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An ASX company sometimes buys back its own shares, as a way to return capital to investors.

Such actions are not necessarily received well, according to Allan Gray portfolio manager Dr Suhas Nayak.

“Some argue that it shows a lack of growth options,” he posted on Livewire. 

“Others say that it is financial engineering, especially if those companies are borrowing a lot to enable the buyback.”

However, executed well, buybacks can provide tremendous benefits to shareholders.

Nayak said that Australian tax rules rightly favoured franked dividends, but businesses like Metcash Limited (ASX: MTS) and Sims Ltd (ASX: SGM) have returned capital effectively to investors this year.

With this in mind, Nayak named 4 ASX shares that could see buybacks in 2022.

But why wouldn’t these companies put that money into a “hot investment” such as green energy, lithium or cloud software?

“It is inevitable that ‘hot’ investments are overpriced and companies will pay up for that privilege, or that returns will disappoint,” said Nayak. 

“It would be far better to see companies exercise good judgement and patience by slowly chipping away at their own shares, especially as the market is giving them an opportunity to buy those shares so cheaply.”

G8 has nothing else to do with its money

Childcare provider G8 Education Ltd (ASX: GEM) raised much capital from markets in 2020 while the whole industry was struck badly by COVID-19 restrictions.

According to Nayak, earnings have not yet fully recovered but the business is now in a net cash position and the share price is below its peers.

“With limited value-accretive investment opportunities, the company’s best course of action may well be to return cash to shareholders via a buy-back, while also improving underlying operations of their existing centres,” he said.

“That is certainly something we would like to see.”

G8 shares are down more than 6% for the year so far and closed Friday at $1.105.

Demand for Monash IVF is far better than expected

Fertility services provider Monash IVF Group Ltd (ASX: MVF) also raised significant funds last year.

But its business has “dramatically increased” during the pandemic, according to Nayak, meaning it’s seeing more activity now than in the pre-COVID era.

“With the benefit of hindsight, the capital raising was not required and it is unlikely that inorganic opportunities are priced anywhere near as [attractive] as its own share price.”

Nayak said that for Monash IVF, it’s “time to reward shareholders”. 

“Money raised has now clearly been shown to be far in excess of requirements and could be put to good use through a share buyback.”

The Monash IVF share price is up 17% in 2021, closing Friday at 92.5 cents.

An ‘intentionally capital-light’ growth plan

Only a couple of years ago, Incitec Pivot Ltd (ASX: IPL) was struggling due to the drought in Australia.

But it’s now thriving with much higher prices for its products, such as fertilisers and explosives chemicals.

The Melbourne company paid down its debts after a 2020 capital raising.

Incitec now has “a growth plan that is intentionally capital-light”, according to Nayak.

“With a low franking credit balance, a strong balance sheet, healthy cash flows and an adjusted share price that is still well below pre-COVID levels, we believe the company should institute a buyback program.”

Incitec shares closed Friday at $3.08, which is up more than 35% for the year.

Buyback could cash in on a pile of franking credits

Rising oil prices haven’t really helped Woodside Petroleum Limited (ASX: WPL) investors, with its shares down 3% this year to close Friday at $22.

According to Nayak, higher commodity prices will result in “strong cash flows” inside the business.

“This, together with the sell-down of Pluto T2 (the new LNG train Woodside is building to process the Scarborough resource), the enlarged earnings base that will come with the BHP Group Ltd (ASX: BHP) petroleum merger, and only one large growth project (Scarborough) getting off the ground means the company will soon find itself under-geared.”

But the biggest reason why Nayak thinks a buyback could be coming is Woodside has a financial ace up its sleeve.

“What really pushes us over the line on a share buyback is the potential to unlock an asset currently valued at zero by most: a US$1.8 billion-and-growing pile of franking credits.”

An off-market equal-access buyback would allow the company to purchase the shares at up to a 14% discount for the good of all shareholders, said Nayak.

The post 4 ASX shares tipped for buybacks in 2022: expert appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Monday
• Morgans names 2 ASX 200 shares to buy
• 5 things to watch on the ASX 200 on Friday
• Woodside (ASX:WPL) share price dips as company eyes east coast market
• 5 things to watch on the ASX 200 on Thursday

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

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The hunt is on for a new CEO at Fortescue Metals Group Limited (ASX: FMG). This new CEO will need to be focused on driving the green transformation of the business.

New CEO needed at Fortescue

Fortescue may have built its reputation as an iron ore mining giant. However, the leadership of the business firmly see the future pivoting towards the green industrial side of the business: Fortescue Future Industries (FFI).

In an announcement to the market last week, Fortescue confirmed that it was transitioning the business to become a vertically integrated green energy and resources group.

Fortescue boasted that it has developed a major green, fully renewable hydrogen initiative. It said that its focus and significant industrial, project engineering and development capacity, has resulted in the largest portfolio of green hydrogen, green ammonia, green iron ore and other green product developments.

It was decided that a new CEO was needed to lead the development of the diversified renewables and resources business. The outgoing CEO, Elizabeth Gaines, will transition to the roles of non-executive director of Fortescue and become its global green hydrogen brand ambassador.

Twiggy explains the new role

Dr Andrew Forrest, the founder of Fortescue, said the company has benefited from the forward thinking of the company’s leadership. He said:

The search with Elizabeth, for a CEO and an even deeper management bench, is an enormous opportunity for a talented and visionary executive team, to continue the successful leadership of Fortescue, as we deliver on our strategy to diversify Fortescue to a renewable energy and resources company.

Fortescue Future Industries is making enormous progress and will support the decarbonisation of Fortescue through the innovation and technological development of a green fleet and the supply of green energy. We are undergoing a significant transition, and I am delighted that with Elizabeth, the board is united in its vision and enthusiasm for the opportunity this presents.

Fortescue noted in the announcement that it will be looking for leaders with exceptional skills and global experience across heavy industry, manufacturing and renewable energy. They will also have a strong track record of delivering transformation, innovation and enhanced value for stakeholders. It’s important for the candidate to share the culture and values to assist the company as it moves to become a diversified energy and resources business.

What is Fortescue Future Industries working on?

FFI’s FY22 expenditure is expected to be between US$400 million to US$600 million.

It has announced a large number of different agreements, initiatives and projects.

For example, it has announced the construction of a (global) green energy manufacturing centre in Gladstone, Queensland. The first stage development is an electrolyser factory with an initial capacity of two gigawatts.

It has also signed a letter of intent with Plug Power for a 50:50 joint venture for the electrolyser factory, with the ability to expand into fuel systems and other hydrogen-related refuelling and storage infrastructure in the future.

Fortescue Future Industries also recently announced that it would work with AGL Energy Ltd (ASX: AGL) to repurpose its coal-fired power plant sites in NSW to generate green hydrogen. The idea is to generate green hydrogen from water using renewable energy at the Hunter Valley Liddell and Bayswater coal-fired power stations.

Dr Andrew Forrest said:

FFI’s goal is to turn regional Australia into the global green energy heartland and create thousands of jobs now and so many more in the future.

Repurposing existing fossil fuel infrastructure with forward looking companies like AGL to create green hydrogen to help power the world, is the solution we have been looking for.

The post Search for new Fortescue (ASX:FMG) boss focused on green ‘transformation’: Twiggy appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Monday
• Fortescue (ASX:FMG) Future Industries signs Indonesian hydrogen deal
• ASX 200 (ASX:XJO) midday update: Fortescue CEO steps down, Westpac buyback update
• Fortescue (ASX:FMG) share price falls following surprise CEO exit
• Why did the AGL share price outperform the ASX 200 today?

Motley Fool contributor Tristan Harrison owns Fortescue Metals Group 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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Are you looking for some dividend shares to buy this month? If you are, then you might want to look at the ones listed below.

Here’s why these ASX 200 dividend shares could be in the buy zone:

Australia and New Zealand Banking GrpLtd (ASX: ANZ)

This banking giant could be an ASX 200 share to buy. It recently released its full year results to much fanfare. In FY 2021, the bank reported a 72% jump in statutory profit after tax to $6,162 million and a 65% increase in cash earnings from continuing operations to $6,198 million.

This was driven by a significant reduction in provisions compared to the prior corresponding period, tightly managed expenses, and profit growth in the Australia Retail and Commercial segments.

Morgans was pleased with ANZ’s performance and remains positive on its outlook. Its analysts have an add rating and $31.00 price target on the company’s shares. As for dividends, Morgans is forecasting fully franked dividends of 147 cents per share in FY 2022 and 164 cents per share in FY 2023.

Based on the current ANZ share price of $27.47, this will mean yields of 5.3% and 6%, respectively, for investors.

South32 Ltd (ASX: S32)

If you’re not averse to investing in the resources sector, then another ASX 200 dividend share to look at is this mining giant. It could be a top option for income investors due to its attractive valuation, strong free cash flow generation, and its extremely generous dividend yield forecast.

Thanks to its exposure to a number of in-demand commodities such as aluminium, the team at Goldman Sachs believe South32’s shares will provide investors with big fully franked dividend yields in the coming years. In fact, based on the latest South32 share price of $3.82, Goldman expects yields greater than 10% per annum for the next five years.

Goldman has a conviction buy rating and $4.40 price target on its shares.

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

More reading

• These 3 ASX 200 shares are topping the volume charts on Friday
• Brokers name 3 ASX shares to buy today
• 5 things to watch on the ASX 200 on Friday
• Could rumours over a Westpac (ASX:WBC) mega-merger ever become facts?
• Why Morgans upgraded South32 (ASX:S32) shares to a buy rating

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

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There is increasing acceptance that electric cars will replace combustion engine vehicles in the coming years.

For those wanting to invest in this trend but feeling nervous about picking individual stocks, a new exchange-traded fund (ETF) is coming that might do the heavy lifting.

BetaShares revealed recently that BetaShares Electric Vehicles and Future Mobility ETF (ASX: DRIV) would be “coming soon”.

“Sales of electric vehicles are projected to grow strongly in coming years,” stated BetaShares.

“The transition to smarter vehicles is likely to significantly increase the use of semiconductors and high-tech componentry in cars.”

Which shares will this ETF hold?

While details, including launch date, are currently scarce, the fund manager did provide 4 examples of shares that the new ETF would hold:

• Tesla Inc (NASDAQ: TSLA): arguably the most famous electric vehicle stock, which has risen more than 1,000% since the start of 2020
• Nio Inc (NYSE: NIO): one of several Chinese car makers focusing purely on electric engines
• Aptiv PLC (NYSE: APTV): a US auto parts provider headquartered in Ireland, which has a large business making electronic active safety technologies
• Uber Technologies Inc (NYSE: UBER): best known for its dominance in ride-sharing.

All up, the Electric Vehicles and Future Mobility ETF will hold up to 50 different stocks involved in the future of transportation. 

According to BetaShares, the convenience of investing in foreign businesses through ASX shares is not the only advantage of the new fund.

“DRIV offers potential portfolio diversification benefits to Australian investors, given that automotive technology is under-represented in the Australian market.”

Thematic ETFs are so hot right now

The new ASX listing is the latest in a series of thematic ETFs to come to the market this year.

Just last month, BetaShares itself listed ASX’s first cryptocurrency-related ETF, while this month ETF Securities revealed it would debut the first-ever Australian funds directly investing in Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH).

ETFs have become popular in recent years on the back of the success of passive index funds.

But Nucleus Wealth spokesperson Jayden Stent warned last month there were considerable risks with theme-based ETFs.

“You don’t want to be lulled into thinking that because some ETFs offer low volatility that all ETFs are the same,” he said on a Nucleus blog.

“The potential for large swings will mainly depend on the type of the fund… Investors [need] to take note of what the ETF is tracking and what are the underlying risks associated with it.”

The post An electric car ETF is coming to the ASX: Here’s what we know appeared first on The Motley Fool Australia.

More reading

• What this EV forecast could mean for top ASX 200 resource shares
• Does the tech sell-off affect EV stocks like Nio?
• Why Nio stock is trading lower today
• Could Rivian, Lucid, or Nio become the next Tesla?
• 3 reasons to buy Tesla stock, and 1 reason to sell

Motley Fool contributor Tony Yoo owns Bitcoin, Ethereum, and NIO Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Bitcoin and Ethereum. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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On Friday the S&P/ASX 200 Index (ASX: XJO) finished a positive week on a subdued note. The benchmark index fell 0.4% to finish the period at 7,353.5 points.

Will the market be able to bounce back from this on Monday? Here are five things to watch:

ASX 200 expected to rise

The Australian share market looks set to start the week on a positive note. According to the latest SPI futures, the ASX 200 is expected to open the day 13 points or 0.2% higher this morning. This follows a positive end to the week on Wall Street, which saw the Dow Jones rise 0.6%, the S&P 500 climb 0.95%, and the Nasdaq push 0.7% higher.

Oil prices higher

Energy producers such as Santos Ltd (ASX: STO) and Woodside Petroleum Limited (ASX: WPL) will be on watch after oil prices finished the week on a positive note. According to Bloomberg, the WTI crude oil price rose 1% to US$71.67 a barrel and the Brent crude oil price rose 1% to US$75.15 a barrel. Oil prices had their best week in months, rising 8% over the period as omicron concerns eased.

Iron ore price softens

The Fortescue Metals Group Limited (ASX: FMG) and Rio Tinto Limited (ASX: RIO) shares will be on watch after the iron ore price softened. According to Metal Bulletin, the benchmark spot iron ore price edged 0.5% to US$108.03 a tonne.

Gold price higher

Gold miners Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) could start the week on a positive note after the gold price pushed higher on Friday night. According to CNBC, the spot gold price rose 0.45% to US$1,784.80 an ounce. The gold price pushed higher

CSL acquisition coming?

The CSL Limited (ASX: CSL) share price will be on watch today amid reports the biotherapeutics company is getting closer to finalising a $10 billion deal for Swiss-based Vifor Pharma. CSL has previously been tipped to partly fund the deal with a $4 billion equity raising. Vifor Pharma is a leader in iron deficiency, nephrology and cardio-renal therapies.

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

More reading

• Are these 2 leading ASX 200 shares worth buying?
• Top brokers name 3 ASX shares to buy next week
• Morgans names 2 ASX 200 shares to buy
• These were the best performing ASX 200 shares last week
• Fortescue (ASX:FMG) Future Industries signs Indonesian hydrogen deal

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

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The team at Goldman Sachs has been running the rule over a number of ASX 200 shares this month.

Two that the broker rates highly right now are listed below. Here’s what it is saying about them:

Bank of Queensland Limited (ASX: BOQ)

This regional bank could be an ASX 200 share to buy according to Goldman Sachs. It was pleased with its recent trading update and notes that the company is performing better than expected so far in FY 2021. In light of this and recent share price weakness, the broker sees a lot of value in its shares currently.

Goldman Sachs has a buy rating and $9.67 price target on the company’s shares. This compares to the latest Bank of Queensland share price of $7.94.

Goldman commented: “Our recently revised FY22E revenue growth on pro-forma FY21A had been 1.2% and costs of -0.4%. This compares to their updated implied revenue growth guidance of +1% (i.e. at least 2% positive jaws guidance) and expenses of -1%. Therefore, with costs run-rating mildly better than we had expected, we make minor revisions to our FY22/FY23/FY24E EPS of +0.5%/+0.4/+0.1% and our TP moves to A$9.67 from A$9.66. Overall we maintain our Buy recommendation on BOQ, which we believe has more offsets to these mortgage NIM pressures in the form of i) BOQ’s more rate sensitive deposit book, and ii) the continued delivery of ME Bank synergies. Coupled with 33% TSR to our revised TP, we stay Buy.”

Harvey Norman Holdings Limited (ASX: HVN)

This retail giant could be a top option for investors right now. This is due to Goldman’s belief that the company will continue to benefit from strong consumer spending in the home category.

The broker has a buy rating and $6.00 price target on the retailer’s shares. This compares to the current Harvey Norman share price of $5.17.

Goldman explained: “We update our earnings outlook on HVN to reflect the latest trading update. We continue to expect the underlying sales growth vs. pre-COVID levels to remain strong due to the positive housing related spending environment and an overall expected increase in spending for the home category. Additionally, we also update our FX forecasts for HVN, in line with the latest GSe. Overall, this results in a revision of group EBIT outlook by +0.1% and +0.8% respectively over FY22 and FY23e respectively. Our 12m Target Price for HVN remains unchanged at A$6.00 and we maintain a Buy rating on HVN.”

The post Goldman Sachs names 2 ASX 200 shares to buy appeared first on The Motley Fool Australia.

More reading

• Bank of Queensland (ASX:BOQ) shares: $8 one day, $10 the next?
• Top brokers name 3 ASX shares to buy today
• ASX 200 retail shares lift as Aussies head into Christmas with $240bn in savings
• Why Bank of Queensland, Imugene, Webjet, and Zip shares are pushing higher
• Why the Bank of Queensland (ASX:BOQ) share price is racing 5% higher today

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 owns and has recommended Harvey Norman Holdings 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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There are some market leaders of industry within the S&P/ASX 200 Index (ASX: XJO). The ASX 200 shares in this article could be compelling ideas to think about.

Businesses that have strong competitive positions may be good ideas to think about for an investor’s portfolio.

Companies can continually improve their business if they keep investing and focusing on their strengths.

Could these two top ASX 200 shares be worth owning?

JB Hi-Fi Limited (ASX: JBH)

This company is made up of three operating businesses – JB Hi-Fi Australia, The Good Guys and JB Hi-Fi New Zealand.

It sells a wide array of electronics like computers, phones, TVs, as well as other home items like fridges, cooking appliances, air conditioning and so on. Many of the products it sells are integral parts of our homes and lives.

JB Hi-Fi says that its group model is underpinned by five unique competitive advantages – scale, a low cost operating model, quality store locations, supplier partnerships and multichannel capability. Another aspect of its success is that its stores are very effective, with a high level of sales per square metre.

FY21 saw the ASX 200 share’s profitability significantly increase. Whilst total sales went up 12.6% to $8.9 billion, net profit after tax (NPAT) soared 67.4% to $506.1 million.

Analysts were impressed by the FY22 first quarter sales update. Despite restrictions, lockdowns and so on, JB Hi-Fi Australia sales only fell 7.5%, JB Hi-Fi New Zealand sales dropped 6.4% and The Good Guys sales dropped 5.6% in the first three months.

JB Hi-Fi also said that in October, the group had seen sales momentum continue and has benefited from the reopening of stores in NSW and changes to the timing of key product releases compared to prior years.

Credit Suisse rates JB Hi-Fi as a buy, with a price target of $55.86 and thinks it has a very strong position in the retail world.

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

Soul Patts is one of the oldest ASX 200 shares. It was listed over a century ago.

It has built an investment portfolio of different businesses in different sectors.

Soul Patts is in telecommunications with TPG Telecom Ltd (ASX: TPG) and Tuas Ltd (ASX: TUA), resources with substantial investments in New Hope Corporation Limited (ASX: NHC) and Round Oak, agriculture, property and so on. Brickworks Limited (ASX: BKW) is another major position. Soul Patts also has a large cap ASX share portfolio and a small cap ASX share portfolio.

This business has grown its dividend every year for the last two decades. It has achieved this by having a range of asset classes, with mostly defensive and contrarian investments that it picks for the long-term. The reliable cashflow it generates both funds the growing dividend and can be re-invested into more opportunities.

A recent merger with the listed investment company (LIC) Milton will allow the ASX 200 share to jump on investment opportunities in a number of different target asset classes and thematics. It’s looking at private equity, structured high yield, emerging companies, global equities, ‘real’ assets, property, health and ageing, energy transition, agriculture, financial services and education.

Whilst the Soul Patts share price has a 15% upside to the Morgans price target of $36.78, it’s only rated as a hold at the moment by that broker.

The post Are these 2 leading ASX 200 shares worth owning? appeared first on The Motley Fool Australia.

More reading

• These were the best performing ASX 200 shares last week
• These were the worst performing ASX 200 shares last week
• Soul Pattinson (ASX:SOL) share price dips as investors digest AGM
• Here are the top 10 ASX shares today
• These 3 ASX 200 shares are topping the volume charts on Friday

Motley Fool contributor Tristan Harrison owns Washington H. Soul Pattinson and Company Limited. 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 and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended TPG Telecom 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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The Westpac Banking Corp (ASX: WBC) share price has been a poor performer in recent weeks.

For example, since the start of November, the banking giant’s shares have lost approximately 19% of their value.

Is the weakness in the Westpac share price a buying opportunity?

One leading broker that is sitting on the fence with the Westpac share price is Goldman Sachs. Last week the broker retained its neutral rating on Australia’s oldest bank’s shares.

Though, it is worth noting that with a price target of $25.60, Goldman still sees 23% upside for the Westpac share price over the next 12 months.

Furthermore, its analysts are forecasting a fully franked 5.8% dividend yield in FY 2022. If you add this into the equation, this brings the total return on offer to almost 29%. Not bad for a neutral rating!

What did the broker say?

The main reasons Goldman Sachs isn’t overly positive about the Westpac share price are the bank’s margin outlook and doubts over management’s bold cost reduction plans.

Goldman explained: “We remain Neutral rated on WBC, reflecting: i) the significant reset in the margin at the FY21 result provides a weak platform for revenue growth in FY22E; ii) with expenses disappointing in 2H21, we believe the potential for WBC to reach its FY24 cost target of A$8.0 bn should be more heavily discounted than previously was the case, and we note that our like-for-like FY24E cost forecast is c. A$8.6 bn; and iii) the benefits to non-interest income from increased economic activity are set to be offset by a loss of income from divestments.”

Though, the broker does acknowledge there is potential upside risk from “higher interest rates, outperformance on NIM management, better than expected performance on cost management.”

The post Is the Westpac (ASX:WBC) share price a buy after falling 19% in 6 weeks? appeared first on The Motley Fool Australia.

More reading

• Top brokers name 3 ASX shares to buy next week
• ASX 200 (ASX:XJO) midday update: Fortescue CEO steps down, Westpac buyback update
• Westpac (ASX:WBC) share price higher on $3.5bn buyback update
• Could rumours over a Westpac (ASX:WBC) mega-merger ever become facts?
• RBA maintains interest rate but removes 2024 reference. What could this mean for ASX shares?

Motley Fool contributor James Mickleboro owns Westpac Banking Corporation. 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 Westpac Banking Corporation. 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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Last week saw a number of broker notes hitting the wires once again. Three buy ratings that investors might want to be aware of are summarised below.

Here’s why brokers think investors ought to buy them next week:

Rio Tinto Limited (ASX: RIO)

According to a note out of Morgan Stanley, its analysts have upgraded this mining giant’s shares to an overweight rating with an improved price target of $110.50. The broker believes there is upside risk to expectations thanks to an improving housing outlook in China and strong demand for aluminium. Morgan Stanley also highlights that the company’s shares have pulled back materially from recent highs. The Rio Tinto share price was trading at $95.83 at the end of the week.

Webjet Limited (ASX: WEB)

A note out of Goldman Sachs reveals that its analysts have retained their buy rating but trimmed their price target on this online travel agent’s shares to $6.90. The broker has been looking at the Omicron variant of COVID-19 and the impact it could have on travel markets. While it does expect it to push back Webjet’s recovery, it remains positive. Goldman continues to see a long term growth story in the Webjet business. The Webjet share price was fetching $5.49 at Friday’s close.

Westpac Banking Corp (ASX: WBC)

Analysts at Morgans have retained their add rating and $30.50 price target on this banking giant’s shares. According to the note, the broker believes the market is pricing Australia’s oldest bank’s shares as a value trap. However, it doesn’t believe this is the case and instead sees significant value in them. All in all, it feels the recent pullback is a buying opportunity for investors. The Westpac share price ended the week at $20.85.

The post Top brokers name 3 ASX shares to buy next week appeared first on The Motley Fool Australia.

More reading

• ASX 200 (ASX:XJO) midday update: Fortescue CEO steps down, Westpac buyback update
• Evergrande officially defaults, downgraded by Fitch. What next?
• Westpac (ASX:WBC) share price higher on $3.5bn buyback update
• Analysts name 2 ASX dividend shares to buy now
• Could rumours over a Westpac (ASX:WBC) mega-merger ever become facts?

Motley Fool contributor James Mickleboro owns Westpac Banking Corporation. 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. and Westpac Banking Corporation. 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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Once again, a large number of broker notes hit the wires last week. Some of these notes were positive and some were bearish.

Three sell ratings that investors might want to hear about are summarised below. Here’s why top brokers think investors ought to sell these shares next week:

Commonwealth Bank of Australia (ASX: CBA)

According to a note out of Morgans, its analysts have retained their reduce rating and $73.00 price target on this banking giant’s shares following a review of the banking sector. While Morgans is positive on the sector, it continues to believe the CBA share price is overvalued at the current level and sees better value on offer with other banks. Morgans has previously stated its belief that the premium CBA’s shares trade at to the other big banks is unjustifiably large. The CBA share price ended the week at $97.90.

Insurance Australia Group Ltd (ASX: IAG)

A note out of Morgan Stanley reveals that its analysts have downgraded this insurance company’s shares to an underweight rating and cut the price target on them to $3.75. The broker has concerns over IAG’s margin outlook and ability to hold onto its market share. In light of this, it feels investors should stay away from the company’s shares, even though they’re trading close to their 52-week low. The IAG share price was fetching $4.40 at Friday’s close.

Magellan Financial Group Ltd (ASX: MFG)

Analysts at UBS have retained their sell rating and $29.50 price target on this struggling fund manager’s shares. According to the note, the broker was pleased to see Magellan’s funds under management update reveal an end to its run of net outflows during November. However, given the very poor performance of its flagship fund, which trails its benchmark materially, the broker isn’t getting excited. It feels this will weigh on performance fees and fund inflows. The Magellan share price ended the week at $29.12.

The post Top brokers name 3 ASX shares to sell next week appeared first on The Motley Fool Australia.

More reading

• These were the worst performing ASX 200 shares last week
• Why Alcidion, Magellan, Redbubble, and Seven West shares are dropping
• Why CBA (ASX:CBA) and this dividend share could be buys
• Why the IAG (ASX:IAG) share price could be cheap for patient investors
• The Magellan (ASX:MFG) share price has lost 40% in 6 months. What now?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns and has recommended Insurance Australia Group 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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