Tag: Motley Fool

In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is fighting hard to get into positive territory but is falling just a touch short. At the time of writing, the benchmark index is down slightly to 7,379.2 points.

Four ASX shares that are not letting that hold them back today are listed below. Here’s why they are racing higher:

Charter Hall Group (ASX: CHC)

The Charter Hall share price is up a further 5% to $21.89. Investors have been buying this property company’s shares since the release of a strong update on Monday. That update went down well with the team at Macquarie. In response, the broker retained its outperform rating and lifted its price target on the company’s shares to $22.90.

Nearmap Ltd (ASX: NEA)

The Nearmap share price is up 5% to $1.55 following the release of a trading update. According to the release, the company expects the Annualised Contract Value (ACV) of its North America portfolio to surpass its Australia and New Zealand ACV by the end of the first half. The release notes that North America ACV has just surpassed US$50 million, taking group ACV beyond US$100 million.

PolyNovo Ltd (ASX: PNV)

The PolyNovo share price has jumped 15% to $1.57. This morning the medical device company advised that its United States segment has experienced a strong start to the second quarter of FY 2022. Sales for October and November are up 133% over the prior corresponding period to $4.66 million. PolyNovo also revealed that a number of large corporations have expressed their interest in bringing its NovoSorb BTM product to their retrospective markets.

Virtus Health Ltd (ASX: VRT)

The Virtus Health share price has surged 31% to $6.81. Investors have been bidding this fertility treatment company’s shares higher today after it received a takeover approach from BGH Capital. The private equity firm has tabled an offer of $7.10 cash per share, which represents a 36.3% premium to its last close price. The Virtus Board is assessing the proposal.

The post Why Charter Hall, Nearmap, PolyNovo, and Virtus Health are racing higher appeared first on The Motley Fool Australia.

More reading

• ASX 200 (ASX:XJO) midday update: Afterpay takeover vote, Woolworths crashes
• Here’s why the Charter Hall (ASX:CHC) share price is leaping another 5% today
• Here’s why the Polynovo (ASX:PNV) share price is rocketing 12% today
• Virtus Health (ASX:VRT) share price soars 30% on takeover bid
• Nearmap (ASX:NEA) share price jumps 10% on strong US growth

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 Nearmap Ltd. and POLYNOVO FPO. The Motley Fool Australia owns and has recommended Nearmap Ltd. The Motley Fool Australia has recommended Virtus Health Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/31PADeq

Shares in airline operator Qantas Airways Limited (ASX: QAN) are rangebound today and are trading around 1% down at $4.90.

It’s been a difficult year in 2021 for Qantas, having come off a low base in 2021 amid the pandemic-induced lockdowns of 2020/21.

Today the company announced it will purchase blended sustainable aviation fuel (SAF) from next month, helping to reduce its carbon emissions by around 10% for its flights from London.

Whilst not price-sensitive at all, let’s take a look at what the flying kangaroo had to say today.

What did Qantas release?

Qantas advised it will purchase the SAF for its Kangaroo route flying direct from Australia to London.

Both Qantas and subsidiary Jetstar have already flown several demonstration flights using SAF, most notably a flight across the Pacific Ocean in 2018 that was powered by biofuel derived from mustard seeds.

However, this new agreement is the first time an Aussie airline will purchase SAF on an ongoing basis for regular scheduled services, Qantas says.

The fuel will be produced with certified bio feedstock from used cooking oil and other waste products. This is then blended with normal jet fuel to create the SAF derivative.

Specifically, the company has signed an agreement with petroleum giant BP to purchase 10 million litres of SAF in 2022 with an option to purchase up to another 10 million litres in 2023 and 2024 for flights from Heathrow Airport.

In total, this litreage represents up to 15% of Qantas’ annual fuel use out of London, according to the release.

Qantas says it is also in discussions about accessing SAF at its other overseas ports, such as Los Angeles, and recently joined other airlines in signing a memorandum of understanding to use SAF for flights from San Francisco from 2024.

These agreements are “crucial to bringing the cost of SAF down, which can be several times more expensive than traditional jet kerosene”.

Management commentary

Speaking on the media release, Qantas Group Chief Sustainability Officer, Andrew Parker said:

We know that climate change is incredibly important for our customers, employees and investors and it is a major focus for the national carrier as we come out of a difficult couple of years. Zero emission technology like electric aircraft or green hydrogen are still a very long way off for aviation, and even further away for long haul flights like London to Australia. SAF and high quality carbon offsetting are therefore critical on the path to net zero.

Parker also added:

Aviation biofuels typically deliver around an 80 per cent reduction of greenhouse gas emissions on a lifecycle basis compared to the jet fuel it is replacing and is the most significant tool airlines have to reduce their impact on the environment.

The Qantas share price has slipped over 3% into the red in the last 12 months, however, has reversed course and is up more than 1% this year.

Yet, despite this, Qantas remains deep out of the money in the last month of trading, plunging over 13% in that time.

The post Qantas (ASX:QAN) share price struggles despite ‘green fuel’ news appeared first on The Motley Fool Australia.

More reading

• Zip (ASX:Z1P) shares just topped these end-of-year rankings
• Down 14% in a month, is the Qantas (ASX:QAN) share price a buy?
• ASX 200 retail shares lift as Aussies head into Christmas with $240bn in savings
• Here’s why ASX 200 travel shares are taking off today
• Qantas (ASX:QAN) share price lifts as airline expands freight capacity

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.

from The Motley Fool Australia https://ift.tt/3ynQf4w

It’s no secret the world is decarbonising, but there’s another reason the ASX renewable energy sector could be worth watching in 2022.

Chief investment officer for AXA Investment Managers’ Core Investments Chris Iggo says decarbonisation could increasingly “determine capital allocation and investment opportunities” in the future.

Let’s look at why the fundie is bearish on decarbonisation, as well as which ASX shares operate in the area.

The market in 2022

While the risk of COVID-19 causing havoc on share markets continues as the new year approaches, concerns of inflation have also started to surface.

According to Iggo, during the pandemic, policymakers supported economic growth by cutting interest rates and “loosening fiscal purse strings”. But now, he says, “the era of pandemic-crisis monetary policy is coming to an end”.

As a result, central banks will likely scramble to reduce inflation – a challenge that’s not so simple. Iggo commented:

The impact of the pandemic on global economic trends … will take some time to really understand. For now, however, central banks will err on the side of caution and will need to be convinced – by evidence of persistent second round effects – that the decades-long period of low inflation is coming to an end.

Luckily, Iggo believes investors can look forward to “decent returns” while central banks make necessary changes.

That’s because trends like energy transition are still pushing companies to make structural changes.

ASX renewable energy sector on watch

Iggo is optimistic about renewable energy in 2022. Particularly, as energy prices are likely to continue increasing. He commented:

Energy prices rose in the second half of 2021 – a key reason why broader inflation has also increased – yet, there has been no global approach to pricing carbon, which could push energy prices even higher. When it comes, and it will, the economics will swing sharply in favour of renewably produced energy and that will quickly allow upstream activities to benefit.

He also noted that the ongoing COVID-19 recovery, climate innovation, and re-purposing supply chains may bring “strong tailwinds for equity investors”, leaving investors with “opportunities to profit”.

Finally, he stated, the march towards decarbonisation will be driven by the market even more so in 2022:

Investors are playing a key role in supporting decarbonisation through asset allocation decisions, in engagement with companies on transition plans, and by supporting new technologies and business models that rate highly in terms of ESG.

With that in mind, here are some shares to consider:

3 ASX renewables shares

Genex Power Ltd (ASX: GNX)

Genex Power is working to build a portfolio of renewable energy projects within Australia.

It operates projects producing power from solar, hydro energy, and wind, as well as a battery storage project.

Right now, its share price is 20 cents, 9% lower than it was at the start of 2021.

Infratil Ltd (ASX: IFT)

Infratil is a largely New Zealand-focused company investing primarily in energy, transport, and social infrastructure businesses.

The company owns a business that operates 22 New Zealand hydropower stations. It also owns others that develop wind and solar generation in North America, Europe, and Asia.

Infratil shares are currently trading for $7.60, 6% higher than they were at the start of this year.

Contact Energy Limited (ASX: CEN)

Contact Energy also operates in New Zealand.

It retails electricity generated from geothermal and hydropower.

The company also produces power using thermal generation and supplies gas and broadband.

Shares in Contact Energy are swapping hands for $7.30. They’ve fallen 14% in 2021.

The post How might renewable energy investment opportunities play out in 2022? appeared first on The Motley Fool Australia.

More reading

• The Genex (ASX:GNX) share price shot up 12% earlier today. Here’s why
• Which ASX renewable energy shares have been climbing the charts lately?

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.

from The Motley Fool Australia https://ift.tt/31VuYTE

The S&P/ASX 200 Index (ASX: XJO) is having a pretty disappointing day of trading so far this Tuesday. At the time of writing, the ASX 200 is down by 0.11% at 7,371 points. But one ASX 200 share is putting that loss well and truly to shame. That would be the Australian Ethical Investment Limited (ASX: AEF) share price.

Australian Ethical shares are currently up a very pleasing 7.72% to $12.97 a share so far today, after closing at $12.09 a share yesterday afternoon and opening at $12.04 this morning.

Well, unfortunately, it’s not entirely clear why Australian Ethical shares are rocketing higher today. There has been no news or announcements out of this ethically-focused fund manager today. Nor any other major developments as of yet.

Why is the Australian Ethical share price rocketing today?

However, it’s very important to keep in mind this company’s recent performance. Sure, today’s move looks like an amazing gain for shareholders (which it is). But consider this: Australian Ethical shares are still down by close to 12% over the past month. This is what today’s move looks like in that context:

Just last week, we looked at why it has been such a dreary time for Australian Ethical shares of late. It all seemed to stem from the earnings guidance update that Australian Ethical put out on 1 December. Investors seemed supremely disappointed with the data Australian Ethical released in this update. It included a 9% increase in funds under management (FUM) over the 4 months to 31 October. As well as an expectation of underlying profit before tax of between $5 million and $5.5 million for the half year ending 31 December, an 8% increase on its previous half year to 31 December.

We also touched on Australian Ethical’s valuation. At today’s pricing, this company still commands a price-to-earnings (P/E) ratio of 126.58. That’s arguably very high, considering that the broader P/E ratio average for the entire ASX 200 is currently sitting at around 17.53, according to iShares.

So it could be said that today’s pricing pop is just a liftoff from the recent lows we have seen with this company. Remember, the Australian Ethical share price is still up an incredible 164% year to date in 2021 so far.

The post Why is the Australian Ethical (ASX:AEF) share price surging 8% today? appeared first on The Motley Fool Australia.

More reading

• Why has the Australian Ethical (ASX:AEF) share price tanked 17% in a week?
• Why Australian Ethical, GUD, Nuix, and Redbubble shares are tumbling lower
• Australian Ethical (ASX:AEF) share price sinks on earnings update
• This sector could be a $50 trillion investment opportunity: expert
• Why is the Australian Ethical Investment (ASX:AEF) share price surging 7% today?

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

from The Motley Fool Australia https://ift.tt/3F0kVeQ

Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH) are both tumbling.

Bitcoin is down 6% over the past 24 hours, currently trading for US$47,120 (AU$66,360).

Ethereum, the world’s number 2 crypto with a market cap of $US454 billion, is down 7% since this time yesterday. One Ether is currently worth US$3,822.

The Bitcoin price is still up 60% in 2021. But it’s now down 31% from its record high of US$68,789, set on 10 November.

Ethereum also reached its record high on 10 November, peaking at US$4,859. That puts Ether down 21% from its all-time highs, though the token remains up an impressive 419% year-to-date.

Why are Bitcoin and Ethereum deep in the red?

Bitcoin, Ethereum and almost every crypto are in the red today, according to data from CoinMarketCap.

With altcoins often following the direction of Bitcoin, we’ll keep our focus there.

So what headwinds is the world’s first and biggest digital token battling?

Recent months have shown that Bitcoin is behaving more like a risk asset than a safe haven in times of market uncertainty. When global share markets fall, Bitcoin tends to lose value.

With the Omicron COVID variant spreading rapidly, and investor concerns over structural inflation growing, investors have been re-evaluating their riskier holdings.

Yesterday (overnight Aussie time) we saw US markets selloff sharply. The tech-heavy Nasdaq closed down 1.4%. At the time of writing, the S&P/ASX 200 Index (ASX: XJO) is down a more muted 0.2%.

What else should crypto investors be watching?

With Bitcoin now having retraced for 5 weeks running since hitting its record high, it’s fallen right about level with its 200-day moving average. That’s a key price level which crypto analysts keep an eye on. Any significant fall below the 200-day moving average is seen as bearish for the nearer-term price outlook.

Addressing Bitcoin’s continuing volatility and the perception by some crypto investors that it can serve as an inflation hedge, Marc Chandler, chief market strategist at Bannockburn Global Forex said (quoted by Bloomberg), “The idea that as it matured, the volatility would ease has not really materialised. The volatility is deadly and its other supposed attributes, like a hedge against inflation, seems spurious.”

The post Bitcoin (CRYPTO:BTC) and Ethereum fall hard again. What’s going on? appeared first on The Motley Fool Australia.

More reading

• After a wild 2021, what can crypto investors expect in 2022?
• What is the better buy: Bitcoin vs. Ethereum
• Why cryptocurrencies like Bitcoin, Polygon, and Terra fell today
• Bitcoin, Ethereum, and Cardano continue to recover from late-week selloffs
• Here’s what crypto investors need to know about the metaverse

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Bitcoin and Ethereum.  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.

from The Motley Fool Australia https://ift.tt/3s4kXi6

The Noxopharm Ltd (ASX: NOX) share price is on the rise today after a clinical trial update.

Noxopharm shares hit an intraday high of 39 cents, a 6.85% gain, before settling at 37 cents at the time of writing, up 1.37%.

Noxopharm is a drug development company working on treating cancer and septic shock.

What did Noxopharm announce today?

It seems investors were responding to an update from the company on a cancer treatment trial.

The company has recruited its first group of patients for its Direct and Abscopal Response to Radiotherapy (DAART-2) phase two clinical trial.

DARRT is a cancer treatment that combines Novopharm’s Veyonda drug candidate and a low dose of external beam radiotherapy.

The patients receiving the treatment are suffering from a range of cancers including prostate, breast, and lung.

The patients are enrolled at the Beverly Hills Cancer Centre in Los Angeles and the MD Anderson Cancer Centre in Houston.

Noxopharm said the momentum of patient and site recruitment is on the rise, with a first Australian trial site also now open for enrolment.

The company aims to recruit 100 patients across Australia, the United States, and Europe for this trial.

Management comment

Commenting on the announcement that may have impacted the Noxopharm share price, company Chief Medical Officer Dr Gisela Mautner said:

This phase two study builds on our phase one trial where we saw promising signals that it may be possible to achieve cancer reduction through the abscopal response.

A combination of Veyonda and low-dose radiation therapy would be a very important new treatment option for cancer patients worldwide…

Noxopharm share price snap shot

It’s been a tough year for shareholders in the drug development company. The Noxopharm share price has fallen more than 23% in the past 12 months, plunging 24% this year to date.

In contrast, the benchmark S&P/ASX 200 Index (ASX: XJO) has returned nearly 11% in the past year.

Shares in the company reached a 52-week high of 95 cents, while the low was 36.5 cents.

The post Here’s why the Noxopharm (ASX: NOX) share price leapt 7% today appeared first on The Motley Fool Australia.

More reading

• Bitcoin (CRYPTO:BTC) and Ethereum fall hard again. What’s going on?
• When it comes to the Webjet (ASX:WEB) share price, do the brokers or the shorters have it right?
• 3 ASX shares now bargains after a nightmare November
• Is the Brickworks (ASX:BKW) share price a buy? Leading brokers weigh in
• What to look for when investing in ASX microcap shares

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

from The Motley Fool Australia https://ift.tt/3lXvrfh

The Webjet Limited (ASX: WEB) share price is trading lower again on Tuesday.

In afternoon trade, the online travel agent’s shares are down 2% to $5.33.

This means the Webjet share price is now down 14% since this time last month.

Where next for the Webjet share price?

The market appears incredible divided on where the Webjet share price will be going next.

In one corner you have a number of bullish brokers such as Goldman Sachs and Morgans, whereas in the other corner you have a growing number of short sellers better against the company.

In respect to the latter, earlier this week Webjet’s short interest rose to 9.4%. This makes Webjet one of the most shorted shares on the Australian share market alongside Flight Centre Travel Group Ltd (ASX: FLT), which has 13.9% of its shares held short.

Short sellers appear to have concerns over its valuation and the travel market’s stuttering recovery from COVID-19, particularly given the emergence of the Omicron variant.

All in all, the bears appear confident there’s more chance of the Webjet share price falling than rising from here.

What about the bulls?

Last week Goldman Sachs retained its buy rating but trimmed its price target on the company’s shares to $6.90. Whereas a week earlier, Morgans upgraded Webjet’s shares to an add rating with a $6.60 price target.

Based on the current Webjet share price of $5.33, these price targets imply potential upside of 24% to 29% over the next 12 months.

Goldman commented: “Overall, WEB continues to make progress in the right direction through the reopening with the 20% cost savings target remaining intact for the Webbeds division. We continue to see a long term growth story in this business and view WEB as net beneficiaries of the post COVID recovery. We slightly lower our 12m Target Price to A$6.90 (vs. A$7.00 prior) and maintain our Buy rating on WEB.”

Morgans agrees and notes that Webjet’s shares are trading on attractive post-recovery multiples.

It said: “WEB’s share price has been weak this month as concerns around rising COVID cases and lockdowns in Europe have weighed on the sector. Following forecast changes, our blended valuation has risen to $6.60. With 16.4%  [now 24%] upside to our new price target, we move to an Add rating. Based on our forecasts, WEB is trading on an FY24 recovery year PE of 17.9x which is at a discount to its five-year average PE (pre-COVID) of 20.6x.”

Time will tell whether it is the brokers or the short sellers that make the right call on the Webjet share price.

The post When it comes to the Webjet (ASX:WEB) share price, do the brokers or the shorters have it right? appeared first on The Motley Fool Australia.

More reading

• These are the 10 most shorted ASX shares
• Top brokers name 3 ASX shares to buy next week
• Goldman says Webjet (ASX:WEB) share price is a buy with 25% upside
• 5 things to watch on the ASX 200 on Thursday
• ASX 200 retail shares lift as Aussies head into Christmas with $240bn in savings

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

from The Motley Fool Australia https://ift.tt/3s48QkP

You can’t win them all, especially in the stock market investing game.

Each month you’ll see some of your ASX shares plunge in value. During market downturns you might even see your entire portfolio in the red.

But short term movements, experts say, should be ignored. If you invest with a long-term horizon, the more important factor is whether you still have faith in the businesses you own.

It’s not just the everyday investor but even the professionals have to make such judgments.

Cyan Investment portfolio manager Dean Fergie was faced with this exact dilemma as he pored over 3 ASX shares in his fund that shockingly underperformed in November:

ASX share that’s haemorrhaging value but with ‘exceptionally bright’ future 

Delivery service platform provider Zoom2u Technologies Ltd (ASX: Z2U) saw its shares plummet 22% last month.

According to Fergie, it underperformed even though the business was showing “strong underlying customer growth and revenue of its courier service”.

“It’s obviously exceedingly frustrating when stock prices appear to contradict underlying operating performance,” he said in a memo to clients.

“But we are also not so naive as to not consider possible underlying issues.”

Zoom2U’s white-label fleet management software Locate2U was also seeing “impressive expansion”, he added.

“We met with MD Steve Orenstein in Sydney last week and remain confident the company’s future is exceptionally bright with strong scalability and significant structural tailwinds.”

Unfortunately the stock has dropped a further 20% this month, to trade at 34 cents on Tuesday afternoon.

Neither no news or some news convince the market

Shares for healthcare software maker Alcidion Group Ltd (ASX: ALC) sank 12% in November.

No news is apparently bad news, as far as the market is concerned.

“The Alcidion share price has been sliding of late on an apparent lack of news-flow,” said Fergie.

“However, this month they have announced the win of their long-awaited $23 million+ government contract along with a significant acquisition in the UK.”

Investor patience will be further tested though, as the Alcidion share price has lost another 20% in December.

The market yet to grasp this opportunity

Touch Ventures Ltd (ASX: TVL), which is an investment firm spun-off from Afterpay Ltd (ASX: APT), debuted in September with an initial public offer price of 40 cents a share.

It was about break-even when November started but that month saw a calamitous 17% fall in the share price.

Fergie suspects it’s a temporary misunderstanding by the market.

“Touch Ventures traded lower with the market not embracing (for the moment) our analysis of the underlying value of the investment portfolio and the company’s significant relationship with Afterpay.”

The Cyan team met with Touch Ventures boss Hein Vogel, which did not change its bullish view on this stock.

“Additionally the company conducted an investee company webinar during the month which should improve investor understanding of the company’s asset portfolio.”

Touch shares have fallen even more this month, to trade at 28 cents on Tuesday afternoon.

The post 3 ASX shares now bargains after a nightmare November appeared first on The Motley Fool Australia.

More reading

• Here’s why the Zoom2u (ASX:Z2U) share price zoomed 26% higher today
• Why Alcidion, Magellan, Redbubble, and Seven West shares are dropping
• Why is the Alcidion (ASX:ALC) share price down 14% today?
• Alcidion (ASX:ALC) share price halted amid acquisition news
• Why the Alcidion (ASX:ALC) share price is rocketing 11% higher

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

from The Motley Fool Australia https://ift.tt/322rLBT

Shares in building products manufacturer Brickworks Limited (ASX: BKW) are nudging higher today and now trade less than 1% in the green at $24.58 apiece.

Investors are holding onto positive sentiment in Brickworks after the company released a property update yesterday, confirming it expects record earnings in 1H 2022 and has recently purchased an additional 121 acres of land.

Now leading brokers have weighed in and offered their speculation on the direction of the Brickworks share price in 2022. Is it a buy? Let’s take a closer look.

Is Brickworks a buy right now?

According to the team at Ord Minnett, Brickworks could be a decent buy as it currently stands. In a recent note to clients, the firm was pleasantly surprised by the valuation increase in Brickworks’ property assets.

Not only that, but Brickworks’ expected $290–$310 million in first half property earnings in FY22 – a record for the company – is well above its own internal estimates of $130 million, the broker says.

It also notes that the outlook for this division remains strong amid heightened demand for residential and industrial property assets in Australia.

However, amidst its bullishness, Ord also cautions investors that Brickworks’ stake in Washington H. Soul Pattinson Ltd (ASX: SOL) could be a drag on its share price performance in the comping periods.

The firm highlights that whilst Brickworks’ expanding property portfolio and strengthened earnings profile are net positives, it still doesn’t offset the declining value of its Soul Pattinson stake.

The value of Brickworks’ stake has fallen by approximately 20% since late September, in direct contrast to the company’s own fundamental momentum.

As such, the broker recently trimmed its price target on the share price by around 5%. Nevertheless, Ord Minnett retains its buy rating on Brickworks, and values the company at $27.50 per share, implying an upside potential of around 12%.

Fellow broker Citi also recently advised that it values the building products manufacturer at $30, implying that a considerable amount of upside is yet to be priced in by the market.

Not all are as rosy on the outlook for Brickworks, however. Macquarie retained its neutral rating on the company’s shares today even after revising its price target upwards by 1% to $26.40. In contrast to Citi, it reckons that the company’s strong property portfolio looks to be well priced in by the market.

Meanwhile, Morgans also has Brickworks as a hold, slapping a $26.10 per share valuation on the company in an update yesterday.

Henceforth sentiment appears to be mixed amongst the list of brokers mentioned in this report, however, in the list of analysts provided by Bloomberg Intelligence, the consensus price target for Brickworks is $26.45.

Brickworks share price snapshot

In the previous 12 months, the Brickworks share price has gained around 29% after climbing 28% this year to date.

It has gained more than 5% in the last month of trading and is up around 6% in the last week.

Each of these returns has outpaced the benchmark S&P/ASX 200 Index (ASX: XJO)’s return of around 10.5% in the last year.

The post Is the Brickworks (ASX:BKW) share price a buy? Leading brokers weigh in appeared first on The Motley Fool Australia.

More reading

• Why AVZ, Brickworks, Charter Hall, and Senex shares are storming higher
• Brickworks (ASX: BKW) share price lifts 3% on record forecast property earnings
• ASX 200 (ASX:XJO) midday update: CSL acquisition talks, Charter Hall guidance upgrade
• Top broker tips 30% upside for the Brickworks (ASX:BKW) share price. Here’s why
• 2 ASX dividend shares that could provide rock-solid income

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

from The Motley Fool Australia https://ift.tt/3pX4itQ

When it comes to investing in ASX shares, most investors tend to stick with the famous names. If you select a random ASX investor, chances are they will have at least one of the four major banks in their ASX share portfolios, for example. Or perhaps BHP Group Ltd (ASX: BHP). Or Telstra Corporation Ltd (ASX: TLS) or Woolworths Group Ltd (ASX: WOW). But chances are they won’t have a single ASX microcap share.

Shares outside the S&P/ASX 200 Index (ASX: XJO) tend to have market capitalisations of less than $1 billion. But an ASX microcap is normally a company with a market cap of less than $300 million. So well outside most ASX investors’ universe.

That’s usually because the companies are less well-known and data on them is limited compared to larger ASX companies. And, well, small-cap and microcap shares simply tend to have a reputation as poor investments, often dismissed as ‘penny stocks’.

Experts: what to look for in an ASX microcap

But if you can successfully invest in the microcap space, the rewards can be lucrative. It’s a lot easier for a $100 million company to double in size than a $5 billion one, after all.

So what does one look for in a potentially successful ASX microcap investment?

In a recent interview with Livewire, two fund managers expand on that very question. Here’s some of what Dean Fergie of Cyan Investment Management, and Luke Winchester, of Merewether Capital, had to say:

“A lot of the companies in my portfolio don’t yet have earnings, so first and foremost, we look at the revenue they’re producing,” says Fergie. “Many earnings numbers can be fudged. For example, you see “underlying earnings” mentioned frequently in half-yearly results, which I think aren’t very useful…. [In a nutshell, we] look at the revenue and then subtract the costs.”

Art and science…

“The art and science lie in judging whether microcaps are either over-earning or under-earning,” Winchester adds. “If an early stage or growing business is tipping a big chunk of its revenue into development or expansion initiatives, it’s probably under-earning.”

Fergie agrees, saying, “We sometimes see businesses that are driving top-line sales that are also spending the same amount on marketing. If you’re spending $100 to get $90 of revenue, that doesn’t work for long.”

Winchester says his team doesn’t avoid unprofitable microcaps, but he treats them with extreme caution:

“We get taught that risk and volatility are the same things, but they really aren’t,” he stated. “When you invest in a loss-making business, you assume that capital will always be available. But it obviously won’t be.”

So what to avoid? Winchester cites “companies in the EV metals and clean-tech spheres”. He says, “To me, they feel like the themes that come up every couple of years, and they’re crowded as a result.”

So there you have it, two ASX expert investors on how to successfully navigate the world of ASX microcap investing. While it may remain a space that many ASX investors feel uncomfortable with, these two investors have clearly made it work for them.

The post What to look for when investing in ASX microcap shares appeared first on The Motley Fool Australia.

More reading

• ASX 200 (ASX:XJO) midday update: Afterpay takeover vote, Woolworths crashes
• Could 2022 be a good year for the Vanguard International Shares ETF (ASX:VGS)?
• 5 things to watch on the ASX 200 on Tuesday
• What is the outlook for the ANZ (ASX:ANZ) share price in 2022?
• Here are the top 10 ASX shares today

Motley Fool contributor Sebastian Bowen owns Telstra Corporation 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 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.

from The Motley Fool Australia https://ift.tt/3dPGdzK