Tag: Motley Fool

Key points

• Australians don’t seem to realise earning $50,000 a year puts them in the richer half
• Younger generations are overspending to keep up with a social media-driven lifestyle
• You don’t need a $300,000 salary to build your wealth

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A new survey has revealed greed is rife among Australians, who don’t realise they’re already in the wealthier half if they earn the median wage.

A quarter of Aussies would not consider themselves rich until they were earning at least $500,000 per year, according to new research from comparison site Finder.

This is 10 times the median personal income of $49,805.

A person receiving the median income means they are earning more money than half of the population.

Australians, on average, wanted a $326,900 salary each year to start counting themselves as wealthy.

That’s still almost 7 times the median wage.

As a comparison, in 2020 the base salary for a federal politician was $211,250. The prime minister earned $549,250 in total.

Finder personal finance expert Kate Browne said constantly wanting more money was dangerous, taking the focus off saving and investing.

“The reality is that the typical middle-class Australian is actually earning a $50,000 salary,” she said.

“If you are already fortunate enough to earn more than the median wage it’s a good reminder that you are already ahead. It can be tempting to keep striving for more, but it’s also important to truly enjoy your work.”

Keeping up with a social media lifestyle

Generation	Income to feel rich
Baby boomers	$313,031
Generation X	$354,100
Generation Y	$329,290
Generation Z	$286,964
Source: Finder; Table created by author

The study also found generation X set the highest bar to achieve ‘rich’ status, wanting an annual income of $354,100.

US figures from Credit Karma showed almost half of millennials spent beyond their means to keep up the appearance of a certain lifestyle.

“Remember, social media is a highlight reel. And while it can seem like everyone around you is hustling their way to the top, appearances can be deceiving,” said Browne. 

“There’s nothing wrong with striving to be financially comfortable, but endeavouring to compete with others is exhausting, expensive, and you’ll never be satisfied with what you already have.”

That survey showed food (47%), clothes (41%) and travel (33%) were the biggest items millennials were overspending on.

How to become rich without a $300,000 salary

Browne pointed out that building wealth did not require a $300,000 yearly income.

“Working on habits like cutting back on spending where you can and saving a regular portion of what you earn is a great start,” she said.

“Aim to put at least 20% of your income every month into a savings account and let this grow.”

Finder recommended a 50-30-20 budget, where 50% of your income is spent on needs, 30% is spent on wants and 20% of it is saved.

With interest rates currently at historic lows, investing outside of bank deposits was also an idea, added Browne.

The post This is how much the average Aussie needs to feel ‘rich’ 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. 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

There’s little question that Netflix (NASDAQ: NFLX) has created a windfall for early investors, generating returns of more than 43,300% in 20 years. Furthermore, those who invested in the streaming stock just five or ten years ago have beaten the market by a wide margin, with gains of 290% and 3,800%, respectively, during those periods, compared to 105% and 260% for the S&P 500.

However, Netflix’s stock has recently fallen out of favor with some investors. The most common bearish narrative goes something like this: Once, Netflix was the only streaming game in town. Now, there is growing competition and a host of alternatives. Netflix won’t be able to keep up the frantic pace of original content additions and will continue to lose market share as a result. Sound familiar?

Thing is, that argument misses out on several very important factors. In fact, there are 835 reasons investors should ignore the narrative and buy Netflix stock now.

Too much is never enough

Netflix has long said that a continuing stream of high-quality new and original content is the key to its success, essentially providing programming to suit every viewing taste. Netflix isn’t taking its foot off the pedal in terms of production, either.

During the fourth quarter of 2021 alone, Netflix debuted 835 episodes of content, up more than 50% year over year and more than the next four services combined, according to an analysis by MoffettNathanson. To put those numbers in context, AT&T‘s (NYSE: T) HBO Max comes in a distant second place at 302 episodes. Other well-heeled competitors also lagged behind. Amazon‘s (NASDAQ: AMZN) Prime Video, Disney (NYSE: DIS)-controlled Hulu, and Disney+ rounded out the top five, with 248, 148, and 98 episodes, respectively. 

And the Emmy goes to…

This strategy is bearing fruit. In 2021, Netflix came away with 44 Emmys, the most-ever awards for a single network or service. The Crown took best drama series, while The Queen’s Gambit won 11 awards out of 18 nominations. 

Netflix closed out the year with a bang, with the return of a host of fan-favorite programs such as The Witcher, Tiger King, and Cobra Kai, as well as the final chapter of La Casa de Papel (aka Money Heist). The company also released a number of big-budget, feature-length movies, including Red Notice, Don’t Look Up, and The Harder They Fall. Red Notice was such a huge hit on the platform, it prompted Netflix to order back-to-back sequels — a rare move for the streaming giant. 

In October, Netflix revealed that Squid Game, its original program from Korea, had become the company’s biggest TV show ever. 142 million member households watched the show in the first four weeks after its release.

The success and wide-ranging appeal of Netflix’s original content will no doubt continue to drive subscriber gains and prevent defections.

Programming drives financial results

Netflix is the undisputed leader when it comes to penetration, with a whopping 78% of U.S. households subscribing to its streaming video service. At the same time, the company continues to use the same template it employed so successfully at home to expand its presence internationally.

The streaming pioneer isn’t the money pit it once was. After burning cash for years, Netflix generated free cash flow of $1.9 billion in 2020, though it got an artificial boost from pandemic-related production shutdowns. Yet, even after ramping-up production again in 2021, the company is still generating cash, and for the first three quarters of 2021, Netflix had free cash flow of $410 million, though it expects this metric to end the year near the breakeven point. 

The company announced late last year that it would no longer need to raise external financing for programming or to fund day-to-day operations.

Netflix has also seen a commensurate uptick in profitability. The company generated earnings per share (EPS) of $6.09 in 2020, up 47%. Netflix has already eclipsed that growth during the first nine months of 2021, delivering EPS of $9.91, and will add to that total in Q4. This illustrates that as its subscriber count grows, more of each subscription price drops to the bottom line.

Why now?

Even as Netflix closes out its best year ever, investors have grown cautious, and the stock is down roughly 25% from its recent high. As a result, Netflix is currently trading at a price-to-earnings ratio of less than 47, its lowest valuation since 2015. 

Given the company’s robust content additions, record-setting industry accolades, and improving financial picture, in-the-know investors should stake their claim in Netflix stock — before the masses catch on. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post 835 reasons to invest in Netflix stock right now appeared first on The Motley Fool Australia.

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• Why investors will be tuning in for Netflix’s earnings report this week

Danny Vena owns Amazon, Netflix, and Walt Disney. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and recommends Amazon, Netflix, and Walt Disney. The Motley Fool Australia has recommended Amazon, Netflix, and Walt Disney. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Key points

• Fortescue has been rated as a sell by Goldman Sachs
• It believes its shares could fall 34% over the next 12 months
• Broker warns that dividends are at risk from Fortescue Future Industries plans

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The Fortescue Metals Group Limited (ASX: FMG) share price is sliding on Tuesday.

In morning trade, the iron ore producer’s shares are down 1% to $20.55.

Where next for the Fortescue share price?

One leading broker has been running the rule over the resources sector this month and unfortunately did not have anything positive to say about the Fortescue share price.

In fact, the team at Goldman Sachs has named four reasons why its shares are a sell at the current level.

The broker currently has a sell rating and $13.50 price target on the miner’s shares, which implies potential downside of 34% for the Fortescue share price over the next 12 months.

Why is the broker so bearish?

The first reason that Goldman is bearish on the Fortescue share price is its valuation compared to rivals BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO).

It explained: “The stock is trading at c. 1.8x NAV vs. RIO at c. 0.9x NAV. FMG is pricing in c. US$84/t (real) long run iron ore vs. our US$67/t (real 2022 $) estimate. FMG is also trading at a significant premium to BHP & RIO on a EV/EBITDA basis (5.4x vs. BHP & RIO on c. 4x), which we think is unwarranted considering the lack of diversification.”

Another reason is the low grade ore that Fortescue produces, which is falling out of favour with end users.

The broker commented: “Widening of low grade 58% Fe product realisations due to high coking coal prices and high steel mill margins (similar to the steel/iron ore market dynamics at the end of 2017). Based on the 58% Fe price, we see FMG’s price realisations dropping to 68% in Dec Q (from 73% in the Sep Q).”

Goldman also has concerns over the Iron Bridge project, which it suspects will require higher capital expenditure than guided to.

It explained: “Execution and ramp-up risks on the Iron Bridge project: capex guided to US$3.3-3.5bn (100% basis) and first production in Dec 2022. We model capex of US$3.7bn and first ore in 1Q 2023, and an 18-24 month ramp up, but think there may be further capex increases and pressure on the project schedule due to contractor shortages inflation on key input costs (steel, concrete, labour, equipment, etc).”

A fourth reason Goldman Sachs sees downside risk to the Fortescue share price is its Fortescue Future Industries business and decarbonisation plans. Its analysts suspect these plans will come at a significant cost and force a reduction in future dividend payments.

The broker said: “Uncertainties around Fortescue Future Industries (FFI) diversification and Pilbara decarbonisation: FMG is targeting a 10% allocation of NPAT to FFI renewable energy projects (green hydrogen, solar, wind, etc) but only when a project is investment ready.”

“We think decarbonising the Pilbara could cost FMG over US$7bn and requires +US$50/t carbon or a green premia to be NPV positive. FMG has outlined that the Pilbara decarbonisation project/assets would logically sit within FFI (although ultimately under a Power Purchasing Agreement (PPA) which would still be reflected on FMG’s balance sheet). In order to fund FFI projects, we think FMG may have to reduce their dividend payout ratio from 80% to 50% in the coming years,” it concluded.

The post 4 reasons the Fortescue (ASX:FMG) share price is a strong sell 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 Bruce Jackson.

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Key points

• The Brickworks share price soared nearly 26% in 2021

• June was the best month of the year for the company

• Investors were impressed with the company’s financial results

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The Brickworks Ltd (ASX: BKW) share price had a phenomenal run in 2021 including a major bounce in June.

The company’s share price increased from $19.20 to $24.16 during the year, up 25.8%.

Let’s take a look at what impacted the company’s share price.

2021 highlights

Investors had many highlights during the year including surges in late January, March, June, September, and December.

Between market close on 28 January and 8 February, shares in the company increased 11.27%. The stock was rated as a “buy” by at least six brokers during this time. Motley Fool Australia noted in March that Brickworks had maintained or increased its dividend yields for 44 years.

In June, shares soared 20.76% between market close on 1 June and 30 June. Investors reacted positively to a trading update released by the company. The profit from its joint venture industrial property trust was reevaluated by $100 million. The Brickworks share also benefited from the economy reopening in the United States.

August and September saw the share price bounce up and down like a yo-yo. The Brickworks share price hit a yearly high of $25.98 on 14 September. The company also announced it would scale back its operations in NSW and Qld due to the COVID-19 outbreak.

However, positive full-year results gave the Brickworks share price a boost. The company recorded an underlying net profit after tax of $285 million, a 95% gain. Its 50/50 joint venture with property trust Goodman Group (ASX: GMG) played a part in its record earnings before interest and taxes (EBIT) of $253 million. Analysts at Citi lifted their price target on the company to $30.

But, from late September, shares in the company fell again. In fact, between market close 27 September and 2 December, the Brickworks share price fell 12.57%. The Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) share price also fell 21.49% during this same time frame. Brickworks owns a 39.4% stake in this company.

However, then came another comeback. The Brickworks share price gained 6.57% between market close on 2 December and 31 December. Investors responded well to a trading update revealing the company expected record property earnings in the first half of financial year 2022.

Foolish takeaway

The Brickworks share price, with its 26% gain in 2021, easily outperformed the benchmark S&P/ASX 200 Index‘s (ASX: XJO) 12% rise over the same period.

The company’s shares have started the year slightly in the green, up 1.74% year to date.

The company has a market capitalisation of about $3.7 billion based on its current share price.

The post What happened to the Brickworks (ASX:BKW) share price 2021? appeared first on The Motley Fool Australia.

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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Brickworks. The Motley Fool Australia owns and has recommended Brickworks. 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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Key points

• Polynovo is coming off a difficult year in 2021 where shares lost around 60% in value
• Shares have started the year well as investors respond positively to the company’s 1H trading update
• From the report the company expects a 43% year on year gain in revenue by the first half
• Macquarie is bullish on Polynovo and the consensus price target from all analysts is $2.21 at the time of writing.

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Shares in medical device company Polynovo Ltd (ASX: PNV) have started the year well and have climbed 2% since January 1.

The gains are a welcomed reversal for the long-term downtrend Polynovo has been trading in over the last 12 months.

For instance, in 2021 shareholders saw their holdings decline by approximately 60% in value, as investors continued unloading shares into the back end of the year.

Much of this downside was underpinned by COVID-19 lockdowns and the exit of its CEO back in November, news that mounted further selling pressure on the company’s stock.

What’s in store for Polynovo in 2022?

Sentiment appears to be evenly split amongst the analysts covering Polynovo in 2022. The team at Macquarie is bullish on the Polynovo share price, maintaining its outperform rating and $2.85 per share price target last week.

Even with the recent rally, this valuation still represents more than an 82% margin of safety for investors at the time of writing.

Macquarie likes the long-term growth prospects for Polynovo, particularly with respect to its NovoSorb segment.

NovoSorb is a “Biodegradable Temporizing Matrix” that may be used to temporarily close wounds and aid the body in generating new tissue.

It is indicated in the use of partial and full thickness wounds such as pressure ulcers, diabetic ulcers, surgical wounds, trauma wounds, burns and draining wounds.

Given that it is a ”man made synthetic polymer”, Polynovo says that its offering is superior to grafts etc that contain biological material because it dampens the likelihood of infection.

Now with recent successes in these markets, the company is seeking to widen its footprint into adjacent markets like hernia repair and breast augmentation.

The broker notes that, together, both of these avenues present a larger total addressable market (TAM) at $7.5 billion annually, and therefore more opportunities to drive revenue.

Wilsons has the Polynovo share price to perform in line with the market and remains neutral in its direction, valuing the company at $2 per share in doing so.

That sentiment is shared equally amongst both Evans and Partners and Ord Minnett, both of whom tip the Polynovo share price to remain flat and value the company at $1.70 apiece.

In fact, the consensus price target assigned to Polynovo at the time of writing is $2.21, implying around a 41% margin of safety should the bull thesis come to light.

Hence, investors should keep a close eye on movement around Polynovo’s NovoSorb segment in 2022, according to these experts, and this could be a key catalyst for its share price this year.

In its recent 1H FY22 trading update, the company explained that it expects to recognise US sales of $14 million in 1H, bringing total first half revenue to $18 million – a 43% year on year growth.

Polynovo share price snapshot

It was a difficult period in the last 12 months for Polynovo shareholders. As mentioned earlier, shares lost more than half in value, meaning they now need to gain 100% from that point to ‘breakeven’ again.

Though, shares have rallied more than 11% in the past month, and have climbed over 9% in the last week of trading following the release of its 1H trading update.

The post Own Polynovo (ASX:PNV) shares? Here’s what to expect in 2022 appeared first on The Motley Fool Australia.

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

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Key Points

• The JB Hi-Fi share price surges 7.33% in early morning trade
• The company’s sales increased following heightened customer demand
• Net profit is down 9.4% versus H1 FY21

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The JB Hi-Fi Ltd (ASX: JBH) share price is racing higher today following a trading update from the company.

At the time of writing, the retailer’s shares are swapping hands for $50.06, up 7.33%.

JB Hi-Fi continues sales momentum in FY22

Investors are buying up JB Hi-Fi shares after the company highlighted sales growth for the second quarter of FY22.

For the 3-month period ending 31 December 2021, the group achieved a double-digit increase in sales across its businesses.

JB Hi-Fi Australia experienced a 23.1% lift in sales volumes when compared against the prior corresponding period (Q2 FY20).

Meanwhile, JB Hi-Fi New Zealand and the Good Guys realised a 12.8% and 26.2% improvement in sales, respectively.

Sales momentum continued throughout the second quarter for JB Hi-Fi, with heightened customer demand for consumer electronics and home appliances products.

When looking at the first half of FY22, preliminary unaudited total sales came to $4.86 billion. This reflected a fall of 1.6% on H1 FY21, but an increase of 21.7% compared to the first half of FY20.

Online sales grew 62.6% to $1.1 billion, or 22.7% of total sales, underpinned by growth categories across the retailer’s portfolio. This included communications, computers, games hardware, visual, and small appliances.

Earnings Before Interest and Tax (EBIT) sunk 9.1% to $420.5 million on last year’s result but surged 59.5% over a 2-year period. JB Hi-Fi stated that this was driven by elevated sales growth, management of gross margins, and disciplined cost control.

On the company’s bottom line, net profit after tax (NPAT) dipped to $287.9 million, a decline of 9.4% versus H1 FY21. In contrast, NPAT jumped 68.8% against the first half of FY20’s financial results.

JB Hi-Fi group CEO Terry Smart touched on the results, saying:

We are pleased to report strong sales and earnings for HY22. In challenging circumstances, we have again demonstrated our ability to adapt and respond to meet the strong demand from our customers, both in-store and online.

The company will release its audited half-year results for the 2022 financial year on 14 February.

JB Hi-Fi share price snapshot

Over the past 12 months, the JB Hi-Fi share price has gone somewhat on a rollercoaster ride, down 11.5%. This is a stark contrast from when its shares were on a steep growth trajectory from March 2020 to August 2020.

On valuation grounds, JB Hi-Fi commands a market capitalisation of roughly $5.36 billion, with approximately 114.88 million shares on hand.

The post JB Hi-Fi (ASX:JBH) share price shoots 7% higher on ‘strong sales’ appeared first on The Motley Fool Australia.

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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 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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Key points

• Redbubble shares are being hammered after underperforming during the first half
• Increased competition weighed heavily on its margins during the second quarter
• Management has downgraded its revenue and earnings guidance for FY 2022

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The Redbubble Ltd (ASX: RBL) share price is under significant pressure on Tuesday morning

At the time of writing, the ecommerce company’s shares are down 20% to 52-week low of $2.39.

Why is the Redbubble share price crashing again?

Investors have been selling down the Redbubble share price following the release of another disappointing trading update.

According to the release, the heavily shorted ecommerce company’s gross transaction value (GTV) came in at $381 million for the six months ended 31 December. This represents a 14% decline over the prior corresponding period.

It was a similar story for its marketplace revenue, which fell 18% to $288 million. Management advised that this was due to cycling strong sales growth in the prior corresponding period, driven particularly by mask sales. Excluding mask sales, revenue would have been down 5% year on year.

Unfortunately, things got worse the further down the income statement you travelled. Gross profit dropped 25% to $108 million, gross profit after paid acquisition (GPAPA) tumbled 36% to $63 million, and EBITDA crashed 84% to just $8 million.

Management advised that its margins were crunched by strong competition in the second quarter which impacted organic demand and led to increasing paid acquisition costs. This may not go down well with the market, which has had concerns over Redbubble’s lack of customer loyalty for some time.

One positive, though, was that the company ended the period with a very strong cash balance of $143 million.

Outlook

Also likely to be weighing on the Redbubble share price this morning was management’s outlook for the remainder of FY 2022.

In October, the company guided to full year marketplace revenue slightly above FY 2021’s levels. However, this has now been downgraded to “slightly below” what was achieved last year.

It has also downgraded its EBITDA expectations. Instead of an EBITDA to marketplace revenue margin in the mid single digits, it now expects it to be “negative low single digits.”

And while the company’s CEO, Michael Ilczynski, remains positive on the future, it hasn’t been enough to stop investors selling down the Redbubble share price today.

He commented: “I am confident of the tremendous potential for the Redbubble Group. To capture this, we will continue to invest in our technology platforms, artist and customer experiences, and our brands. We have multiple growth levers at our disposal, and given our strong cash balance, we will continue to invest in order to realise the potential upside that can be unlocked by aggressively pursuing this opportunity.”

“We remain committed to our medium term aspirations to grow GTV to more than $1.5 billion, to grow Artist Revenue to $250 million, and to produce Marketplace Revenue of $1.25 billion per annum. EBITDA margin is also expected to expand over the medium-term with top-line growth,” he added.

The post Here’s why the Redbubble (ASX:RBL) share price is crashing 20% today 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 Bruce Jackson.

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Key points

• Allkem was formed following the merger of Galaxy Resources and Orocobre
• Its combined operations delivered strong revenues and generated significant cash during the first half
• Its lithium pricing is expected to get even stronger during the second half

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The Allkem Ltd (ASX: AKE) share price is on the move on Tuesday.

In morning trade, the lithium giant’s shares are up 2.5% to $11.63.

Why is the Allkem share price rising again?

The Allkem share price is rising today after it revealed that it reported strong production results and pricing from its Mt Cattlin and Olaroz operations during the first half.

Over at Mt Cattlin, the company achieved calendar year production of 230,065 dry metric tonnes (dmt) of spodumene concentrate. This compares to its previous guidance of 220,000 dmt. During the second quarter, a total of 38,071 tonnes were shipped, generating US$60.7 million in revenue. An additional shipment of 23,000 tonnes is scheduled for dispatch in January.

Pleasingly, Mt Cattlin looks set to benefit from positive lithium product pricing momentum in the second half of FY 2022. It notes that spodumene shipments are already at US$2,500/t CIF (6.0% Li2O).

For FY 2022, management expects Mt Cattlin concentrate production of 200,000 to 210,000 dmt with a grade of 5.5% to 5.7% and a cash cost of US$400 to US$430 per tonne.

Olaroz on form

Over at Olaroz, 3,644 tonnes of lithium carbonate were produced during the quarter. From this, 51% was battery grade, which was in line with guidance. Sales came in at 3,293 tonnes with an average price of US$12,491 per tonne FOB. This generated revenue of US$41.1 million with a gross cash margin of 65% (US$8,155/tonne).

Once again, prices look set to continue to improve in the near term. Management revealed that it expects lithium carbonate prices for the second half of FY 2022 to be approximately US$20,000 per tonne. This is up 60% from the prices commanded during the first half.

Quarterly revenue tops US$100 million

Allkem ultimately reported quarterly group revenue of approximately US$107 million and a group gross operating cash margin of US$70 million.

As a result of the above, at the end of the half, Allkem’s cash balance stood at US$426.6 million. From this, US$118.8 million is being held as a guarantee for the debt facilities until the practical completion for the Naraha and Olaroz Expansion projects.

The post Why is the Allkem (ASX:AKE) share price rising again today? appeared first on The Motley Fool Australia.

More reading

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Motley Fool contributor James Mickleboro owns Allkem shares. 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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Key points

• The ASX All-Tech index rose over 2021, but has still lost 15% since November
• One expert reckons 2022 will again be rocky for the sector
• But there is one subset of tech that could still do okay

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It’s been a turbulent time for technology shares in the past year.

To demonstrate, the S&P/ASX All Technology Index (ASX: XTX) rose 3.72% last year, but the sector has sunk more than 15% since its November high.

The combination of new variants of COVID-19, strong inflation and the prospect of rising interest rates has investors nervous about holding tech stocks.

We know that, in the real world, technology adoption is ploughing ahead. So how does one invest in it on the stock market within the current volatile environment?

‘Tech sector to again be challenged’

Principal Global Investors chief strategist Seema Shah forecasts that “parts of the tech sector” will “again be challenged” in 2022.

“Given tech’s stellar run, investors may be waiting for the other shoe to drop,” she said. 

“As financial conditions tighten and pandemic headwinds ease, cyclical conditions become increasingly unfavourable for the sector.”

However, generalising an entire industry is always dangerous.

Shah pointed out exactly what type of tech companies would stumble this year.

“Certainly, in this environment, profitless firms, such as those represented by the Goldman Sachs Non-Profitable Tech Index, will struggle as profit margins are stressed further,” she said.

“Additionally, these unprofitable companies are particularly vulnerable to rising rates, as they derive almost all their present value from future cash flows.”

So which tech companies might resist the correction?

Shah said that “not all tech is created equal” and that there would be some companies in that sector that would simply power ahead.

“Mega-cap tech firms, such as the FAANGs (Meta Platforms Inc (NASDAQ: FB), Apple Inc (NASDAQ: AAPL), Amazon.com Inc (NASDAQ: AMZN), Netflix Inc (NASDAQ: NFLX), and Alphabet Inc (NASDAQ: GOOGL)), who already generate huge cash flows, exhibit strong pricing power, and offer impressive earnings delivery, should be significantly more resilient.”

For the past 10 years, investors have had a fruitful run with tech.

From now, according to Shah, it will not be so easy to make returns and one will have to be more selective.

“While conditions for the sector are becoming trickier, strong companies with robust balance sheets and pricing power still have further to run,” she said. 

“For the profitless ones, tech-nically speaking, the period ahead may not be so pretty.”

The “be discriminating” message is similar to one that local expert and Cyan portfolio manager Dean Fergie espoused to clients last week.

He picked out 2 ASX tech shares that went against the grain and gained value over the month of December.

Fergie’s fund will continue to hold that pair, as they both possess attributes that are distinct from the rest of the pack.

The post The tech shares that will lose and win this year appeared first on The Motley Fool Australia.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Tony Yoo owns Alphabet (A shares) and Amazon. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Alphabet (A shares) and Meta Platforms, Inc. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Meta Platforms, Inc., and Netflix. 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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Key points

• Woolworths has reportedly suspended supply from Teys Australia’s South Australian facility
• The supermarket’s decision reportedly comes after the meatworks asked COVID-19 positive employees to return to work
• Teys Australia states the request is in line with SA Health guidelines

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Owners of Woolworths Group Ltd (ASX: WOW) shares might have noticed that the company is in the news today.

The headlines come as the supermarket reportedly stops selling some products from major supplier Teys Australia.

As of Monday’s close, the Woolworths share price is $35.45.

Why are Woolworths and supplier, Teys Australia, making news?

Woolworths shares are likely front of mind this morning. The supermarket giant has been splashed across headlines claiming its barred supply from Teys Australia’s South Australian meatworks.

According to reporting by the ABC, the decision came after the meatworks asked workers who are testing positive to COVID-19 to return to work, as long as they’ve isolated for 7 days prior.

Teys Australia said the move is in line with and endorsed by, SA Health.

All COVID-19 positive employees returning to work must be asymptomatic and will be working separately from other workers. In a statement, Teys Australia commented:

[W]e are specifically instructing our workers not to present for work if they feel unwell or they do not meet the strict requirements of the relevant State health authorities.

The decision follows a recent outbreak that reportedly saw 140 of the meatworks’ employees testing positive for the virus. According to Teys Australia, there have been no new cases at the site since last Monday.

The ABC quoted a Woolworths spokesperson as saying:

We have suspended all supply through Tey’s South Australian facility while we work with Teys, SA Health, and Safework SA to understand the protocols currently in place for their team and operations…

We expect all of our suppliers to adhere to the COVID safety protocols set by their relevant state authorities.

The news is unlikely to move the Woolworths share price today. The supermarket’s stock has slipped 7% year to date.

The post Own Woolworths (ASX:WOW) shares? Here’s why the supermarket is hitting headlines appeared first on The Motley Fool Australia.

More reading

• How did the Woolworths (ASX:WOW) share price perform in 2021?
• There were the 5 best performing ASX 200 retail shares of 2021
• Woolworths (ASX:WOW) supply woes continue with retailer receiving half of normal deliveries
• ASX 200 (ASX:XJO): Woolworths withdraws API proposal, tech shares rebound
• If supermarkets are ‘COVID winners’, why is the Woolworths (ASX:WOW) share price sliding into 2022?

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 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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