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The Commonwealth Bank of Australia (ASX: CBA) share price is climbing slightly today despite news of legal proceedings launched against the company.

At the time of writing, the CBA share price is up 0.07% trading at $104.53 apiece. This means that in the past week alone, CBA shares have elevated almost 5%.

What did CBA announce to the ASX?

In its release, the bank advised that the Fair Work Ombudsman (FWO) had started civil proceedings against CBA and its stockbroking firm, CommSec.

The FWO alleges that Australia’s largest bank breached the Fair Work Act by not paying 7,425 of its employees their correct entitlements. Staff mainly in customer services roles were affected by the underpayment.

The total discrepancy came to around $16.44 million for the period between October 2015 and December 2020.

The matter was taken to the Federal Court following the FWO investigation.

CBA defence

CBA noted that a comprehensive remediation program has been underway since early 2018 to identify issues dating back to 2010. The bank self-reported the employee entitlement payments to the FWO and publicly disclosed them in 2019.

The bank advised that the underpayments had led to it strengthening its systems and processes to ensure the issue was not repeated.

All missing entitlement payments have since been remedied, and CBA believes no further compensation payments are required.

Furthermore, the company highlighted that it was constructively working with the FWO to resolve the proceedings.

The maximum penalty for each company for the contraventions is up to $666,000 per breach.

A date is yet to be determined for when the matter will be heard in the Federal Court.

CBA share price snapshot

The CBA share price continues its upwards trajectory to post a 50% gain in a year. When looking at 2021, its shares have moved almost 30% higher for the period.

CBA commands a market capitalisation of roughly $178.59 billion, making it the biggest company on the ASX.

The post CBA (ASX:CBA) share price edges higher amid legal proceedings appeared first on The Motley Fool Australia.

More reading

• CBA (ASX:CBA) share price slips as bank spruiks carbon credit opportunity
• How did ASX bank shares perform in the last quarter?
• Why do Pilbara Minerals (ASX:PLS) shares keep topping the volume charts?
• Could the CBA (ASX:CBA) share price hit $120 by the end of 2021?
• What happened for the CBA (ASX:CBA) share price in the FY22 first quarter?

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

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The BHP Group Ltd (ASX: BHP) share price is edging higher on Monday afternoon.

At the time of writing, the mining giant’s shares are up 0.5% to $37.90.

While this is positive on a red day for the ASX 200, the BHP share price is still down a disappointing 30% from its August high of $54.55.

Is the BHP share price good value?

While the recent weakness in the BHP share price is disappointing for shareholders, it could be a buying opportunity for non-shareholders.

That’s the view of the team at Macquarie Group Ltd (ASX: MQG), which last week retained their outperform rating and $56.00 price target on the miner’s shares.

Based on the current BHP share price, this implies potential upside of 48% over the next 12 months.

And that’s before dividends. Macquarie is forecasting a fully franked dividend of $3.97 per share in FY 2022. This works out to be a sizeable 10.5% dividend yield, which increases the total potential return to over 58%.

Why is Macquarie so bullish?

Macquarie is bullish on BHP largely due to the diversity of its operations.

Although the iron ore price has fallen heavily in recent months, this is being cushioned by strong rises in other commodity prices such as coal.

“Buoyant coking coal prices have enabled BHP to maintain earnings upgrade momentum despite the recent volatility in iron-ore prices,” it commented.

In fact, the broker believes that overall commodity prices are strong enough for BHP to generate enough free cash flow to support a ~20 free cash flow yield. Which, as mentioned above, is expected to underpin very generous dividends in the near term.

In light of this, the broker appears to believe that the recent weakness in the BHP share price could be a buying opportunity for investors looking for exposure to the resources sector.

The post Top broker tips BHP (ASX:BHP) share price to rise 48% appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Monday
• 2 buy-rated ASX dividend shares with big yields
• Own BHP (ASX:BHP) shares? Here’s why the miner won’t be jumping onboard the hydrogen train
• Brokers name 3 ASX shares to buy today
• Here’s why the Rio Tinto (ASX:RIO), BHP and Fortescue share prices are surging 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 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 AGL Energy Limited (ASX: AGL) share price is slipping today despite reports Federal Energy Minister Angus Taylor believes a net-zero carbon target won’t mean net zero emissions.

According to reporting by the Australian Financial Review (AFR), Taylor told the publication’s Energy and Climate Summit that offset schemes will be crucial in Australia’s decarbonisation strategy.

It’s seemingly good news for AGL, Australia’s largest carbon emitter. The company has been battling calls to move away from coal-fired power and towards more climate-friendly energy production. Meanwhile, it’s watching its bottom line dip lower.

At the time of writing, the AGL share price is $6.145, 1.68% lower than its previous close.

Let’s take a closer look at how today’s AFR Energy and Climate Summit is going for AGL.

Energy and Climate Submit spells good news for AGL

The AGL Energy share price is slipping despite a few bright spots for the company at today’s AFR Energy and Climate Summit.

The most obvious win came from Energy Minister Angus Taylor.

Taylor reportedly told the conference Australia won’t be enforcing zero emissions or carbon taxes. Rather, it will encourage emission reduction measures, carbon capture and storage programs, and blue hydrogen. Blue hydrogen is hydrogen derived from methane in natural gas. He was quoted by the AFR as saying:

Our government will always stand up for our traditional industries, and their crucial ongoing role in underpinning our economy and reducing emissions,

and …

we are on the side of not adding costs for customers.

In a similar vein, the publication reports AGL’s customer service chief Christine Corbett told the summit the energy provider is struggling to go green without increasing customers’ bills.

Corbett said only around a third of energy customers care about renewable power while 80% are concerned about prices.

Earlier, AGL’s CEO Graham Hunt spoke on AGL’s move away from coal-fired power at the conference, saying:

[W]e do need to leverage off the sunk infrastructure, the skilled workforces, and we’ve got to do that in advance of planned closures.

Such commitment to coal comes despite 55% of its shareholders recently voting for AGL to implement Paris Agreement-aligned emissions targets.

AGL share price snapshot

Today’s dip is just the latest for the AGL share price.

The company’s stock is now trading for 49.5% less than it was at the start of 2021. It has also lost 54.7% of its value since this time last year.

The post Why is the AGL (ASX: AGL) share price sliding lower on Monday? appeared first on The Motley Fool Australia.

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• Why did the AGL (ASX: AGL) share price have such a shocking FY22 first quarter?
• Why this broker sees 30% upside for the AGL (ASX:AGL) share price
• Why did the AGL share price have such a lousy month in September?
• 3 ASX 200 shares down more than 50% in 2021
• Why is the AGL (ASX:AGL) share price down almost 4% on Tuesday?

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned.

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

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The Creso Pharma Ltd (ASX: CPH) share price is sliding in afternoon trade today and now trades at 11.3 cents apiece.

Whilst there’s been no market sensitive information released today, Creso Pharma shares are struggling despite the company announcing an update on testing of its new cannabis strains.

Read on for more details.

What did Creso Pharma announce?

Creso advised that its Canadian subsidiary, Mernova, has completed third-party testing of “THC content for four new cannabis strains with a Health Canada certified lab”.

Each new strain demonstrated “a major achievement” and exceeded the industry average THC content of 15% to 20%, recording an average of 19.6–30.1% THC content.

Specifically, the New Miracle Alien Cookies strain showed a 30.1% THC concentration – almost 50% higher than Creso Pharma’s competitors’ products.

This is expected to give Creso a competitive advantage in the Canadian market, increase product demand, and grow market share, per the release.

The release also notes the company has substantially increased the skill and experience levels of its employees, in order to commence advanced grow methods.

Supporting the staff changes are “multiple process improvements and upgrades (that) are currently underway”, each in an effort to increase plant yield and quality.

Aside from this, Creso advises that an additional 4 strains have been started from seed, and will undergo testing to determine sex in the coming months. They are expected to be introduced sometime in 2022.

With this momentum, the company stated that “sales continue to grow, (with) an additional $152,236 in purchase orders secured in the last week”.

That builds on a mix of bulk purchase orders for $800,000 that was announced for Mernova’s cannabis product last week.

Investors aren’t chasing the Creso Pharma share price today, and are instead selling the cannabis company’s shares in afternoon trade, pushing it 2% lower at last check.

Creso Pharma share price snapshot

It’s been a difficult year to date for the Creso Pharma share price, having posted a loss of 37.5% since January 1.

Yet, it has gained over 240% in the past 12 months, even after a 10% decrease this past month.

This result has far outpaced the S&P/ASX 200 index (ASX: XJO)’s gain of around 25% in the last year.

The post Creso Pharma (ASX:CPH) share price struggles despite study update appeared first on The Motley Fool Australia.

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• Creso Pharma (ASX:CPH) share price jumps on new deal
• What’s going wrong for ASX cannabis shares lately?
• Creso Pharma (ASX:CPH) share price lifts following two positive updates
• Creso (ASX:CPH) share price edges 4% higher following export deal

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

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“This investment is only available to sophisticated and wholesale investors’. 

That is a phrase many ASX investors might be familiar with. Here in Australia, we have a plethora of rules and regulations safeguarding our financial system and the investments within it.

One of those rules governs who can invest in what.

For an investment product to be available for general public use, it has to jump through a number of compliance hurdles. These include providing disclosure and risk assessment documentation to investors. Think prospectuses or product disclosure statements. Something I’m sure the managers at Platinum Asset Management Ltd (ASX: PTM) or Magellan Financial Group Ltd (ASX: MFG) could tell us more about.

The idea is that there needs to be a rigorous regulatory framework that protects ordinary ‘retail’ investors, like you or I, from spurious or dubious investment products.

An air of sophistication…

However, not all investment products in Australia have to comply with these rules. If an investor meets the qualifications of being a ‘sophisticated’ or ‘wholesale’ investor, they can be given an exemption.

The federal government’s moneysmart.gov.au website tells us what this means. People who qualify as sophisticated or wholesale investors “can buy financial products without a regulated disclosure document such as a prospectus or product disclosure statement”.

In other words, they are permitted to access a world of investment products that are not available for ordinary investors.

So what does one have to do to qualify as one of these elite investors?

According to the Australian Securities and Investments Commission (ASIC), to become a sophisticated or wholesale investor, one has to obtain a “certificate from a qualified accountant certifying they have a prescribed net asset or gross income level”.

That net asset or income level?

You need either a “gross income of $250,000 or more per annum in each of the previous two years”. Or else have “net assets of at least $2.5 million”.

So why this two-track system for investors?

ASIC tells us the following:

The rationale is that people meeting one of these criteria are more likely to be able to evaluate offers of securities and some financial products (such as interests in managed investment schemes) without needing the protections of a regulated disclosure document.

How many sophisticated or wholesale investors are there?

A lot more than there used to be.

According to a report in today’s Australian Financial Review (AFR), there are now more than 3 million Australians who meet the qualifications. The report quotes modelling from the Australian National University (ANU). This found that “1.09 million households (or 3.25 million individuals) meet the legal definition for a sophisticated or wholesale investor”.

There were only 104,000 households that met this definition back when this system was introduced in 2002. That means this number has ballooned by roughly 10 times over the past 2 decades. And the report reckons that this number could hit 6.78 million adults by 2031. And 11.5 million by 2041. The ranks are being further swelled by the rapidly rising property market, as the family home is not exempt from the asset test.

Associate professor from the ANU’s Centre of Social Research and Methods Ben Phillips called this situation the result of an “oversight” by policymakers:

Clearly the share of Australians earning $250,000 in gross income over two consecutive years, or those with more than $2.5 million in net assets, has changed dramatically over the last two decades because of income and asset price inflation…

These changes arise as a result of the failure of the legislation to index the… wealth tests in the Corporations Act’s sophisticated investor definition… to the increase in both income and wealth over the 20 years since the definition was introduced.

However, if you’re one of the lucky investors who now qualify as sophisticated or wholesale, don’t get too carried away. Dr Phillips warns that “meeting the requirements of the sophisticated investor definition is unlikely to guarantee that an investor is immune to poor investment choices or being misled by shady deals”.

Something to keep in mind if you are aiming to be, or already are, an official sophisticated or wholesale investor.

The post 3 million Aussies now qualify as sophisticated investors. Do you? appeared first on The Motley Fool Australia.

More reading

• Ampol (ASX:ALD) share price zooms higher on NZ$2.8bn Z Energy acquisition
• Why the Nexus Minerals (ASX:NXM) share price just leapt to an all-time high
• ASX 200 energy shares rise amid market sell-off
• Own Bank of Queensland (ASX:BOQ) shares? Here’s what to expect from its FY21 results
• Aurizon (ASX:AZJ) share price struggles amid $2b deal speculation

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. 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 Ampol Ltd (ASX: ALD) share price is fuelled up and zooming higher on Monday.

In afternoon trade, the fuel retailer’s shares are up over 3% to $30.08.

Why is the Ampol share price charging higher?

Investors have been bidding the Ampol share price higher today after it announced that it has entered into a binding scheme implementation agreement to acquire Z Energy Ltd (ASX: ZEL).

According to the release, the two parties have agreed on a price of NZ$3.78 cash per share. This represents an enterprise value of NZ$2.8 billion.

In addition, Z Energy shareholders will be entitled to a NZ$0.05 per share interim dividend for FY 2022 that won’t impact the cash offer price.

But it doesn’t stop there. Depending on how long the transaction takes to complete, the offer price could increase. The release explains that if the transaction has not been implemented by 31 March 2022, the final cash consideration will be progressively increased to reflect Z Energy’s FY 2023 performance. This allows for an increase of up to NZ$0.10 per share.

Is this a good deal?

Judging by the Ampol share price performance today, it appears as though the market believes this is a good deal.

And it’s not hard to see why. Z Energy is the market leader in New Zealand with a 40% share of all fuel volumes. As a result, Ampol believes that acquiring Z Energy will create a “Trans-Tasman fuel champion.”

Management is also forecasting significant transition and synergy opportunities totalling NZ$60 million to NZ$80 million. These are expected to be achieved via fuel procurement and overhead cost reductions.

This is expected to lead to the transaction being double digit earnings per share accretive and +20% free cash flow accretive in 2023.

The Ampol share price is now up 22% over the last 12 months.

The post Ampol (ASX:ALD) share price zooms higher on NZ$2.8bn Z Energy acquisition appeared first on The Motley Fool Australia.

More reading

• Z Energy (ASX:ZEL) share price leaps 6% on Ampol takeover news
• Ampol (ASX:AMP) share price on watch after Z Energy takeover agreement

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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The Nexus Minerals Ltd (ASX: NXM) share price is pulling back after surging to an all-time high today. This comes after the company announced positive results in regards to its drilling campaign at the Templar Prospect.

During morning trade, the gold explorer’s shares reached a record high of 49.5 cents. However, profit-taking has led its shares in negative territory, down 2.3% to 42.5 cents at the time of writing.

High-grade gold mineralisation

In a statement to the ASX, Nexus advised it has received high-grade assay results from its drilling operations.

Strong gold mineralisation has been detected from one diamond hole and two RC holes within the company’s Wallbrook gold project.

Diamond hole #3 yielded the following intercept result:

• 4.61 meters at 5.78 grams per tonne of gold (within 18.38 meters at 2.40g/t Au from 123.72 meters).

Both diamond drill holes #3 and #4 were tested from the surface to a depth of 600 meters, intersecting mineralisation. While the results for drill hole #3 have been collected, assays are still pending for drill hole #4.

The two RC drill holes (#199 and #201) are highlighted below, respectively:

• 4 meters at 4.13 grams per tonne of gold (within 12 meters at 1.72g/t Au from 200 meters); and
• 8 meters at 1.99 grams per tonne of gold (within 40 meters at 0.82g/t Au from 44 meters).

While these holes indicated promising mineralisation, five other RC holes were halted due to poor drilling conditions. As such, Nexus will now use diamond tails to extend the five holes to their desired depth.

No timeline has been given by the company of when it expects to complete the remaining holes to be tested.

Nexus managing director, Andy Tudor commented:

These broad high- grade results received from DDH#3 at Templar are in line with our expectations. What has significantly exceeded our expectations is the alteration style and mineralisation observed in both DDH#3 and the recently completed deeper diamond hole #4. They exhibit the same style that hosts the multi-million-ounce Karari deposit 30km to the south.

This has now linked the Crusader-Templar alteration and mineralisation style with that of Karari, providing confidence in the potential for the Crusader- Templar Prospect to evolve into a very large mineralised system.

About the Nexus Minerals share price

Over the last 12 months, Nexus shares have accelerated by more than 220%, with year-to-date also up 220%.

Based on today’s price, Nexus commands a market capitalisation of roughly $104.2 million and has approximately 245.16 million shares outstanding.

The post Why the Nexus Minerals (ASX:NXM) share price just leapt to an all-time high appeared first on The Motley Fool Australia.

More reading

• Why is the Nexus Minerals (ASX:NXM) share price rocketing 28% today?
• The Nexus Minerals (ASX:NXM) share price is up 34% today and 340% in a month

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

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ASX 200 energy shares are collectively one of the few brights spots on Monday, following a broad-based market sell-off.

The S&P/ASX 200 Index (ASX: XJO) reversed last Friday’s gains, sliding 0.45% to 7,286. Most sectors are in red, with heavy selling taking place across information technology, healthcare and real estate sectors.

By comparison, the S&P/ASX Energy (ASX: XEJ) index is trading 0.81% higher, with most of its constituents in positive territory.

The Woodside Petroleum Limited (ASX: WPL) share price has managed to eke out a small gain of 0.28% to $25.42. Shares in the largest ASX-listed oil and gas player are currently hovering around 7-month highs.

Santos Ltd (ASX: STO) is up 0.95% to $7.45, a price not seen for 3 months.

The Oil Search Ltd (ASX: OSH) share price is trading 1.77% higher to $4.59, its highest level since March 2020.

Beach Energy Ltd (ASX: BPT) is perhaps the best performing ASX 200 energy share. In early morning trade today Beach Energy shares rallied 3.8% to a 5-month high of $1.50.

What’s driving ASX 200 energy shares?

Oil prices continue to gather momentum, rallying to fresh 7-year highs.

The United States benchmark, West Texas Intermediate (WTI), has cracked the US$80 a barrel mark. While the global benchmark, Brent Crude, is trading 0.51% higher at a 3-year high of US$83 a barrel.

Oil prices rallied last Friday after the US Department of Energy spokesperson said that the agency had no plans to tap into strategic petroleum reserves to help ease tight supplies.

“An acceleration in gas-to-oil switching could boost crude oil demand used to generate power this coming northern hemisphere winter, however, the US may be heading into winter with its lowest stockpiles of heating oil for decades,” ANZ research analysts said, according to S&P Global.

Market dynamics for oil are expected to remain tight after the Organization of the Petroleum Exporting Countries and Russia (OPEC+) decided to stick to its existing plan to increase output by 400,000 barrels a day last week.

This is amid the recent supply-side disruptions caused by Hurricane Ida. Not to mention rising demand amid an energy crisis in China and gas shortage in Europe.

The post ASX 200 energy shares rise amid market sell-off appeared first on The Motley Fool Australia.

More reading

• Here’s what happened to the Woodside Petroleum (ASX:WPL) share price in the FY22 first quarter
• 5 things to watch on the ASX 200 on Monday
• 5 things to watch on the ASX 200 on Friday
• These were the 3 best performing ASX energy shares in September
• Why A2 Milk, Magellan, Santos, & Whitehaven Coal shares are falling

Motley Fool contributor Kerry Sun 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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Bank of Queensland Limited (ASX: BOQ) shares will be on watch this week.

On Wednesday the regional bank is scheduled to release its full year results for FY 2021.

Ahead of the release, I thought I would look to see what is expected from the bank.

What is expected from Bank of Queensland in FY 2021?

According to a note out of Goldman Sachs, its analysts are expecting Bank of Queensland to deliver strong profit growth in FY 2021.

The note reveals that the broker has pencilled in cash earnings of $406 million, which will be an increase of 80% year on year.

This is expected to lead to cash earnings per share of 66 cents, allowing the bank to pay a 39 cents per share fully franked full year dividend. The latter comprises an interim 17 cents per share dividend and Goldman’s forecast for a 22 cents per share final dividend.

Based on the current Bank of Queensland share price of $9.72, this represents an attractive 4% dividend yield.

What else should you out for?

There are a number of key metrics that banks release with their results that help investors judge its performance and the strength of its business.

One of these is its CET1 capital ratio, which Goldman expects to come in at 10%. This is ahead of the bank’s target range of 9% and 9.5%, suggesting there’s room for potential capital returns.

In addition, the broker is expecting a notable improvement in the bank’s cash return on equity from 5.4% in FY 2020 to 8% in FY 2021.

Another metric Goldman will be looking out for is its lending growth. It expects the bank to be growing its lending at above system growth.

It explained: “For 2H21, BOQ expected to achieve above system lending growth with a steady recovery in business lending through 2H21. (GSe housing +2.8% vs. system (ex-ME Bank), business -1%). We will be keen to hear management commentary around the sustainability of its volumes growth and whether this can be achieved with a reasonable NIM outcome. We note that the recent month’s APRA data indicates 4 straight months of improved momentum (tracking at 13.3% on a 3m ann. basis) and we remind investors that at its 1H21 result, BOQ guided to 2H21 NIM (ex-ME Bank) to be flat hoh.”

Are Bank of Queensland shares in the buy zone?

The note reveals that Goldman Sachs still sees value in Bank of Queensland shares at the current level.

The broker currently has a buy rating and $10.09 price target on its shares.

Based on the current Bank of Queensland share price, this implies a potential return of 4% before dividends and 8% including them.

Though, it is worth remembering that this recommendation could change (for better or for worse) depending on the quality of its results on Wednesday.

The post Own Bank of Queensland (ASX:BOQ) shares? Here’s what to expect from its FY21 results appeared first on The Motley Fool Australia.

More reading

• Bank of Queensland (ASX:BOQ) share price hits 52-week high on Friday
• Top broker tips Bank of Queensland (ASX:BOQ) share price as a buy
• 5 things to watch on the ASX 200 on Wednesday
• If you invested $1,000 in Bank of Queensland (ASX:BOQ) shares a decade ago, here’s what it would be worth now
• Why Bank of Queensland (ASX:BOQ) shares are up 66% in the past 12 months

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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The Aurizon Holdings Ltd (ASX: AZJ) share price is sliding into the red on Monday and now trades at $3.89.

Shares in the rail freight giant are struggling amid reports the company may be stepping onto the acquisition trail that’s been set on the ASX so far in 2021.

Here are the details.

What’s the situation?

The Aurizon share price is losing ground amid speculation the company may be gearing up to buy One Rail Australia.

According to a report in The Australian, Australia’s largest freight operator has put itself in prime position to sweep up the $2 billion One Rail, potentially opting to buy all of its assets.

These include 2,500km of railroad between South Australia and the Northern Territory, alongside bulk haulage operations.

One Rail is also understood to derive approximately 47% of its revenue from coal, according to the report. With the price of coal soaring lately, Aurizon would be on the receiving end of these earnings if the sale were to go through.

This comes despite the company’s recent moves to take a step back from its coal revenue streams, in accordance with ESG principles.

However, the price of coal has climbed more than 196% this year to date and is up another 34% in the past month, making the commodity an attractive asset for its net-revenue potential right now.

According to The Australian, there is speculation Aurizon is set to make a move for One Rail. This could have a bearing on its share price if the deal goes through. Especially if Aurizon were to reinvest cash flows from its coal operations into non-coal operations.

On this prospect, the Aurizon share price was recently upgraded to a buy from leading broker Morgans which increased its price target to $4.14.

Analysts at the firm liked Aurizon’s prospects to make acquisitions and generate return on the company’s invested capital.

Time will tell if the speculation will convert to a real-life offer from Aurizon to purchase One Rail.

Aurizon share price snapshot

The Aurizon share price is trading flat this year to date and has posted a loss of 9.74% these past 12 months.

Yet, it has gained 2% in the last month and another 2% this past week.

Nonetheless, these results have lagged the S&P/ASX 200 Index (ASX: XJO)’s return of around 25% this last year.

The post Aurizon (ASX:AZJ) share price struggles amid $2b deal speculation appeared first on The Motley Fool Australia.

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• Why a top broker upgraded the Aurizon (ASX:AZJ) share price to a buy
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The author Zach Bristow 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 recommended Aurizon Holdings 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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