it thinks investors should be buying this ASX 200 energy stock. The first is its attractive valuation. It said:

KAR is trading at a ~25% discount to our risked NAV following recent oil price weakness and concern over Brazilian production challenges, which we feel does not reflect the value of existing producing assets and the potential Neon development, where our unrisked NAV including 100% of Neon is A$3.37/sh.

In addition, the broker highlights the strong free cash flow (FCF) it is expected to generate. It adds:

Trading on a ~25% FCF yield over the next 12 months supported by our expectations for oil prices to remain elevated over the near term, where KAR offers unique exposure to oil prices within the Australian Energy sector. We expect KAR’s cash flow could support debt repayments, organic growth developments, potential acquisitions or future returns.

Finally, Goldman also sees scope for its resource to increase meaningfully. It said:

KAR are participating in an exploration program over 2024 targeting prospects around the recently acquired Who Dat field which could present low cost tieback opportunities, in addition to the Neon discovery in Brazil which is not priced in.

The post Why this ASX 200 energy stock could rise 35% appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Why IDP Education, Karoon Energy, Liontown, and Zip shares are falling today
• 5 things to watch on the ASX 200 on Tuesday
• 5 things to watch on the ASX 200 on Friday
• 5 things to watch on the ASX 200 on Tuesday
• 5 things to watch on the ASX 200 on Friday

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 positions in and has recommended Goldman Sachs Group. 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.

from The Motley Fool Australia https://ift.tt/XtoQsNl

Lake Resources N.L. (ASX: LKE) shares continued their horror run on Tuesday.

The lithium developer’s shares were down 9% to a multi-year low of 9.5 cents.

This means that its shares are now down 88% since this time last year.

Is the rot over or is this lithium stock going to zero? Let’s take a look.

Are Lake Resources shares going to zero?

It is fair to say that things aren’t looking good for this lithium developer given recent lithium price weakness.

As I warned here late last year with the release of the company’s phase one definitive feasibility study (DFS) for the Kachi lithium brine project in Argentina, this project is only viable with lithium prices materially higher from current levels.

Lake Resources commissioned a bespoke study for its DFS pricing from Wood Mackenzie, which estimated that the average lithium carbonate sales price will be US$33,000 per tonne for the life of the project.

As I covered here yesterday, the current spot lithium carbonate in China is just US$11,867 per tonne.

Furthermore, Goldman Sachs expects its price to stay around these levels until 2027, when a rebound to US$15,646 per tonne is forecast. After which, its analysts estimate an average long term price of US$15,500 per tonne.

This is less than half the price that Lake Resources plugged into its DFS study.

Is this bad? Yes, it’s about as bad as it gets. The company even explains why with its DFS:

Project cash flows are most sensitive to changes in lithium carbonate selling price, where a 15% change in price resulted in a 28% change to the Post-Tax NPV. Lithium price impact can be limited/mitigated by the pricing mechanisms to be put in place with potential offtakers. Production volume fluctuations are expected to have similar effect as price fluctuations on NPV.

A lithium carbonate price 15% lower than its US$33,000 per tonne estimate wiped out 28% of its Post-Tax NPV. A 50% change makes the project completely uneconomical.

And with management estimating that its initial capital expenditure for phase one is US$1.38 billion, it is going to have a real battle on its hands to raise these funds from debt or equity.

We have already seen Liontown Resources Ltd (ASX: LTR) stripped of its $760 million debt funding packaging because of low lithium prices. It’s hard to imagine anyone willing to risk lending to Lake Resources based on its numbers.

It is also worth noting that Wood Mackenzie has become very bearish on lithium prices since it was commissioned by Lake Resources. In fact, it was reportedly the research company’s lithium price downgrades that led to Liontown’s lenders pulling the plug on their deal.

All in all, this doesn’t bode well for Lake Resources shares and zero seems like it could be a real possibility down the line. Time will tell if that’s the case.

The post Are Lake Resources shares going to zero? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Downgraded: Why Lake Resources shares just lost a bull
• Could the Lake Resources share price double in 2024?
• Lake Resources shares sank 84% in 2023: Will this year be better?

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.

from The Motley Fool Australia https://ift.tt/fWqYhBl

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

But which ones could be in the buy zone right now?

To help narrow things down, I have picked out three top ETFs that could be worth considering this week.

Here’s what you need to know about them:

ETFS Battery Tech & Lithium ETF (ASX: ACDC)

The battery materials industry has been under the pump of late, which has put significant pressure on lithium shares and this ASX ETF. In fact, the ETFS Battery Tech & Lithium ETF currently trades just a fraction off its 52-week low. But if you believe that the recent weakness in lithium prices will be short-lived, then this ETF could be a good option for you. It invests in companies throughout the lithium cycle, including mining, refinement and battery production, cutting across the traditional sector and geographic definitions. This means you get diversified exposure to the industry rather than just putting all your eggs in one lithium miner’s basket.

Vanguard U.S. Total Market Shares Index ETF (ASX: VTS)

Another ASX ETF that could be a top option for investors is the Vanguard US Total Market Shares Index ETF. It allows investors to buy a part of ~4,000 US listed shares of all shapes and sizes in one fell swoop. Vanguard points out that this allows investors to participate in the long-term growth potential of the US economy and its listed companies. This could make it a good option if your portfolio currently only has exposure to Australia.

Vanguard All-World ex-U.S. Shares Index ETF (ASX: VEU)

If you’re already overweight with US exposure, then the Vanguard All-World ex-U.S. Shares Index ETF could be a good option. It gives investors access to approximately 3,500 companies listed in developed and emerging markets across the globe (excluding the United States). This means Australian investors can expand their portfolio to include many sectors that are not well represented in Australia.

The post 3 excellent ASX ETFs to buy this week appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• 2 ASX ETFs to buy for exposure to the decarbonisation megatrend
• These 3 top ASX ETFs just hit new all-time highs
• 5 top ASX ETFs for investors to buy in 2024
• 3 ASX ETFs to buy in 2024 and hold forever

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 positions in and has recommended Global X Battery Tech & Lithium ETF. The Motley Fool Australia has recommended Global X Battery Tech & Lithium ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/K47QAB9

On Tuesday the S&P/ASX 200 Index (ASX: XJO) was on form again and raced higher. The benchmark index rose 0.5% to 7,514.9 points.

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

ASX 200 expected to edge higher

The Australian share market looks set for a subdued session on Wednesday following a mixed night on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 2 points higher. In late trade on Wall Street, the Dow Jones is down 0.3%, the S&P 500 is up 0.1%, and the Nasdaq is 0.1% higher.

Oil prices fall

It could be a poor session for ASX 200 energy shares Beach Energy Ltd (ASX: BPT) and Woodside Energy Group Ltd (ASX: WDS) after oil prices fell overnight. According to Bloomberg, the WTI crude oil price is down 0.8% to US$74.30 a barrel and the Brent crude oil price is down 0.8% to US$79.45 a barrel. Easing Middle East tensions were behind the decline.

Pilbara Minerals Q2 update

All eyes will be on Pilbara Minerals Ltd (ASX: PLS) shares on Wednesday when the beaten down lithium miner releases its second quarter update. Investors will no doubt be looking to see how much its margins have been squeezed by weak lithium prices. It may also be worth looking to see if the miner follows others by taking action to conserve cash.

Gold price rises

ASX 200 gold shares Newmont Corporation (ASX: NEM) and Northern Star Resources Ltd (ASX: NST) could have a good session on Wednesday after the gold price rose overnight. According to CNBC, the spot gold price is up 0.25% to US$2,027.3 an ounce. Rate cut optimism has given the precious metal a boost.

Woodside update

Energy giant Woodside will be in focus today when it releases its fourth quarter and full year update. Management is guiding to full-year production of 183 MMboe to 188 MMboe and capital expenditure of US$5.7 billion to US$6 billion for FY 2023. Investors may also want to look out for an update on its merger discussions with Santos Ltd (ASX: STO).

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

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Here are the top 10 ASX 200 shares today
• At under $31, should I be rushing to buy Woodside shares?
• Why is the Pilbara Minerals share price rebounding on Tuesday?
• Here’s the lithium price forecast through to 2027
• Down 31%: Buy the dip on these ‘attractive’ ASX 200 dividend shares

Motley Fool contributor James Mickleboro has positions in Woodside Energy Group. 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.

from The Motley Fool Australia https://ift.tt/GKxuoV4

2024 may well be the year we see small-cap ASX stocks make up some lost ground and outperform their larger peers.

Some smaller ASX shares have certainly delivered outsized gains over the past few years. But overall ASX small-cap stocks have underperformed the big blue-chip companies, with the S&P/ASX Small Ordinaries Index (ASX: XSO) trailing the returns delivered by the S&P/ASX 200 Index (ASX: XJO) over two years.

According to Andy Gracey, portfolio manager of the Emerging Companies and the Australian Shares Fund at Australian Ethical Investment:

Small companies and particularly microcap companies have underperformed their Australia blue-chip peers over the last few years, so there certainly is rationale to anticipate some form of catchup for these emerging companies.

With that potential catchup in mind, The Motley Fool asked Gracey what investors should consider before buying into the smaller end of the market.

What to investigate before buying small-cap ASX stocks

Gracey said there are “a multitude of factors we, as investors, like to see in the small companies we are investing into”.

First, he said, “We like to see an objectively calculated and decent sized total addressable market.”

He said his preference with small-cap ASX stocks is towards a global focused business, and one with “barriers to entry such as intellectual property”.

Second, Gracey recommends steering clear of companies whose business models you can’t easily comprehend.

“We must be able to understand the business model easily, as complexity brings problems,” he told us.

Third, keep an eye on that M&A potential.

“We like to invest in industries where mergers and acquisition occur regularly,” he said.

The fourth thing to research before buying a small-cap ASX share is its ongoing revenue outlook.

“We prefer higher gross profit margin businesses, and recurring revenue streams, whether this is subscription revenue, consumable revenues or recurring transactional,” Gracey said.

And the fifth factor is seeing some reputable skin in the game.

“We really like to invest alongside executive management and the board, and we look for recognisable and trustworthy names on the board,” he said.

Why invest in ethical small-cap companies?

While we were on the subject of investing in the smaller end of the market, we asked Gracey why his fund is particularly focused on ethical small-cap ASX stocks.

According to Gracey:

We believe combining a rigorous ethical screen with an active investment management approach can be a rewarding investment experience. Our equity funds are typically overweight forward-looking industries such as renewables, healthcare and technology.

We are overweight in industrial companies and small companies, while being underweight in the cyclical materials and energy sectors.

But can ethical small-cap ASX stocks match the returns of those that fall outside this category?

“We believe investors don’t have to sacrifice investment returns while investing in more progressive companies that leave the world in a better place,” Gracey said.

The post 5 critical factors to consider before buying small-cap ASX stocks appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• 2 ASX 200 shares to buy in 2024 and hold for the next 10 years
• If you’d put $40,000 in this ASX healthcare stock at the start of 2023, you’d have $128,000 now
• The 3 best ASX dividend shares for 2024
• How I’d aim to build a bullet-proof ASX passive income portfolio with just $7,000 in 2024
• 3 no-brainer ASX 300 shares I’d buy right now without hesitation

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.

from The Motley Fool Australia https://ift.tt/1PcTZzL