Tag: Motley Fool

Key Points

• Core Lithium share price up 300% in a year after hitting record high yesterday
• Construction underway at company’s flagship Finniss Lithium Project
• Targeting production of spodumene concentrate in late 2022

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The Core Lithium Ltd (ASX: CXO) share price had a stellar 2021 following a surge in interest across the lithium space.

Over the course of the 12 months, the lithium producer’s shares rose by more than 300% for investors. In comparison, the All Ordinaries (ASX: XAO) is travelled just 10% higher over the same time frame.

Let’s take a look at what powered the company’s share price in recent memory.

What’s driving Core Lithium shares to record highs?

Investors have been snapping up Core Lithium shares after the company has been progressing its wholly-owned Finniss Lithium Project.

For most of the year, the company’s share price gradually ascended on the back of market confidence in lithium demand.

Popular belief is that Core Lithium will need to play a key role in meeting the future lithium supply gap. This is expected to grow rapidly as the demand for electric vehicles and renewable energy ramps up over the next decade.

Last month, the company advised that drilling works intersected high-grade spodumene mineralisation across multiple targets. This led to the Core Lithium share price accelerating from 52.5 cents to 88 cents as of yesterday’s market close.

Site construction and establishment activities are currently underway, with first production of lithium concentrate scheduled in Q4 2022.

Once online, the Finniss Lithium Project will be the first Australian lithium-producing mine outside of Western Australia.

The Australian government is focused on increasing the capabilities of onshore refinement of critical minerals. A recent $6 million grant awarded to Core Lithium will be used in building a pilot processing facility at Darwin Harbour’s Middle Arm Industrial Precinct.

Core Lithium share price snapshot

It has been an interesting year for Core Lithium shares, moving in circles for most of 2021 until recently shooting higher. The company’s share price reached an all-time high of 96.5 cents before treading slightly lower.

Based on today’s price, Core Lithium has a market capitalisation of roughly $1.47 billion, with over 1.67 billion shares outstanding.

The post How did the Core Lithium (ASX:CXO) share price perform in 2021? appeared first on The Motley Fool Australia.

More reading

• Why is the Core Lithium (ASX:CXO) share price hitting all-time highs today?
• These were the 5 best performing ASX uranium shares of 2021
• New year’s resolution: Why are ASX lithium shares having such a stellar day?
• Why has the Core Lithium (ASX:CXO) share price leapt 15% since Christmas?

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

• The Northern Star share price is down 28% since this time last year
• Price of gold has failed to ascend
• Northern Star head honcho bought more shares

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The Northern Star Resources Ltd (ASX: NST) share price has had a disappointing 12 months for its shareholders, losing 28%.

The stuttering price of gold continued to weigh down on investor sentiment, causing a sell-off in the gold miner’s shares.

At yesterday’s market close, Northern Star shares finished the day 2.15% lower to $9.10 apiece.

Why is the Northern Star share price not going anywhere?

The Northern Star share price has failed to gain traction following the sideways movement of the price of gold.

Traditionally, investors flock to the precious metal as a safe-haven asset when there is uncertainty in the market. However, with the world moving past COVID-19, among renewed investor confidence across the US dollar, gold has lost its value.

In 2021, the price of gold soared close to the US$2,000 barrier but has since fallen wayside. At current, one ounce of gold is fetching for US$1,818.49.

When compared against this time last year, the price of gold is down 0.54%.

The United States Federal Reserve advised that its stimulus program will be coming to an end as inflation begins to rise. As such, the central bank will be buying $60 billion of bonds each month starting this month. In contrast, this is about half of the amount it bought before November and $30 billion less than in December.

In addition, the Federal Reserve also signalled as many as three rate hikes in 2022 to limit the increase in inflation. Supply and demand imbalances due to COVID-19 along with the reopening of the economy have led inflation to spike.

As such, the Reserves Bank of Australia is expected to follow suit, with two rate hikes for the current 2022 year.

Is Northern Star shares a buy?

A number of brokers believe that the Northern Star share price is currently trading at a bargain price.

Last month, multinational investment firm Macquarie improved its outlook on Northern Star shares by 15% to $15 per share. Based on Monday’s closing price, this implies an upside of a sizeable 65% for investors.

On the other hand, Swiss investment firm, UBS lowered its outlook on the company’s shares by 23% to $11.20. While the broker reduced its assessment on Northern Star, it still sees value in the gold miner. The price target represents a potential upside of 22% from where it trades today.

Furthermore, Northern Star managing director and CEO, Stuart Tonkin recently made an on-market transaction buying more of the company’s shares.

He picked up 50,000 Northern Star shares that were purchased at an average price of $8.86 per share or $443,000 worth. The sale increases Mr Tonkin’s existing holding by 4.2%, taking advantage of the recent share price weakness.

The post Is the Northern Star (ASX:NST) share price trading at attractive levels? appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• 5 things to watch on the ASX 200 on Monday
• 5 things to watch on the ASX 200 on Wednesday
• 5 things to watch on the ASX 200 on Tuesday
• 5 things to watch on the ASX 200 on Monday

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

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The tech sector has been having a tough couple of months. While this is disappointing, it may have created a few buying opportunities for long term focused investors.

For example, the two buy-rated ASX tech shares listed below are trading significantly lower than their 52-week highs. Here’s what you need to know about them:

Megaport Ltd (ASX: MP1)

Megaport is the global leading provider of elastic interconnection services. Using software defined networking (SDN), its global platform allows customers to rapidly connect their network to other services across its network. These services can be directly controlled by customers via mobile devices, their computer, or its open API.

The Megaport share price is currently trading at $18.41, down 16% from its 52-week high. Citi appears to see this as a buying opportunity and has recently put a buy rating and $21.30 price target on its shares.

Citi commented: “The key positive from Megaport’s 1Q update was the solid growth in MRR, with 1Q22 being a record in terms of MRR added. […] We remain Buy-rated as we expect strong growth going forward reflecting structural tailwinds as well as the partner channel kicking in from 2Q22e onwards (both MVE as well as PartnerVantage),” it added.

Nitro Software Ltd (ASX: NTO)

The Nitro share price could be an even bigger bargain if the team at Bell Potter is on the money. Its analysts have a buy rating and $4.50 price target on the growing global document productivity software company’s shares. This implies more than 100% upside based on the current Nitro share price of $2.13.

Bell Potter is a big fan of the company’s Nitro Productivity Platform and believes it has a huge market opportunity to grow into. This has been further boosted by the recent acquisition of Connective NV, which it described as a “game-changer”.

The broker commented: “Nitro announced it has entered into a binding agreement to acquire Connective NV for an EV of €70m (~US$81m). Connective is Belgium’s leading eSign SaaS business with fast growing market share in France and customers in 11 other European countries.”

“The rationale for the acquisition is it will accelerate and enhance Nitro’s eSign, eID (electronic identity) and document workflow capabilities. It will also position Nitro to become the third global player in the enterprise eSign market along with DocuSign and Adobe,” it added.

The post 2 beaten down ASX tech shares tipped as buys appeared first on The Motley Fool Australia.

More reading

• 2 exciting small cap shares named as buys
• ASX 200 (ASX:XJO): Woolworths withdraws API proposal, tech shares rebound
• Why has the Megaport (ASX:MP1) share price tumbled 14% in a month?
• 2 buy-rated ASX tech shares with huge upside potential
• 3 exciting small cap ASX shares rated as buys

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

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With the market jittery about COVID-19 Omicron, inflation and rising interest rates, it’s worth reconsidering the old reliables.

Sure, exciting new businesses sacrificing profit to madly grab market share can see their shares rocket. But in uncertain times, they can also plunge.

With this in mind, Marcus Today portfolio manager Thomas Wegner this week picked out 2 ASX shares he would buy right now that are certainly long-time household brands:

Everyone still uses phones, regardless of inflation

Telstra Corporation Ltd (ASX: TLS) shares have been a staple of portfolios for mum-and-dad investors the past couple of decades.

But it hasn’t all been smooth sailing, with some serious underperformance at times frustrating shareholders.

The past year has been fantastic though, with a mini-revival seeing the stock price soar more than 36%.

Wegner reckons that’s just the start.

“Telstra remains the dominant player in the Australian telecommunications industry,” he told The Bull.

“Telstra is an income stock and its financial performance is building momentum.”

He pointed out how its mobile phone market share of 40% is lightyears ahead of its rivals.

“Digitisation, customer experience developments, cost reductions and capital management have placed it in a solid position at the start of 2022.”

Wegner is not the only analyst high on the telco. Goldman Sachs recently rated Telstra stock as a “buy” and put on a price target of $4.40.

Telstra closed Monday at $4.25.

Everyone still has to eat, regardless of inflation

Grocery and hardware provider Metcash Limited (ASX: MTS) possesses some of the most recognisable retail brands in Australia, like IGA supermarkets, Mitre 10, and Home Timber & Hardware.

Its shares have been on a nice tear the past 12 months, rising 27% in value while giving out a juicy 4.7% dividend yield.

But it has fallen more than 4% in the last month, perhaps opening up a buying opportunity.

Wegner noted Metcash’s favourable numbers from the first half of the 2022 financial year.

“Metcash delivered a good result given challenges with supply chains, labour shortages and staff isolation,” he said.

“Underlying profit after tax of $146.6 million in the first half of 2022 was up 13.1% on the prior corresponding period.”

The good times were driven by “shifting consumer behaviour and improved competitiveness in its retail networks”, according to Wegner.

“The trading update in December pointed to continuing success in the second half.”

Credit Suisse also rates Metcash as a “buy”, with a price target of $4.55 and an expectation of a 7% grossed-up yield this year.

Metcash shares closed Monday at $4.24.

The post 2 big-name ASX shares to buy right now appeared first on The Motley Fool Australia.

More reading

• These 3 ASX 200 shares are topping the volume charts on Monday
• 2 top ASX dividend shares to buy next week
• Top brokers name 3 ASX shares to buy next week
• Here are the 3 most heavily traded ASX 200 shares this Friday
• The Telstra (ASX:TLS) share price has already hit multiple 52-week highs this year. What’s happening?

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

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Key points

• WAM Leaders has revealed some of the blue chip ASX shares it likes
• One pick is the ASX healthcare giant CSL after acquiring Vifor
• The fund manager also likes several resources businesses such as like BHP, Rio Tinto and South32

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The high-performing fund manager Wilson Asset Management (WAM) has recently identified some ASX blue-chip shares that it owns (or owned) in one of its leading portfolios.

WAM operates several listed investment companies (LICs). Two of those LICs are WAM Capital Limited (ASX: WAM) and WAM Research Limited (ASX: WAX).

There’s also one called WAM Leaders Ltd (ASX: WLE) which looks at the larger businesses on the ASX, which you can call ASX blue-chip shares.

WAM says WAM Leaders actively invests in the highest quality Australian companies.

The WAM Leaders portfolio has delivered gross returns (that’s before fees, expenses, and taxes) of 15.4% per annum since its inception in May 2016. That is superior to the S&P/ASX 200 Accumulation Index average return of 10.1%.

These are the blue-chip ASX shares that WAM outlined in its most recent monthly update:

CSL Limited (ASX: CSL)

During December, CSL revealed the acquisition of the Swiss business Vifor Pharma, a global leader in the treatment of iron deficiency, nephrology and cardio-renal therapies.

The ASX healthcare giant has completed a $6.3 billion capital raising to partly fund the $16.4 billion deal, the largest equity raise to take place on the ASX.

WAM noted that while the acquisition means a deviation from CSL’s core competencies of plasma related products and vaccines, there are compelling reasons to like it.

CSL stated there are three factors for the strategic rationale for the transaction.

The ASX blue chip share notes the revenue growth outlook is strong with several products due to launch over the coming years.

Next, the acquisition augments the ASX share’s current therapeutic categories by expanding its presence in the chronic kidney disease space.

The final factor is that it facilitates access to patient populations that will support future clinical trial execution.

The fund manager noted that the 2014 acquisition of Novartis’ flu vaccine business was contentious at the time but has proven to be “extremely successful”, growing Seqirus revenue from US$650 million in the first full year of integration to over US$1.7 billion five years later.

WAM has confidence in management’s ability to replicate this strategy for Vifor.

Resources

WAM Leaders also outlined a number of mining businesses that it thinks are opportunities.

The fund manager likes iron ore mining names including BHP Group Ltd (ASX: BHP), Rio Tinto Limited (ASX: RIO) and Fortescue Metals Group Limited (ASX: FMG). Iron ore prices are hitting four-month highs.

WAM Leaders owns iron ore businesses because WAM believes that the market sentiment had “exceeded the reality” of China’s slowdown and the People’s Bank of China reduction of the one year lending rate to stimulate the economy is evidence of that dynamic.

The fund manager also noted that it’s invested in copper and lithium miners with ASX blue chip share holdings in South32 Ltd (ASX: S32), IGO Ltd (ASX: IGO) and OZ Minerals Limited (ASX: OZL). A key reason for the bull case on those companies and commodities is that battery demand continues to outpace supply and push prices to record levels.

It has also been increasing its gold exposure with investments in Newcrest Mining Limited (ASX: NCM) and Evolution Mining Ltd (ASX: EVN). WAM did this after weak share prices as well as thinking it would provide some defence against potentially higher market volatility.

The post Leading fund manager says these blue-chip ASX shares are buys right now appeared first on The Motley Fool Australia.

More reading

• Rio Tinto (ASX:RIO) share price on watch after Q4 update: How did it perform compared to expectations?
• 5 things to watch on the ASX 200 on Tuesday
• 2 buy-rated ASX dividend shares
• 2 outstanding ASX 200 shares to buy this month according to analysts
• Why Beforepay, Firefinch, Kogan, and South32 shares are dropping

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

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Key points

• Rio Tinto had a tough quarter with shipments and production down year on year
• Iron ore shipments for Q4 fell short of the market’s expectations
• However, the mining giant’s FY 2022 guidance was largely in line

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The Rio Tinto Limited (ASX: RIO) share price will be one to watch on Tuesday.

This follows the release of the mining giant’s fourth quarter update this morning.

How did Rio Tinto perform in the fourth quarter?

For the three months ended 31 December, Rio Tinto reported a 5% decline in Pilbara iron ore shipments to 84.1Mt. This brought its full year shipments to 321.6Mt, which was down 3% year on year.

Unfortunately, this appears to have fallen short of expectations, which could weigh on the Rio Tinto share price. For example, the team at Goldman Sachs was forecasting iron ore shipments of 88.9Mt for the three months.

Management blamed its soft FY 2021 shipments on above average rainfall in the first half of the year, cultural heritage management, and delays in growth and brownfield mine replacement tie-in projects.

Elsewhere, Rio Tinto’s mined copper came in at 132kt for the three months. This was flat on the prior corresponding period and a touch short of Goldman’s forecast of 133kt. This led to full year mined copper of 494kt, which is a 7% reduction on FY 2020’s production. This reflects lower recoveries and throughput at Escondida as a result of the prolonged impact of COVID-19.

It was a similar story for aluminium, which was down 7% in the fourth quarter to 757kt. This ultimately put the miner’s giant full year production into the red for the year, down 1% to 3,151kt. This was driven by reduced capacity at its Kitimat smelter in British Columbia following a strike which commenced in July.

In fact, there was not a single commodity that achieve production growth in FY 2021. Bauxite was down 3% to 54.3Mt, titanium dioxide slag was down 9% to 1,014kt, and iron ore pellets fell 6% to 9.7Mt.

What about FY 2022?

One thing that could support the Rio Tinto share price today is its guidance for potential production growth in FY 2022. Among the highlights, management is guiding to iron ore shipments of 320Mt to 335Mt and mined copper production of 500kt to 575kt.

This is broadly in line with what Goldman Sachs was forecasting. It pencilled in iron ore shipments of 330Mt and mined copper production of 550kt.

Rio Tinto’s Chief Executive, Jakob Stausholm, said: “In 2021 we continued to experience strong demand for our products while operating conditions remained challenging, including due to prolonged COVID-19 disruptions. Despite this, we progressed a number of our projects, including the Pilbara replacement mines, underlining the resilience of the business and the commitment and flexibility of our people, communities and host governments. We are seeing some initial positive results from the implementation of the Rio Tinto Safe Production System, which we will significantly ramp up in 2022, as we continue to work hard to improve our operational performance to become the best operator.”

The post Rio Tinto (ASX:RIO) share price on watch after Q4 update: How did it perform compared to expectations? appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• Is the iron ore price set to slide?
• Own Rio Tinto (ASX:RIO) shares? Jefferies says they’ll outperform ‘in the near term’
• Own Rio Tinto (ASX:RIO) shares? Here’s why the miner’s new chair appointment is making waves
• Goldman Sachs says buy Rio Tinto and South32 shares but sell Fortescue now

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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If you’re looking for dividend shares to buy then you may want to look at the ones below that brokers are recommending.

Here’s what analysts are saying about these ASX 200 dividend shares:

National Australia Bank Ltd (ASX: NAB)

The first ASX 200 dividend share to look at is banking giant NAB. It has been tipped as a buy by the team at Bell Potter, which has a buy rating and $32.00 price target on its shares.

The broker has been pleased with NAB’s performance over the last 12 months and remains positive on its outlook. Particularly given the acquisitions of 86 400 and Citi’s Australian consumer business.

Bell Potter commented: “NAB is now the second largest major bank by market capitalisation. The payout ratio is now close to its maximum, being 65-75% of cash earnings. ROE was 10.7% in FY21 and still climbing, while CET1 ratio was 13% and ahead of the 10.75-11.25% target range. The bank still intends to return surplus capital, being 40% complete. The acquisition of 86 400 plus the proposed acquisition of Citigroup’s Australian consumer business will see the bank achieve scale in digital and consumer banking offerings.”

Its analysts have pencilled in fully franked dividends per share of 132.5 cents in FY 2022 and then 134.5 cents in FY 2023. Based on the current NAB share price of $29.45, this equates to fully franked yields of 4.5% and 4.6%, respectively.

Transurban Group (ASX: TCL)

Another ASX 200 dividend share to look at is Transurban. It is one of the world’s leading toll road operators with a portfolio of key roads in Australia and North America. It also has a number of development projects that look likely to support its growth over the next decade.

The team at Morgans is positive on Transurban. This is due largely to its exposure to a number of drivers which are expected to boost traffic on its roads. The broker has an add rating and $14.57 price target on its shares.

It commented: “We view TCL as a high quality pure-play toll road infrastructure portfolio benefitting from employment and population growth, urbanisation, and the value of time, with particular exposure to the east coast capital cities in Australia.”

As for dividends, the broker is forecasting dividends per share of 35 cents in FY 2022 and then 55.3 cents in FY 2023. Based on the current Transurban share price of $13.24, this implies yields of 2.65% and 4.2%, respectively.

The post Brokers name 2 ASX 200 dividend shares to buy appeared first on The Motley Fool Australia.

More reading

• Own Transurban (ASX:TCL) shares? Here’s what its 2022 dividends might look like
• Is Westpac (ASX:WBC) going to be the best big 4 bank for dividends in 2022?
• NAB (ASX:NAB) share price gains following digital health claim acquisition
• Could this impact the performance of ASX 200 banks more than interest rates in 2022?
• What made the NAB (ASX:NAB) share price so appealing in 2021?

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

• Heuristics are mental shortcuts that humans use to make daily tasks easier
• But such cognitive biases can hurt our investments
• An investment firm has outlined 4 common mental biases and the solution for each

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Your own brain could be sabotaging your ASX share portfolio.

Heuristics are mental shortcuts that humans use every day to get through all the tasks that we need to do.

But these cognitive biases can make us behave irrationally, which is the bane of investing.

Ophir Asset Management stated in a blog post that how an investor behaves often has a bigger impact on returns than their level of knowledge.

“This is more relevant than ever given the abundance of information that’s out there nowadays prompting investment action, combined with a dramatic [increase] in the ease at which investors can trade.”

The investment team stated that if investors can be more self-aware of the psychological traps that can lure even the professionals, it will help them make fewer mistakes.

“But they will also be better placed to exploit the mistakes of other investors, including picking up undervalued stocks, and gain a massive competitive edge in building their wealth.”

Here are 4 common mental biases and the solution for each:

Loss aversion

This is the irrational tendency for humans to feel much more distressed at losing money than the level of joy gained from winning the same amount.

For example, if you buy $1,000 worth of a particular stock, many people feel a lot sadder when it goes down to $500 compared to the happiness they feel when it rises to $1,500.

According to Ophir, the biggest investment mistake borne out of loss aversion is the unwillingness to cut losers.

“Even if they do not see any prospect for a turnaround, they wait to ‘get even’ on the position before selling.”

Conversely, loss aversion also causes investors to sell out too early when a stock rises.

The remedy to the loss aversion bias is to stay invested for the long term, according to the Ophir team.

“Day to day, share markets have only a slightly better than 50% chance of going up and a slightly less than 50% chance of going down,” the blog post read.

“But over longer periods like a month or a year, the odds significantly fall below 50% that your share portfolio will have gone down.”

So looking at your ASX share portfolio less regularly is the most practical action to take. That’ll cause less temptation to sell a winner too early or sell a loser too late.

Mental accounting

This is the habit of putting money into separate mental buckets, to be treated and valued differently.

For example, if an investor buys $10,000 worth of shares and it makes a $5,000 gain, the person may take more risks with the $5,000 compared to the original outlay.

“But a dollar is a dollar is a dollar. That is to say, money is ‘fungible’ — it is all the same no matter where it came from or how you earned it,” stated the Ophir team.

“Taking greater risk with the portion gained by treating it as ‘house money’ violates the fact that all money is interchangeable.”

The best way to combat this bias is to concentrate on the total return for a portfolio.

Confirmation bias

This psychological effect results in accepting information that confirms already-held assumptions and rejecting data that doesn’t.

“This one stems from the fact that it’s easier to digest information that accords with how we already view the world,” the Ophir team wrote.

“The cognitive load is much higher when we have to try and integrate new contradictory information into our worldview.”

To overcome this bias, investors should seek out advice that contradicts their current beliefs.

“At Ophir, we actively ask how we could be wrong in our views and seek out people or broker analysts that hold differing views to ours,” the blog stated.

“Someone having a differing view does not necessarily mean you are wrong, but it can help stress test your position to hopefully provide a more balanced view.”

Overconfidence

A common trap for investors is to think that they are better than they are.

Even professionals, who devote all their working hours to company research and portfolio construction, have trouble consistently beating the market.

But a cognitive bias causes many amateurs to think that they can do it.

“Surveys routinely show that more than 80% of people think they are better than average for a whole list of things — including driving, intelligence, and even looks.”

In stock investing, this means many people trade too often and underestimate risks. They buy expensive ASX shares and sell cheap stocks.

Similar to confirmation bias, plurality is the solution to this bias.

“At Ophir, we try to fight overconfidence by stress testing all our stock ideas in a team environment where everyone else acts as devil’s advocate,” the blog read.

“We also explicitly consider how the stock would perform in a GFC-style scenario.”

The post 4 mental biases stopping you from making money in ASX shares appeared first on The Motley Fool Australia.

More reading

• Brokers name 2 ASX 200 dividend shares to buy
• Is Wesfarmers (ASX:WES) about to buy Greencross?
• 5 things to watch on the ASX 200 on Tuesday
• Centuria Industrial Reit (ASX:CIP) share price rises after six more acquisitions
• 2 buy-rated ASX dividend shares

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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There is market speculation that Wesfarmers Ltd (ASX: WES) could be in the hunt for the Greencross.

For readers that don’t know, Greencross is a business that operates both the Greencross Vets and Petbarn businesses.

According to reporting by the Australian Financial Review, the retail conglomerate Wesfarmers is a leading player in the race to buy the pet business.

Is Wesfarmers going to buy Greencross?

Greencross is currently going through a process of a potential sale or another form of corporate action.

The AFR’s Street Talk reported that Wesfarmers is “firmly in the chasing pack” and is “getting serious about entering the pets sector in what would be a big way”.

Greencross’ owner, the private equity owner TPG, has been collecting interest from potential bidders. It has reportedly been in communication with these possible suitors to bring the review to a conclusion.

A sale of the business isn’t the only option. TPG could decide to break up Greencross or possibly go through an initial public offering (IPO) process.

According to the reporting, Greencross is now making profit of around $300 million a year, which is around three times bigger than when it was acquired three years ago.

This potential acquisition comes at an interesting time considering Wesfarmers is currently going through a process of trying to buy the pharmacy business Australian Pharmaceutical Industries Ltd (ASX: API). Wesfarmers sees API as an opportunity to start a health, beauty and wellness division. Woolworths Group Ltd (ASX: WOW) recently pulled back from its bid for API.

Would Wesfarmers have enough funding to afford to acquire API, Greencross and pay its dividend?

It was noted by the AFR that analysts think the company is financially strong with a net cash position of $109 million at the end of FY21 and annual cashflow generation of a couple of billion dollars.

How is Wesfarmers performing?

The Wesfarmers share price climbed 2.5% yesterday after giving a trading update, though it’s still down around 8% since the start of 2022.

In that trading update, it said it’s expecting to report net profit after tax (NPAT) of between $1.18 billion to $1.24 billion, which is in line with current consensus expectations for the first half of FY22.

This performance was supported by “pleasing” results in Bunnings as well as the Wesfarmers chemicals, energy and fertilisers division.

However, both Kmart Group and Officeworks have seen impacts from COVID disruptions and costs.

Kmart and Target trading in the first half was impacted by COVID-19 restrictions, with almost 25% of store trading days lost due to lockdowns.

Trading conditions improved as restrictions eased during the second quarter of the 2022 financial year, but customer traffic to stores was impacted by rising community transmissions of COVID-19 in some states, particularly during the Christmas period.

For the six months to 31 December 2021, Kmart and Target sales were down 10.3% year on year and down 5.2% compared to two years ago. However, Catch’s gross transaction value was up 1% year on year and increased 97.5% over two years.

Wesfarmers said that it has managed the global supply chain issues well, with the decision to hold extra inventory domestically. High levels of COVID-related impacts on staff in NSW and Victoria meant that distribution centres were impacted on the delivery of stock to stores in line with customer demand.

The ASX share talked about higher wage costs, commitments to paying team members through these difficult times, rising supply chain costs and higher stocking holding costs.

Retail trading conditions weakened in the last two weeks of 2021, with customer traffic subdued in the first half of January 2022.

The post Is Wesfarmers (ASX:WES) about to buy Greencross? appeared first on The Motley Fool Australia.

More reading

• Why Adbri, Australian Ethical, JB Hi-Fi, and Wesfarmers shares are racing higher
• ASX 200 (ASX:XJO) midday update: Wesfarmers’ update, energy shares rise
• Wesfarmers (ASX:WES) share price higher despite guiding to first half profit decline
• An ASX XI to take on the world
• Why did the Wesfarmers (ASX:WES) share price have such a great year in 2021?

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

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On Monday, the S&P/ASX 200 Index (ASX: XJO) started the week in a positive fashion. The benchmark index rose 0.3% to 7,417.3 points.

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

ASX 200 expected to rise again

The Australian share market looks set to continue its ascent on Tuesday. According to the latest SPI futures, the ASX 200 is expected to open the day 24 points or 0.3% higher this morning. The US market was closed on Monday for Martin Luther King Jr Day. In Europe the Dax rose 0.3% and the FTSE stormed 0.9% higher.

Rio Tinto quarterly update

The Rio Tinto Limited (ASX: RIO) share price will be on watch today when it releases its fourth quarter update. According to a note out of Goldman Sachs, it expects iron ore shipments of 88.9Mt and 133kt of mined copper for the quarter. The broker is also expecting the mining giant to provide FY 2022 guidance. It is forecasting Pilbara shipments of 330Mt (+10Mt YoY) and mined copper production of 550kt (+70kt YoY).

Oil prices rise

Energy producers such as Beach Energy Ltd (ASX: BPT) and Woodside Petroleum Limited (ASX: WPL) could have a good day after oil prices rose again. According to Bloomberg, the WTI crude oil price is up 0.6% to US$84.30 a barrel and the Brent crude oil price has risen 0.5% to US$86.52 a barrel. Oil prices rose amid tightening supply and easing Omicron concerns.

Gold price edges higher

Gold miners Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) will be on watch after the gold price edged higher. According to CNBC, the spot gold price is up 0.1% to US$1,818.90 an ounce. Traders appear undecided where gold is heading due to the Hawkish Fed.

South32 shares rated as a buy

The South32 Ltd (ASX: S32) share price remains a conviction buy with a $4.60 price target according to the team at Goldman Sachs. This follows the release of its pre-feasibility study on the Hermosa project. While the capital expenditure estimate was higher than it expected, Goldman believes the free cash flow and valuation story remains intact.

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

More reading

• Here are the top 10 ASX shares today
• Why Beforepay, Firefinch, Kogan, and South32 shares are dropping
• These 3 ASX 200 shares are topping the volume charts on Monday
• The Beach Energy (ASX:BPT) share price is trading at an 11-week high. Here’s why
• Is this driving Santos (ASX:STO) and Woodside (ASX:WPL) shares higher on Monday?

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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