Tag: Motley Fool

Since you’re reading The Motley Fool, the chances are you have some money to invest.

Even if that amount is as little as $10,000, you can have a decent go at setting up a nice stream of passive income for yourself.

The places you could end up using the power of ASX shares and compounding could surprise you.

Let me throw up a hypothetical using one particular stock:

A market darling tipped to go even further

MMA Offshore Ltd (ASX: MRM) is a stock that many experts are particularly fond of at the moment.

The business provides marine services to clients with sea-borne infrastructure such as oil and gas rigs.

With the world experiencing energy anxiety over the past couple of years since Russia invaded Ukraine, MMA Offshore has been going gangbusters.

Just since November alone, the stock has gained more than 54%.

Over the longer term, the MMA Offshore share price has rocketed 107% over the past five years.

According to CMC Invest, all five analysts that cover it reckon MMA Offshore is a strong buy.

Just four years to produce passive income

Past performance, of course, is never an indicator of the future. But we can use this track record to demonstrate how you could grow your $10,000 into a passive income generator.

The last half-decade of returns from MMA shares equate to 15.7% compound annual growth rate (CAGR).

Even if we round that down to 15%, a $10,000 investment could take you to $2,500 of yearly passive income very swiftly.

The “trick” is to keep saving money and add $100 to the nest egg each month.

At that rate, after four years, the MMA shares will amount to $23,482.

From then on, selling off the 12% gain each year would reap you $3,522.

That’s $3,500 of cash for no work.

Right now $10,000 will buy you 5,181 MMA Offshore shares.

So what are you waiting for?

The post $10,000 in excess savings? I’d buy 5,181 shares of this ASX stock to aim for $3,500 in passive income appeared first on The Motley Fool Australia.

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More reading

• I’d invest in these 2 ASX shares for a real shot at $1 million
• Up 140% in 13 months, experts are still backing this ASX stock for the long run
• Top ASX shares to buy in January 2024

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

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The post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.

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• These ASX 300 dividend shares offer major upside and good yields
• Is Core Lithium stock a good buy after falling 80% in a year?
• 3 ASX 200 value stocks I’d buy for my portfolio today!
• These ASX 200 shares just hit new 52-week highs
• Why these two headwinds are dragging down the ASX 200 today

Motley Fool contributor Sebastian Bowen has positions in Endeavour Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Corporate Travel Management and Life360. The Motley Fool Australia has positions in and has recommended NIB Holdings. The Motley Fool Australia has recommended Bapcor and Corporate Travel Management. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Premier Investments Limited (ASX: PMV) shares are trading for $26.83 on Tuesday, up 0.47%.

ASX retail shares like Premier Investments have been volatile over the past 12 months, as investors fretted over high interest rates and inflation and the degree to which consumers would pull back on spending.

Premier Investments, the name behind popular retail brands like Just Jeans, Peter Alexander, and Smiggle, certainly experienced this volatility with its share price on a rollercoaster last year, as shown below.

Despite the economic uncertainty, the full-year performance of ASX retail stocks last year was actually surprising.

Over the year, the S&P/ASX 200 Consumer Discretionary Index (ASX: XDJ) rose by 18.7%.

Retail shares outperformed the S&P/ASX 200 Index (ASX: XJO) by a mile, with the benchmark rising by only 8.13% in comparison.

Meantime, the Premier Investments share price booked an 11.1% gain over the year.

Why did consumers keep spending in 2023?

Analysts speculated that low unemployment and higher spending among older debt-free Australians kept consumer discretionary spending stronger than anticipated in 2023.

Also, many households had a savings build-up of pandemic stimulus money that provided a buffer against the rising cost of living.

On top of that, property prices rose strongly last year. This creates a psychological ‘wealth effect’ whereby people feel richer when their homes rise in value, and thus, they are more likely to spend at the shops.

The big question is whether this retail resilience will continue in 2024. Those household savings are running out, and property price growth is expected to slow this year.

Plus, the Westpac-Melbourne Institute consumer confidence survey released this week found sentiment had fallen to the lowest level recorded for the first month of a new year since the 1990s recession.

So, are we yet to see the full impact of this cost-of-living crisis on retail businesses? Or will the prospect of cuts to interest rates prevent a downward spiral in retail earnings and a hit to dividends?

These are the questions that income investors may ponder before buying ASX retail shares in 2024.

Meantime, let’s take a look at Premier Investments shares and the dividend expected in 2024.

How much passive income will Premier Investments shares pay in 2024?

As published today on CommSec, the consensus forecast dividend for Premier Investments shares in 2024 is $1.21 per share.

This is down on the FY23 dividend of $1.30 per share and the FY22 dividend of $1.25 per share.

Let’s see how this translates for ASX investors purchasing $10,000 worth of Premier Investments shares at today’s price.

An investment budget of $10,000 (minus a brokerage fee of $5) buys you 372 Premier Investments shares at a total cost of $9,980.76.

If we multiply 372 by $1.21, we get a total annual dividend of $450.12, plus 100% franking.

The gross dividend, including the franking, equals $643.

On a purchase price of $26.83 per share, that brings the dividend yield to just over 4.5%.

If we add franking, the gross dividend yield comes in at just over 6.4%.

That means Premier Investments shares will still pay an above-average dividend yield this year.

The long-term average dividend yield for an ASX 200 stock is 4%.

The post If you invest $10,000 in Premier Investments shares, how much passive income will you receive in 2024? appeared first on The Motley Fool Australia.

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More reading

• ‘Short-term correction’: 2 ASX stocks I’d load up on if the market turns sour
• Here are the top 10 ASX 200 shares today
• 3 of the best ASX retail shares I can find right now, no soft landing required
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• 5 things to watch on the ASX 200 on Tuesday

Motley Fool contributor Bronwyn Allen 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 Premier Investments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Washington H. Soul Pattinson and Co Ltd (ASX: SOL) shares are famous on the S&P/ASX 200 Index (ASX: XJO). Soul Patts is the only ASX 200 share that can tell investors that they have enjoyed 23 years of uninterrupted annual dividend pay rises. Yep, Soul Patts shares have come with an ever-rising dividend since the year 2000.

And yet, this ASX 200 investing house doesn’t look like a dividend heavyweight at first glance. Right now, its shares have a trailing yield of 2.69% on the table. That’s fine, but nothing that will catch the eye.

But today let’s undertake an investigation into the power of a compounding dividend.

We’ll start by going back five years. At the start of 2019, Soul Patts shares were asking $26.17 each. That’s 23.7% away from the $32.37 those same shares are asking today.

Over 2019, Soul Patts would go on to fund two fully-franked dividend payments, as is the norm for the company. Those consisted of an interim dividend worth 24 cents per share and a final dividend worth 34 cents per share for a total of 58 cents per share.

Over the following years, Soul Patts kept to its habit of delivering annual dividend pay rises.

2020 saw the company fork out a total of 60 cents per share in dividend payments (despite the pandemic).

Then, in 2021, this was upped again to 62 cents.

2022 saw a huge increase in investor payouts, with a total of 72 cents per share doled out (as well as a special 15 cents per share dividend).

And that brings us to 2023. Last year, Soul Patts shares gave investors an interim dividend of 36 cents per share, in addition to a final dividend worth 51 cents per share. That’s a grand total of 87 cents per share.

How much are dividends from Soul Patts shares really worth?

So this streak of dividend hikes is obviously impressive. But how much exactly is it worth to Soul Patt investors? Well, let’s assume that an investor picked up $10,000 worth of Soul Patts shares back at the beginning of 2019. At that share price of $26.17, this would have resulted in the acquisition of 382 shares, with some change left over.

Over 2019, this investor would have enjoyed a total of $221.56 in dividend income. That translates to a yield cost of around 2.22%.

But over 2020, that same investor would have bagged $226.20 in dividends.

By 2021, it would have been $236.84, and by 2022, $275.04 ($332.34 including the special dividend).

2023 would have yielded the same figure for our investor – $332.34.

As such, we can conclude that our investors’ annual dividends have risen from $221.56 to $332.34 over a five-year period. That’s a rise worth 50%.

What’s more, it means that at the end of 2023, our investor is enjoying a yield-on-cost of 3.32% on their original investment, not the 2.22% they started with.

As a result, their 382 Soul Patts shares, which cost just under $10,000, would be worth $12,365.34 today. In addition, our investor has enjoyed a total of $1,349.38 in total dividend payments. That stretches their total gain to $3,714.62.

Not a bad return for five years.

The post Rivers of cash: Here’s how much Soul Patts shares have paid out in dividends since 2019 appeared first on The Motley Fool Australia.

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• 3 ASX shares I think are ready for dividend hikes in 2024
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Motley Fool contributor Sebastian Bowen has positions in Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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If you want to add to your income portfolio this month, then it could be worth checking out the ASX 300 dividend shares listed below.

That’s because analysts are currently tipping them as buys and forecasting good yields.

Here’s what they are saying about them:

Accent Group Ltd (ASX: AX1)

The team at Bell Potter thinks income investors should be buying Accent Group’s shares.

It is a retail conglomerate with a focus on the footwear market. Its portfolio includes a large number of store brands such as The Athlete’s Foot, Stylerunner, HypeDC, Platypus, and Sneaker Lab.

Bell Potter believes the company is well-positioned for growth over the long term. As a result, it is tipping Accent as an ASX 300 dividend share to buy with a $2.50 price target.

As for dividends, the broker is forecasting fully franked dividends per share of 11.8 cents in FY 2024 and then 13.7 cents in FY 2025. Based on the latest Accent share price of $2.04, this will mean yields of 5.8% and 6.7%, respectively.

Endeavour Group Ltd (ASX: EDV)

Over at Goldman Sachs, its analysts continue to believe that drinks giant Endeavour could be an ASX 300 dividend share to buy.

Its analysts highlight that the BWS and Dan Murphy’s owner’s shares trade “at an attractive 16.9x FY24 P/E vs 5.2% EPS 23-26e CAGR for a staple with clear market leading position.” It has a buy rating and $6.40 price target on the company’s shares.

In addition, Goldman is forecasting some good dividend yields in the coming years. It is predicting fully franked dividends of approximately 21 cents per share in FY 2024 and 23 cents per share in FY 2025. Based on the current Endeavour share price of $5.38, this equates to yields of 3.9% and 4.3%, respectively.

Transurban Group (ASX: TCL)

A third ASX 300 dividend share that analysts have named as a buy is Transurban.

It manages and develops a high-quality portfolio of 22 urban toll roads across Australia and North America. This includes CityLink in Melbourne and the Cross City Tunnel in Sydney.

Citi is a fan of the company. This is partly due to inflation-linked price increases and its defensive qualities. The broker has a buy rating and $15.90 price target on its shares.

As for income, Citi is expecting dividends per share of 63.4 cents in FY 2024 and 64.6 cents in FY 2025. Based on the current Transurban share price of $13.13, this will mean yields of 4.8% and 4.9%, respectively.

The post These ASX 300 dividend shares offer major upside and good yields appeared first on The Motley Fool Australia.

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Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor James Mickleboro has positions in Endeavour Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group and Transurban Group. The Motley Fool Australia has recommended Accent Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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ASX lithium shares are starting the year swirling in a pool of pessimism following an 80% decline in the lithium carbonate price last year.

Not only that, but top broker Goldman Sachs reckons lithium commodity prices won’t bottom until 2025.

Despite this gloomy backdrop, several directors of two beaten-up ASX lithium micro-caps are ploughing more of their own investment funds into their companies this week.

Which directors are buying ASX lithium shares?

Patrick Murphy, a non-executive director of lithium explorer Green Technology Metals Ltd (ASX: GT1), is our first buyer.

Murphy snapped up 362,610 shares on-market over three days in late December and early January. The series of trades cost him a little over $100,000 at an average price of 27.6 cents.

And he’s not the only director buying.

Last month, Cameron Henry also bought 386,148 Green Technology shares for close to $100,000 on-market. He paid an average of 25.9 cents per Green Technology share.

John Young also bought 750,000 shares over two days on-market at an average price of 26.1 cents for a total investment of $196,196.

The buys followed a capital raise in December that raised $14.6 million through the issue of 39,477,680 new shares at 37 cents per share.

The Green Technology share price is currently 19 cents, down 5% for the day. There is no official news relating to the ASX lithium share today.

ASX lodgements also reveal that two directors of Nova Minerals Ltd (ASX: NVA) have also been buying up more shares.

Chris Gerteisen spent just over $15,000 buying 45,000 Nova Minerals shares this week at an average price of 33.8 cents.

The notice also revealed that he let 500,000 unquoted director options expire on 29 December. They were exercisable at 75 cents per share.

Also this month, Craig Bentley bought 200,000 Nova Minerals shares for a tad under $68,000. That’s an average price of 33.9 cents per share.

The Nova Minerals share price is currently 33 cents, up 1.54% for the day. There is no news from the company today.

The post 2 beaten-up ASX lithium shares being bought up by directors appeared first on The Motley Fool Australia.

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• 3 ASX mining insiders celebrating the new year with more share buys

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

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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.

The launch of OpenAI’s ChatGPT in November 2022 triggered a boom in artificial intelligence (AI), with countless tech firms pivoting their businesses toward the budding industry.

According to Grand View Research, the AI market is projected to expand at a compound annual growth rate of 37% through 2030. That trajectory would see the sector exceed a value of $1 trillion before the end of the decade, suggesting there’s no better time than the present to invest in AI-minded companies.

Microsoft (NASDAQ: MSFT) and Amazon (NASDAQ: AMZN) are two attractive options, with both companies investing heavily in the market and active in one of the biggest growth areas of AI: cloud computing. These companies have emerged as some of the biggest threats in the industry and could deliver significant gains over the long term.

So, let’s take a closer look at these companies and determine whether Microsoft or Amazon is the better AI stock right now.

Microsoft

Microsoft was an early investor in AI, sinking $1 billion into OpenAI in 2019. The company has since increased its investment, achieving a 49% stake in the start-up. The partnership with OpenAI has granted Microsoft exclusive access to some of the most advanced AI models, which it has used to bring upgrades across its product lineup.

Over the last year, elements of ChatGPT have been integrated into Microsoft’s search engine Bing, a range of new AI tools have been added to its cloud platform Azure, and its various Office services now offer improved productivity with the help of AI.

Microsoft is a behemoth in the tech world, with millions of consumers and businesses relying on its software. The popularity of its services and OpenAI’s tech could be a powerful combination over the long term.

In the first quarter of 2024 (ending September 2023), Microsoft posted 13% in year-over-year revenue growth, beating Wall Street estimates by nearly $2 billion. Significant gains came from the company’s cloud and productivity segments, which saw revenue rise 19% and 13%, respectively. These divisions are hyperfocused on AI development, which appears to be paying off.

Alongside free cash flow that hit $63 billion last year, Microsoft is on a promising growth path. The company has the brand power and financial resources to become one of the biggest threats in AI.

Amazon

Amazon pulled off an impressive turnaround in 2023 after its stock plunged roughly 50% the year before. Since last January, its shares have soared over 62% thanks to a return to profitability in its e-commerce business and significant potential in AI.

Over the last year, various cost-cutting measures have seen Amazon’s free cash flow skyrocket 427% to $16 billion. The company has restructured its business to prioritize profit growth and is, therefore, investing heavily in its most profitable division: Amazon Web Services (AWS).

The cloud platform is responsible for over 62% of Amazon’s operating income despite earning the lowest revenue out of its three segments. In Q3 2023, AWS achieved nearly $7 billion in profits, representing growth of 29% year over year.

The cloud market is expanding quickly, boosted by the emergence of AI. Businesses are increasingly looking for ways to boost efficiency with the help of AI and turning to cloud services to do so. Meanwhile, AWS’ leading 32% market share in cloud computing positions it well to see big gains as AI develops.

Amazon’s dominant position in cloud computing makes the company one of the best ways to invest in AI.

Is Microsoft or Amazon the better AI stock?

Microsoft and Amazon have emerged as two of the biggest names in AI over the last year. These companies have similar potential in the industry thanks to booming cloud businesses and lucrative opportunities in other areas of tech.

As a result, the best way to determine the better AI stock is to consider which is trading at a better value.

Data by YCharts. PS Ratio = price-to-sales ratio. PEG Ratio = price-to-earnings-to-growth ratio.

This chart compares Amazon and Microsoft’s price-to-sales (P/S) and price-to-earnings-to-growth (PEG) ratios. These are helpful valuation metrics as they take into account a company’s financial health against its stock price.

P/S is calculated by dividing a firm’s market cap by its revenue. Meanwhile, PEG divides a stock’s price-to-earnings ratio by the growth rate of its earnings. For both metrics, the lower the figure, the better the value.

In this case, Amazon’s stock is a bargain compared to Microsoft. So, if you’re between these two AI stocks, Amazon is the better buy this month and a screaming buy at the start of 2024. 

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

The post Better AI stock: Microsoft vs. Amazon appeared first on The Motley Fool Australia.

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Dani Cook has no position in any of the stocks mentioned. John Mackey, former 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. has positions in and has recommended Amazon and Microsoft. 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 Scott Phillips.

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

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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on track to post a small decline. The benchmark index is down 0.4% to 7,361.7 points.

Four ASX shares that are falling more than most today are listed below. Here’s why they are dropping:

Ampol Ltd (ASX: ALD)

The Ampol share price is down 2.5% to $35.02. This morning, the fuel retailer released an update which appears to have fallen short of expectations. It is expecting its unaudited Replacement Cost Operating Profit (RCOP) EBIT for the full year to be “slightly ahead” of the record results delivered in 2022, on a continuing basis. This appears to suggest that fourth quarter earnings were below expectations.

APM Human Services International Ltd (ASX: APM)

The APM share price is down a massive 40% to 80 cents. Investors have been selling the international human services provider’s shares after it released an update on its first half performance. It expects to report revenue of $1.14 billion and underlying NPATA of $55 million for the six months ended 31 December. While the former is an increase on last year, the latter is down sharply on the underlying NPATA of $85.4 million it reported a year earlier.

Liontown Resources Ltd (ASX: LTR)

The Liontown share price is down 12.5% to $1.19. This has been driven by reports that lithium giant Albemarle Corp (NYSE: ALB) has sold its stake in the company. The lithium developer hasn’t commented on the news, but approximately 96.26 million Liontown shares were traded before the market open for a discount of $1.26 per share.

Wildcat Resources Ltd (ASX: WC8)

The Wildcat Resources share price is down 9.5% to 48 cents. This appears to have been driven by broad weakness in the lithium industry. It also doesn’t help that Albemarle has announced that it is scrapping the development of the Kemerton lithium expansion in Western Australia because of weak lithium prices. Clearly it isn’t a great environment to be developing lithium assets.

The post Why Ampol, APM, Liontown, and Wildcat shares are dropping today appeared first on The Motley Fool Australia.

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More reading

• Why are Liontown shares crashing 12% today?
• Guess which ASX All Ords shares are sinking after poor updates
• 5 things to watch on the ASX 200 on Thursday
• Up 1,700% in a year, why is the Wildcat Resources share price gaining again today?
• Copper and lithium: Broker says these ASX mining shares can double in value

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

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Core Lithium Ltd (ASX: CXO) stock has had a year to forget.

After rocketing almost 2,000% from late 2020 through to late 2022, the past 12 months have seen the S&P/ASX 200 Index (ASX: XJO) lithium share crash a precipitous 80%.

Today, Core Lithium stock is trading for 21 cents a share, down from $1.67 in mid-November 2022.

Much of the pain has been driven by the crashing lithium price. This saw Core suspend its lithium mining operations to conserve cash, which spooked investors and sent shares tumbling further.

So, after that kind of fall, is the ASX 200 lithium miner a bargain buy or a falling knife?

Is Core Lithium stock trading at a bargain?

For some deeper insight into that question, we turn to two industry experts.

First up, the analysts at Goldman Sachs.

Noting that Core Lithium stock is trading at a premium to its ASX 200 lithium peers, at 21 cents per share, Goldman doesn’t believe Core Lithium stock is trading at a bargain yet.

The broker has a ‘sell’ rating on the ASX 200 lithium miner with a price target of 15 cents a share. That represents a potential downside of some 29% from current levels.

Among Goldman’s other concerns, its analysts believe that any potential growth and further development of Core Lithium’s resource is “now likely longer dated”. The broker is also worried about production and development funding risks.

Next up, we turn to the fund managers over at the QVG Long-Short fund.

And they, too, aren’t ready to call Core Lithium stock a bargain.

The fund has been short on Core Lithium stock for a year, capitalising on the 80% share price fall. While QVG’s short position is now a lot smaller than it has been, the fund continues to believe Core has further to fall.

Josh Clark, one of the fund’s portfolio managers, said (courtesy of The Australian Financial Review), “We saw there was just a plethora of ‘me too’ lithium stocks with poor economics on each individual asset.”

He added:

We were never sitting there trying to work out if the lithium price was going up or down. We were trying to work out whether they had a good asset and were they going to actually make money.

While not ready to buy into Core yet, QVG said it was discussing the timing of exiting the rest of its short position in the ASX 200 lithium share.

According to Clark:

Looking at the commodity cycle, when mines start to be shut, you’re getting very, very close to the bottom. We always knew the economics were going to catch up to these companies; we just didn’t anticipate how fast.

And a lot of ASX 200 investors appear to agree with Goldman Sachs and QVG.

Core Lithium stock kicked off this week with a short interest of 13.6%, making it the third most shorted share on the ASX 200.

The post Is Core Lithium stock a good buy after falling 80% in a year? appeared first on The Motley Fool Australia.

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More reading

• Which had the better year in 2023: Core Lithium, Liontown or Pilbara Minerals shares?
• Why Core Lithium, Hub24, Lovisa, and Rio Tinto shares are dropping today
• Here’s what Goldman Sachs is saying about Core Lithium shares
• These are the 10 most shorted ASX shares
• Why Boss Energy, Core Lithium, Pinnacle, and Syrah shares are rising today

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

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The S&P/ASX 200 Index (ASX: XJO) is full of interesting businesses, 200 of them! I think there are some ASX 200 value stocks that I’d rate as buys for my portfolio and, indeed, any investment portfolio.

We don’t need to limit ourselves to ASX bank or mining shares for investing opportunities.

Companies with a low price/earnings (P/E) ratio can also be attractive because the market isn’t expecting a great deal, and they can potentially offer an appealing dividend yield because of the low valuation.

With that in mind, here are three value investment ideas I really like the look of.

Bapcor Ltd (ASX: BAP)

Bapcor is one of the largest auto parts companies in the Asia Pacific region. Readers may recognise a number of its businesses, including Burson Auto Parts, Precision Automotive Equipment, BNT (NZ), Autobarn, Autopro, Midas, ABS, Shock Shop and Battery Town.

Bapcor also has a number of specialist businesses, including electric parts, as well as Truckline (for heavy commercial vehicles) and WANO (for light commercial vehicles).

Despite auto parts being a relatively defensive sector – vehicles regularly need fixing regardless of economic conditions – the Bapcor share price is down 26% from October 2023.

Its retail-focused businesses may see a reduction of demand if households rein in their spending in the current high cost-of-living environment. Plus, there has been pressure on its margins, partly because of inflation relating to its cost of doing business (CODB).

But, there continues to be a growing population and growing number of cars in Australia, which is a useful tailwind for longer-term demand and the company’s earnings.

Using the projections on Commsec, the ASX 200 value stock is priced at 14x FY24’s estimated earnings and under 12x FY25’s estimated earnings. In FY25, it is forecast to pay a grossed-up dividend yield of 6.8%.

Metcash Ltd (ASX: MTS)

Metcash is a leading wholesaler, supplying businesses like IGA, Cellarbrations, The Bottle-O, IGA Liquor, Porters Liquor, Thirsty Camel, Big Bargain Bottleshop and Duncans. It also has a number of compelling hardware businesses, including Mitre 10, Total Tools and Home Timber & Hardware.

The ASX 200 value stock has done a good job of growing over the last few years, particularly with the acquisition of Total Tools.

I don’t think Metcash’s businesses are as solid as Coles Group Ltd (ASX: COL) or Bunnings, but those are the sorts of comparable companies.

Metcash and its partners continue to invest in their businesses, which can help their market position as well as costs. Investing in its logistics has been a recent focus.

According to the projections on Commsec, it’s valued at less than 13x FY25’s estimated earnings with a possible grossed-up dividend yield of 8.3% following a 16% decline over the past year.

Qantas Airways Limited (ASX: QAN)

Qantas has seen plenty of troubles over the last year – there’s a reason why it’s down over 22% from 24 July 2023.

I’m going to talk about a few reasons why this could be the right time to invest. For starters, it’s already down a lot, so the valuation is accounting for the issues.

The oil price has fallen in the last few months, which is good news for the costs of the ASX airline share.

At the AGM in November, Qantas chair Richard Goyder said travel demand continued to be strong, and the balance sheet was “in excellent condition”.

I think it’s good news that travel demand is strong – it shows people are still willing to fly with the airline and that the demand can help earnings.

Despite the strong demand environment, the Qantas share price is valued at 5x FY25’s estimated earnings and could pay a dividend yield of 5%, excluding the benefit of any franking credits.

The post 3 ASX 200 value stocks I’d buy for my portfolio today! appeared first on The Motley Fool Australia.

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More reading

• Buying Qantas shares? You’ll want to know about this ‘red flag’
• Here are the top 10 ASX 200 shares today
• Why Bapcor, Deep Yellow, Super Retail, and Telstra shares are rising today
• Where I’d invest $3,000 into ASX dividend shares in January
• If I invest $10,000 in Qantas shares, how much passive income will I receive in 2024?

Motley Fool contributor Tristan Harrison has positions in Metcash. 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 positions in and has recommended Coles Group. The Motley Fool Australia has recommended Bapcor and Metcash. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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