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Shares in iron ore juggernaut Fortescue Metals Group Limited (ASX: FMG) finished the session more than 2% in the green on Tuesday and closed the day at $21.12.

The gain extends a short-term rally that Fortescue shares have embarked on since mid-November, amid a positive upswing in the price of iron ore around the same time.

Shares bounced from a low of $13.95 apiece in November and have gathered support at each new high along the way until the open on Wednesday.

Yet, despite the strengths rolling into 2022, not all are as rosy on the outlook of the Fortescue share price. Here’s what the team at Citi are saying about the outlook for Fortescue investors.

A bridge too far?

Given Fortescue’s core operations are shifting out of iron ore, analysts at investment bank Citi downgraded its recommendation on the company to a sell on grounds of valuation.

Underpinning the broker’s decision was its assessment of Fortescue Future Industries (FFI) which Citi feels presents with “unreasonable” expectations on valuation. The firm says “we don’t think it possible for [FFI] to bridge the valuation gap – the math is just too demanding”.

Even though iron ore pricing has regained strength in recent months, it is still trading well off single-year highs at US$120.5/tonne at the time of writing.

Not only that, but Fortescue’s share price has accelerated north at a faster pace versus the raw ingredient, a fact Citi alludes to in its note to clients.

However, the broker acknowledges this as an upside risk to its sell rating if iron ore rallies towards its previous highs once again. Nonetheless, it was hard for Citi to look past the valuation gap in light of key staff departures and the likelihood that iron ore will remain bottom-heavy.

“While iron ore prices have surprised to the upside and dividend yields for the iron ore names remain robust, there’s now a large valuation gap between Fortescue and peers”, it says.

The broker also notes that a valuation of approximately $11.3 billion is required on FFI to close the gulf in valuation, a feat that would require more than 20 projects and capital expenditure of over $40 billion.

Citi concluded from its examination that “at this early stage, and with no visibility, this seems a bridge too far”.

What are other brokers saying?

Whilst Citi is bearish on the outlook, analysts at Macquarie and Bell Potter each recommend the stock as a buy right now.

However, scoping out the list of analysts covering Fortescue provided by Bloomberg Intelligence, 45% recommend the company as a sell, whereas 35% have it as a hold. Just 20% of coverage reckon the iron ore giant is a buy at the current standing.

Moreover, the consensus price target for Fortescue in 2022 now sits at $15.72, which, at the time of writing, implies a downside potential of 34%.

Goldman Sachs is one of the most bearish and values Fortescue at just $11 per share whereas Morgan Stanley has it as a sell at $14.05.

In the last 12 months, the Fortescue share price has fallen 16% but has started the year to date up 10%. The gains come after shares have rallied almost 17% in the previous month of trading for the $65 billion company by market cap.

The post Why this top broker says the Fortescue (ASX:FMG) share price is overinflated appeared first on The Motley Fool Australia.

More reading

• Dividend beasts: 5 ASX 200 shares with the highest dividend yield
• 2 high-yielding ASX 200 dividend shares to boost income
• Own Fortescue (ASX:FMG) shares? Here’s how the share price performed in 2021
• What’s impacting the Fortescue (ASX:FMG) share price on Monday?
• Top brokers name 3 ASX shares to sell next week

The author has no positions 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.

In 2020, business was booming for e-commerce companies because of the pandemic and related government-imposed lockdown orders. It’s with this momentum that Amazon (NASDAQ: AMZN), one of the largest players in the industry, started 2021. However, the tech giant lagged the market last year, and several factors likely contributed to Amazon’s underperformance in 2021. 

First, investors largely shifted away from the so-called “pandemic stocks,” and many of these companies had a terrible year as a result. Second, Amazon’s iconic founder, Jeff Bezos, stepped down from his role as the CEO of the company in the third quarter, leaving his deputy Andy Jassy in charge. Will these factors continue to weigh on Amazon’s stock performance, or can the company get back to its market-beating ways?

Amazon’s shares currently trade at $3,251.08 apiece. Let’s see whether the company’s stock can rise roughly 23% this year to hit the $4,000 mark.

AMZN data by YCharts

Near-term headwinds

While the pandemic brought forth increased adoption of e-commerce, from which Amazon benefited, the outbreak also came with several issues for the company’s consumer business. As it reported in its latest quarterly update, the tech giant is currently facing “labor supply shortages, increased wage costs, global supply chain issues, and increased freight and shipping costs.”

The company also doubled the size of its fulfillment network since the pandemic started to deal with capacity constraint issues. Amazon largely insulated its customers from these higher costs, which means it is taking them on itself. The company said it would incur “several billion in additional costs” due to the issues it is facing, which may harm the bottom line, at least in the short run. 

Long-term opportunities

Amazon has always been laser-focused on pleasing its customers, and it is showing this commitment once again. The money Amazon is spending to deal with its current issues will help keep its retail business efficient. Getting items to customers promptly is what matters in the long run. But then there’s also the company’s cloud computing unit, Amazon Web Services (AWS), to consider.

AWS continues to contribute substantially to Amazon’s overall business performance. The company recorded net sales of $110.8 billion in the third quarter, 15% higher than the year-ago period. Meanwhile, operating income and net income both dropped for the company. Amazon’s operating income decreased by 21.7% to $4.9 billion, while net income declined to $3.2 billion, 50.2% lower than the year-ago period.

How did AWS perform? Net sales from the segment soared by 38.9% to $16.1 billion — a much higher growth rate than Amazon’s overall business. Furthermore, AWS’ operating income increased by 38.1% to $4.9 billion while Amazon’s international segment reported an operating loss. The North America division only saw a comparatively modest operating profit of $880 million.

According to Statista, Amazon held a 32% slice of the cloud computing market in the third quarter; its closest peer came in at 21%. And while increased competition in this field is a potential headwind to keep in mind, Amazon generates loads of cash, and we can expect the company to continue investing heavily in this business. Amazon ended the third quarter with $30.2 billion in cash and cash equivalents, which remained more or less flat compared to the year-ago period.

According to some estimates, the cloud computing market will expand at a compound annual growth rate of 17.9% through 2028. That’s good news for Amazon — and its shareholders. Expect the tech giant to continue to benefit from this tailwind.

How will the market react? 

Despite the near-term challenges, Amazon is still ideally positioned for long-term growth. That’s what matters most: After all, the market is supposed to be forward-looking. That’s why, after it was a laggard last year, I expect the company to beat the broader market in 2022. Analysts see Amazon growing its revenue by 17.7% this year.

Furthermore, the company’s analyst consensus price target stands at $4,104.88, or 26.3% above its current price (as of this writing). I see Amazon exceeding this price target within the next 12 months. But even if it doesn’t, investors should remain focused on the company’s excellent long-term prospects. 

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

The post Will Amazon shares hit $4,000 in 2022? appeared first on The Motley Fool Australia.

More reading

• If you’d invested $5,000 in Amazon in 2015, this is how much you would have today
• Is Amazon stock too expensive?
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• 5 unstoppable trends to invest $5,000 in for 2022

Prosper Junior Bakiny owns Amazon. 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. The Motley Fool Australia has recommended Amazon. 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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The Mesoblast Limited (ASX: MSB) share price has had a hard time of it lately. Its struggles seem to have been born from a 17% single-day plunge last month, from which the company – whose stock is also listed on the Nasdaq exchange under the ticker NASDAQ: MESO – hasn’t yet managed to recover.

In early morning trade on Wednesday, the Mesoblast share price is $1.36. That’s 20% lower than it was this time last month.

Let’s take a look at what’s been weighing on the biotechnology company recently.

What’s dragging the Mesoblast share price lower?

The Mesoblast share price has been feeling down since it announced a Swiss healthcare company dumped its product in mid-December.

Novartis terminated an agreement that could have seen Mesoblast’s remestemcel-L used to treat COVID-19-induced acute respiratory distress syndrome (ARDS).

As The Motley Fool noted at the time, the agreement’s cancellation saw around US$1.2 billion of Mesoblast’s potential earnings washed down the drain.

Of course, the agreement’s termination might have been expected by some.

It was put in place less than a month before Mesoblast released news its randomised control trial treating ventilator-dependent patients with ARDS due to COVID-19 was called off early after it became apparent it was unlikely to meet its primary endpoint.

The Mesoblast share price recovered some of its losses on 16 December. That’s when the company released positive news of a trial using remestemcel-L to treat chronic back pain.

Its shares gained 11% that day, but they didn’t manage to hold onto the boost.

In fact, the Mesoblast share price has already shed 3.55% year to date. It’s also 47% lower than it was this time last year.

On top that that, Mesoblast remains one of the most shorted stocks on the ASX. The Motley Fool’s most recent weekly breakdown of shorting found 9.1% of the company’s shares were in the hands of short sellers.

The post The Mesoblast (ASX:MSB) share price has tumbled 25% in a month. What’s going on? appeared first on The Motley Fool Australia.

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• These are the 10 most shorted ASX shares
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• Why the Mesoblast (ASX:MSB) share price is rising 5% today
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• These are the 10 most shorted ASX shares

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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The Cochlear Limited (ASX: COH) share price is pushing higher on Wednesday morning.

At the time of writing, the hearing solutions company’s shares are up 1% to $208.79.

Why is the Cochlear share price rising today?

Investors are bidding the Cochlear share price higher today after it released an update on its Nucleus Implants.

According to the release, the U.S. Food and Drug Administration (FDA) has approved Cochlear’s Nucleus Implants for the treatment of unilateral hearing loss (UHL)/single-sided deafness (SSD).

Cochlear’s implants are already FDA approved for those with moderate to profound bilateral sensorineural hearing loss. However, with this approval, for the first time Cochlear can expand implantable treatment options for those with UHL/SSD to include cochlear implants, which is a significant market.

UHL is classified as hearing loss in one ear and near to near-normal hearing in the opposite ear. Whereas SSD is specific to individuals with severe to profound hearing loss in one ear and normal or near-normal hearing in the other ear. Every year, about 60,000 people in the United States acquire SSD.

Cochlear Americas’ Vice President, Clinical Affairs, Christine Menapace, commented: “It is not often that approvals to expand indications and increase awareness about effective treatments for hearing loss come along. Now with this approval, Cochlear is proud to offer the most hearing implant options available to those with unilateral hearing loss/single-sided deafness through our cochlear implant and bone conduction solutions.”

“It is important that those with this type of hearing loss recognize the impact to their lives and understand there are several options available to them, and we encourage them to talk to their hearing health professional today to find out what would work best for them,” she added.

The post Cochlear (ASX:COH) share price higher on FDA approval appeared first on The Motley Fool Australia.

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• Hear this: Why the Cochlear (ASX:COH) share price had such a difficult time in 2021
• Where are Cochlear (ASX:COH) shares headed in 2022?
• 2 ASX 50 shares to buy in 2022
• What’s the outlook for ASX healthcare shares in 2022?

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 Cochlear Ltd. The Motley Fool Australia has recommended Cochlear Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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If you can believe it, it’s now one year since the GameStop Corp. (NYSE: GME) short squeeze exploded into the public consciousness.

That episode, which saw shares for the video game retailer rise 1,500% in just a fortnight, brought mainstream attention onto the Reddit forum r/wallstreetbets.

The group plan to buy up GameStop stock to inflate its flagging share price was allegedly hatched in that discussion channel.

The term “meme stock” had well and truly arrived.

Crowd-picking stocks on social media and online chats has become so influential that institutional investors are now reportedly keeping a close eye on these forums.

As such, it’s always interesting to keep tabs ourselves.

So let’s take a look at the 5 most-discussed stocks on WallStreetBets as of Tuesday January 11 Australian time, thanks to statistics from Swaggy Stocks:

1. Tesla Inc (NASDAQ: TSLA)
2. GameStop Corp
3. Tilray Inc (NASDAQ: TLRY)
4. Invesco QQQ Trust Series 1 (NASDAQ: QQQ)
5. Nvidia Corporation (NASDAQ: NVDA)

Electric cars, cannabis and computer chips

Electric car maker Tesla needs no introduction, and regularly features among the most-discussed shares on Reddit.

After multiplying its share price 8-fold in 2020, punters were certainly interested in whether Elon Musk’s company had become overvalued.

The bulls won out in 2021, seeing their shares increase another 50%.

The debate apparently still continues in 2022.

Tilray is a Canadian cannabis company that grows the plant in Canada and Europe and then sells it into the fast-growing US market.

The company listed on the NASDAQ in July 2018 with an initial public offer price of US$17 per share.

Many of those original investors may have left by now, with the share price languishing at US$7.29. It has lost 41% of its valuation just in the past 12 months.

Are the Redditors planning a crowd-induced surge?

Invesco QQQ Trust is an exchange-traded fund that tracks the NASDAQ-100 (NASDAQ: NDX) index.

With a heavy technology bias, the ETF has lost about 4.5% since the start of this year, so there may be some debate on WallStreetBets about buying the dip.

Rounding out the top 5 is chipmaker Nvidia.

Despite its origins in graphics processing units, the company has seen spectacular growth thanks to its innovations in artificial intelligence and data analytics.

Shareholders have enjoyed a marvellous ride, with the Nvidia stock price surging more than 10-fold over the past 5 years.

But despite still doubling over the past 12 months, the stock has cooled considerably in recent weeks. Since 7 December, Nvidia shares have lost 15.5%.

No wonder there is some discussion on Reddit as to whether it’s a buying opportunity.

It’s worth noting that Reddit is itself planning to list publicly this year, confidentially filing for an initial public offer last month.

No doubt Reddit shares will also make an appearance soon as one of the most-discussed shares.

The post Top 5 stocks mentioned on Reddit’s WallStreetBets right now appeared first on The Motley Fool Australia.

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• Here’s why the Tesla (NASDAQ:TSLA) share price soared 13% overnight

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 recommended Nvidia. 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 Rio Tinto Limited (ASX: RIO) share price has continued to climb throughout the new year.

In the past couple of weeks, the company’s shares have risen 6.25% in value. By contrast, the S&P/ASX 200 Index (ASX: XJO) has fallen 0.73% to 7,390.1 points over the same timeframe.

At Tuesday’s closing bell, Rio Tinto shares finished the day up 0.36% to $106.37.

With the new year upon us, we take a look at what’s ahead for the mining heavyweight.

The dates to watch for in 2022

Late last month, Rio Tinto provided investors with its key dates for the 2022 calendar year.

The most important date to circle in your diary is the company’s announcement of its 2021 full-year results on 23 February. Rio Tinto will report how it performed for the last 12 months along with its final dividend.

Following the release, Rio Tinto shares will trade ex-dividend on 10 March. This is when investors must have purchased the company’s shares to be eligible for the upcoming dividend payment.

In addition, eligible shareholders can elect to participate in the dividend reinvestment plan (DRP) with the deadline being 29 March.

The payment date for the final dividend is scheduled for 21 April, when investors will collect a portion of the company’s profits. Rio Tinto traditionally rewards its shareholders with 60% of its profits as dividends.

In FY20, the board declared a final dividend of $5.17 per share, its third-biggest payout to date.

Moving ahead, the company will hold its 2022 annual general meeting on 5 May. This will likely recap the events over the last 12 months, as well as the near-term outlook for the mining outfit.

Rio Tinto’s half-year results for FY22 are set to be disclosed to the ASX on 27 July. This will also comprise an interim dividend for the six-month period.

Rio Tinto shares will again trade ex-dividend on 11 August. The final date for elections under the DRP will fall on 1 September.

Shareholders who are eligible to receive Rio Tinto’s distribution of profits will collect payment on 22 September.

Rio Tinto share price summary

Despite travelling higher in 2022, it has been a disappointing 12 months for Rio Tinto shareholders. The company’s shares have lost around 13% for the period.

Based on valuation grounds, Rio Tinto has a market capitalisation of $39.49 billion and a price-to-earnings (P/E) ratio of 13.56.

The post Attention Rio Tinto (ASX:RIO) shareholders: Here are the key dates to note in 2022 appeared first on The Motley Fool Australia.

More reading

• Dividend beasts: 5 ASX 200 shares with the highest dividend yield
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• Is the Rio Tinto Limited (ASX:RIO) share price a buy for its 13% dividend yield?
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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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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.

What happened

Today, investors in top cryptocurrency Cardano (CRYPTO: ADA) are finally seeing some green. As of 11:15 a.m. ET, Cardano has appreciated 4.8%, reversing part of its losses from the past week.

Over the past seven days, Cardano remains down 12.1%, as investors price in headwinds relating to transaction issues on key exchanges such as Coinbase Global (NASDAQ: COIN). As was reported yesterday, transfers to and from the crypto exchange had been disabled for at least a portion of a few trading days, but these issues appear to be resolved at the time of this writing.

The resolution of these issues, along with strong price action in the crypto market today, appear to be propelling investor sentiment higher. Currently, the entire crypto market has gained 2.9% over the past 24 hours, with beaten-up tokens such as Cardano seeing outsized gains today.

Cardano investors are beaming today thanks to news that the Cardano Forest, a project run by Cardano Foundation, a non-profit linked to managing the Cardano network, has officially planted more than 1 million trees. As a proof-of-stake network, Cardano’s validation protocol is already among the greenest in the crypto world. Via planting trees, Cardano has sought to become a carbon-negative network, a goal that appears to be closer to reality today than ever before.

So what

Overall, investors in Cardano have a number of reasons to be bullish today. Retail investors are able to trade ADA tokens, and sentiment in the overall crypto market is improving. Cardano is making big strides toward being the “greenest” blockchain network on the planet. What’s not to like?

However, serious headwinds continue to batter the crypto sector, mainly driven by an increasingly hawkish Fed. This environment has led to a de-risking of investor portfolios, with cryptocurrencies and higher-growth equities seeing marked declines this year. In fact, the past 10 days have been the worst start for the crypto market since its inception.

Now what

Is now the time to be bullish or bearish on cryptocurrencies? That’s the key question many investors are asking right now.

The answer probably depends on each individual investor’s time horizon. As with any sort of disruptive technology, the growth we’re likely to see coming out of the crypto world won’t be linear. In fact, digital currencies are likely to remain among the most volatile assets anywhere. Accordingly, those with risk-averse mindsets may want to avoid this sector altogether.

However, those with a little more appetite for risk may consider adding a portion of their holdings to cryptocurrencies such as Cardano. This network has a number of token-specific catalysts that look attractive right now. Over the long term, there’s reason to believe these catalysts could prevail over shorter-term knee-jerk responses to macro catalysts by the market. Of course, only time will tell.

Today’s price action in the crypto market is a nice reprieve for investors who have seen sharp declines over the past month or so. However, it’s likely that volatility will continue from here. Accordingly, fastening the seatbelt and getting ready for a bumpy ride should be the mindset investors have from here. 

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

The post Why Cardano is on the move higher today appeared first on The Motley Fool Australia.

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• Can these 3 ‘Ethereum Killers’ actually kill Ethereum in 2022?
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• Australia’s first physical crypto gift cards are now on sale for Christmas
• What crypto investors should know about these ‘Ethereum killers’
• Bitcoin, Ethereum, and Cardano continue to recover from late-week selloffs

Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and recommends Coinbase Global, Inc. 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.

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

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The Coles Group Ltd  (ASX: COL) share price finished slightly in the red in 2021 amid Omicron COVID-19 disruptions.

Shares in the supermarket giant shed 1.1%, dropping from $18.14 a share to $17.94 during the calendar year. In contrast, the S&P/ASX 200 Index (ASX: XJO) gained 13% during the year.

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

How did the Coles share price perform?

The Coles share price had a topsy-turvy year marked by its dramatic fall in February, a massive recovery to a yearly high in August, and more drama in September.

Early in the year, the Coles share price plummeted more than 17% between market close on 27 January and its yearly low of $15.33 on 26 February.

Despite promising financial results in February, management warned of potential sales declines in the second half of the year due to COVID-19 uncertainties. Coles reported a 14.5% spike in net profit to $560 million in these half-year results.

Between 12 July and 23 August, the supermarket’s shares surged more than 13% to a 52-week high of $18.84.

During this time, Goldman Sachs forecast strong dividend growth for Coles in FY2021 and FY2022.

As my Foolish colleague Tristan reported on 23 July, ASX supermarket shares, including Coles, performed well during Australia’s lockdowns.

In August, The company also released promising financial results, showing sales revenue increased 3.1% to $38.6 billion.

Then, between market close on 23 August and 28 September, the Coles share price collapsed more than 12%. A broker note from UBS placed a sell rating on the company. Also, during this time, the retailer replaced existing debt facilities with sustainability-linked loans worth $1.3 billion. An end to lockdowns also weighed on investors’ minds.

A recovery was now on the cards. In between market close on 28 September and 23 November, the share price soared more than 10%.

Positive first-quarter sales results showing a 48% boost in eCommerce sales in the first quarter of FY22 was a highlight during this time. At its AGM, the company also highlighted some of its technological advances improving its business.

Finally, to end the year, between market close on 23 November and 31 December, the Coles share price shed 1.54%. In what was the only market announcement in December, Coles informed the market the Fair Work Ombudsman was investigating the company’s pay arrangements.

Also, news from Coles’ supermarket competitor Woolworths that its first half of FY22 was “one of the most challenging in recent memory” may have weighed on the minds of investors.

Foolish takeaway

The Coles share price performed roughly 14 percentage points below the benchmark index in 2021.

In the past month, the company’s shares are down 6.77%, and 7.19% lower in the past week. Omicron fears seem to be weighing on investors’ minds in recent days, with supply shortages prompting the company to warn of challenges in the next few weeks. The Coles share price dropped 2.46% on Tuesday.

The supermarket giant has a market capitalisation of roughly $22.2 billion based on its current share price.

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

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• Own Coles (ASX:COL) shares? The retailer is warning of ‘difficult weeks’ ahead
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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns and has recommended COLESGROUP DEF SET. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Like many tech shares, the NEXTDC Ltd (ASX: NXT) share price has had a very tough start to the year.

Since the start of 2022, the data centre operator’s shares have fallen 12%.

This means the NEXTDC share price is now in negative territory on a 12-month basis.

What’s happening with the NEXTDC share price?

Investors have been selling down the NEXTDC share price along with other ASX tech shares this year following a selloff on the Nasdaq index.

That selloff has been driven by the release of minutes from the US Federal Reserve, which indicated that the increasingly hawkish central bank may remove its support for financial markets sooner than anticipated. This includes increasing interest rates quicker than previously expected.

Rising interest rates are bad news for shares that trade on high multiples. That’s because they form part of the financial models that valuations are based on.

When interest rates are low, valuations are higher. The opposite happens when interest rates rise, which is the scenario we are facing right now.

According to a recent note out of Citi, it is expecting NEXTDC to deliver earnings per share of 3 cents in FY 2022, 8 cents in FY 2023, and then 16 cents in FY 2024. This means the NEXTDC share price is trading at approximately 71x FY 2024 earnings today, which is significantly higher than the market average.

Though, it is worth highlighting that NEXTDC is investing heavily in its future growth, so these earnings estimates are not truly indicative of its actual earnings power.

Is this a buying opportunity?

While buying into the tech sector right now carries a lot more risk because of the hawkish Fed, Citi appears to believe that patient investors will be rewarded.

The broker has a buy rating and $15.40 price target on its shares. Based on the current NEXTDC share price of $11.36, this implies potential upside of almost 36% for investors.

The post The NEXTDC (ASX:NXT) share price has tumbled 12% so far this year. Is it a buy? appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro owns NEXTDC 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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Given how low interest rates are, dividend shares remain a very popular way for investors to generate a passive income.

Fortunately, the Australian share market is not short of companies that share their profits with investors in the form of dividends. Two such shares are listed below. Here’s why analysts have given buy ratings to these dividend shares:

Inghams Group Ltd (ASX: ING)

The first ASX dividend share to look at is Inghams. Australia’s leading poultry producer is having a very tough time at the moment because of COVID-19 headwinds. This led to the release of a disappointing trading update earlier this week.

However, the team at Goldman Sachs has suggested that this could be a buying opportunity for investors. This morning it retained its buy rating with a trimmed price target of $3.90.

It commented: “We remain Buy-rated on ING as we are attracted to its relatively defensive revenue stream; duoploy industry structure; strong balance sheet and undemanding valuation. ING is trading at 13.4x our revised FY22 EPS (vs peers on an average 15.2x) and attractive 5% fully franked yield. Our revised TP offers 23% total return over 12 months.”

Goldman is then forecasting dividend yields of 6.2% in FY 2023 and 7.2% in FY 2024.

Jumbo Interactive Ltd (ASX: JIN)

Another ASX dividend share to consider is Jumbo Interactive. It is the growing online lottery ticket seller behind the OzLotteries business. In addition, it has the Powered by Jumbo software as a service business which has a significant global opportunity.

Analysts at Morgans are very positive on the company. They currently have an add rating and $20.20 price target on its shares.

Morgans commented: “While JIN has recovered strongly since its August result, we remain attracted to the strong cash generation and balance sheet optionality afforded from its core LR business (+ Oz Lotto refresh upside) and long-term growth potential of its SaaS and Managed Services business, which remain exposed to large, global addressable markets.”

The broker is forecasting fully franked dividends per share of 45 cents in FY 2022 and 52 cents in FY 2023. Based on the current Jumbo share price of $18.35, this will mean yields of 2.5% and 2.8%, respectively, for investors.

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

More reading

• 5 things to watch on the ASX 200 on Wednesday
• Why ARB, Inghams, James Hardie, and SDI shares are sinking
• ASX 200 (ASX:XJO) midday update: PolyNovo rockets, Inghams sinks
• Inghams (ASX:ING) share price sinks as Omicron bites
• 2 ASX dividend shares that could be buys with yields above 4%

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 Jumbo Interactive Limited. The Motley Fool Australia has recommended Jumbo Interactive 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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