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On Friday the S&P/ASX 200 Index (ASX: XJO) was on form and finished the week on a positive note. The benchmark index rose 0.9% to 7,320.1 points.

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

ASX 200 expected to edge lower

The Australian share market looks set to start the week on a subdued note. According to the latest SPI futures, the ASX 200 is expected to open the day 4 points or 0.05% lower this morning. This follows a soft end to the week on Wall Street, which saw the Dow Jones edge slightly lower, the S&P 500 fall 0.2%, and the Nasdaq drop 0.5%.

Oil prices rise

Energy producers such as Santos Ltd (ASX: STO) and Woodside Petroleum Limited (ASX: WPL) could have a solid start to the week after oil prices rose on Friday night. According to Bloomberg, the WTI crude oil price is up 1.05% to US$79.35 a barrel and the Brent crude oil price has risen 1.2% to US$82.39 a barrel. Prices rose 3.9% and 4.6%, respectively, over the five days amid supply concerns.

PointsBet named as a buy

The Pointsbet Holdings Ltd (ASX: PBH) share price could be in the buy zone according to analysts at Goldman Sachs. This morning the broker retained its buy rating and $14.75 price target on the sports betting and iGaming provider. Goldman was recently at a conference in Las Vegas where the management teams of PointsBet and other gaming companies were attending. It notes that the companies reported stronger near-term top-line trends in online even as challenging comparisons are lapped.

Gold price edges lower

Gold miners Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) will be on watch after the gold price edged lower on Friday night. According to CNBC, the spot gold price fell 0.1% to US$1,757.40 an ounce. The precious metal hit a two-week high at one stage after US jobs data fell short of expectations.

Iron ore prices charge higher

BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO) shares could have a good day after the spot iron ore price strengthened. According to Metal Bulletin, the benchmark iron ore price jumped 5.4% to US$123.38 a tonne on Friday night.

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

More reading

• Why did the Rio Tinto share price struggle in the September 2021 quarter?
• 2 buy-rated ASX dividend shares with big yields
• Here’s what happened to the CSL (ASX:CSL) share price in the FY22 first quarter
• 3 fantastic ASX growth shares to buy
• Why this expert reckons the Woolworths (ASX:WOW) share price is on special

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 shares of and has recommended Pointsbet Holdings Ltd. The Motley Fool Australia has recommended Pointsbet 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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In the quarter for the three months to 30 September 2021, the Rio Tinto Limited (ASX: RIO) share price has been struggling. What has been going on?

The September 2021 quarter represents the third quarter of Rio Tinto’s financial year because its financials align with the calendar year.

Between 1 July 2021 and 30 September 2021, Rio Tinto shares fell by just over 20%.

A few days after reporting its half-year result, the Rio Tinto share price actually reached a peak of $134.40. So, up until early August, it had actually risen during the quarter.

FY21 result

That half-year report actually included a lot of growth. Net operating cash generated jumped 143% to US$13.66 billion. Underlying earnings went up 156% to US$12.17 billion. Free cashflow surged 262% to US$10.18 billion. Reported net earnings soared 271% to US$12.3 billion.

All of that growth allowed the board to declare a total dividend per share of US$5.61 for the result, an increase of 262%. That included a special dividend per share of US$1.85.

Of the total underlying earnings, Rio Tinto generated US$10.2 billion of that from iron ore. The other two sizeable contributors were aluminium (US$921 million of net earnings) and copper (US$885 million of net earnings).

As readers can see, iron ore plays a big part in the profits (and dividend) of the business.

Looking at the six months to 30 June 2021, Rio Tinto said that the average realised price for its iron ore increased 97% to US$168.4 per dry metric tonne.

So, what may be hurting the Rio Tinto share price?

Whilst the miner benefited from the rising iron ore price during the first half of 2021. It appears to be suffering from the reversal of strength of iron. The iron ore price has roughly halved between May 2021 and now.

All things being equal, the lower iron ore price likely means Rio Tinto can’t generate quite as much profit.

Analysts may point to lots of different reasons for iron weakening such as the Evergrande crisis in China, steelmakers in China being told to reduce production and higher production coming back online in Brazil.

The iron ore price is certainly not at the lowest price it has been over the past decade, but it’s materially lower than where it was a few months ago.

What could help the Rio Tinto share price in the future?

Commodities like iron ore often move in cycles. Peaks and troughs could continue for iron ore.

Rio Tinto is also looking to diversify its earnings.

On 27 July, the board committed $2.4 billion of funding for the Jadar lithium-borates project in Serbia, one of the world’s largest greenfield lithium projects, subject to receiving all relevant approvals, permits and licences.

This lithium asset is expected to operate in the first quartile of the cost curve, with a 40-year mine life. First saleable production is expected to take place in mid-2026 at a time of strong market fundamentals with lithium demand forecast to grow 25% to 35% per year over the next decade.

Following ramp-up to full production in 2029, the mine is expected to produce approximately 58,000 tonnes of battery-grade lithium carbonate, 160,000 tonnes of boric acid and 255,000 tonnes of sodium sulphate annually.

Rio Tinto said that Jadar could supply all the necessary lithium to power over one million electric vehicles per year.

The post Why did the Rio Tinto share price struggle in the September 2021 quarter? appeared first on The Motley Fool Australia.

More reading

• Here’s why the Rio Tinto (ASX:RIO), BHP and Fortescue share prices are surging today
• US warns Evergrande crisis could affect ‘entire world’
• ASX 200 (ASX:XJO) midday update: EML crashes, mining shares rise
• CBA (ASX:CBA) warns iron ore price will fall by 27% in the next year
• Could the Rio Tinto (ASX:RIO) share price reach $123 by the end of 2021?

Motley Fool contributor Tristan Harrison 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 National Australia Bank Ltd (ASX: NAB) share price was on form last week.

The banking giant’s shares rose almost 2% over the five days to end the period at $28.38.

This means the NAB share price is now up 24% since the start of the year.

Could the NAB share price hit $30.00 before the end of the year?

One leading broker that believes the NAB share price could rise further from here is Goldman Sachs.

A note out of the investment bank last week reveals that its analysts have retained their conviction buy rating and $30.62 price target on the bank’s shares.

Based on the current NAB share price, this implies potential upside of 7.9% over the next 12 months.

In addition, the broker is forecasting a fully franked $1.40 per share dividend in FY 2022. This represents a 4.9% dividend yield, which brings the total potential return to almost 13%.

Based on this, Goldman appears to believe there’s potential for the NAB share price to hit $30.00 by the end of the year.

What did the broker say?

NAB is the broker’s top pick among the major banks for a number of reasons. One of those is its cost management initiatives. It recently explained:

“i) NAB’s cost management initiatives, which seem further progressed relative to most of its peers, should drive productivity benefits sooner and free up investment spend to be directed more towards customer experience, as opposed to infrastructure (3Q21 update shows NAB is tracking well against this).”

Goldman also likes NAB due to its strong position in business banking. Its analysts commented:

“ii) given NAB’s position as the largest business bank and investment in its mortgage capability, we believe it is strongly positioned to benefit from the current recovery in both housing and commercial volumes (3Q21 update showed continued volume momentum).”

Finally, Goldman has been pleased with the way it manages its margins. It said:

“iii) NAB continues to effectively manage the balance between volumes and margins as well as any peer.”

The post Could the NAB share price to hit $30 before the end of 2021? appeared first on The Motley Fool Australia.

More reading

• How did ASX bank shares perform in the last quarter?
• Westpac and other ASX 200 banks face renewed shareholder pressure over climate policies
• Is the NAB (ASX:NAB) share price a buy?
• 5 things to watch on the ASX 200 on Thursday
• What happened for the NAB (ASX:NAB) share price in the FY22 first quarter?

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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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 caught my eye are summarised below. Here’s why top brokers think investors ought to sell these shares next week:

A2 Milk Company Ltd (ASX: A2M)

According to a note out of Credit Suisse, its analysts have retained their underperform rating and $5.50 price target on this infant formula company’s shares. While it acknowledges that infant formula prices are stabilising, it isn’t enough for any changes to its rating. Particularly given its concerns over slowing birth rates in China and market share losses in stage 1 formula. The A2 Milk share price finished the week at $6.02.

Magellan Financial Group Ltd (ASX: MFG)

A note out of UBS reveals that its analysts have retained their sell rating and cut their price target on this fund manager’s shares to $29.00. This follows the release of another disappointing funds under management update, which revealed further fund outflows. The broker suspects this is being driven by the poor performance of its flagship Global Fund and fears that there could be further outflows to come. Particularly on the retail side due to its poor performance and high fees. The Magellan share price was trading at $33.90 at Friday’s close.

Unibail-Rodamco-Westfield CDI (ASX: URW)

Analysts at Ord Minnett have retained their sell rating and $4.00 price target on this shopping centre operator’s shares. While Ord Minnett notes that Unibail-Rodamco-Westfield’s shares have pulled back meaningfully in recent months. It still doesn’t see enough value in them to change its rating. Particularly given how it is yet to see proof that a rebound in trading conditions is taking place. As a result, it is holding firm with its sell rating for the time being. The Unibail-Rodamco-Westfield share price ended the week at $4.94 today.

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

More reading

• Here are the top 10 ASX shares today
• Which shares are set to finish the week as the top movers on the ASX 300?
• Top brokers name 3 ASX shares to sell today
• Why Fletcher Building, Magellan, Sezzle, & Starpharma are racing higher
• Here’s why these top brokers reckon the Magellan (ASX:MFG) share price is cheap

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 A2 Milk. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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If you’re wanting to construct a balanced portfolio, owning a few ASX 200 shares could be a smart move.

But which ASX 200 shares should you buy? Two that could be in the buy zone are listed below:

Coles Group Ltd (ASX: COL)

The first ASX 200 share for investors to consider is Coles. It is one of the big two supermarket operators in the ANZ market. In addition to this, it has a number of complementary businesses such as its convenience stores, flybuys loyalty program, and Liquorland.

Due to the strength of these businesses and their positive long term outlooks, Coles has been tipped as an ASX share to buy. This is particularly the case for income investors due to its attractive yield and favourable dividend policy.

Morgans is positive on the company and is forecasting generous dividend payments in the coming years. Its analysts are expecting dividends per share of 61 cents in FY 2022 and 62 cents in FY 2022. Based on the current Coles share price of $17.03, this will mean fully franked yields of 3.6% and 3.65%, respectively, over the next two years.

Morgans has an add rating and $19.80 price target on its shares.

ResMed Inc. (ASX: RMD)

Another ASX 200 share to look at is ResMed. It is one of the world’s leading sleep treatment-focused medical device companies.

ResMed has been growing its revenue and earnings at a very strong rate over the last decade. This has been underpinned by its industry-leading products, growing software business, the increasing awareness of sleep disorders, and its investment in research and development (R&D).

Pleasingly, the company’s growth outlook remains very positive. This is thanks to its huge addressable market and the shift to home healthcare. The latter is being supported by its comprehensive out-of-hospital software platforms that allow people to stay healthy in the home or care setting of their choice.

Another positive is that one of its biggest rivals is currently battling with a major product recall. This is expected to allow ResMed to gain market share this year.

The team at Credit Suisse are very positive on the company. The broker currently has an outperform rating and $44.00 price target on its shares.

The post 2 high quality ASX 200 shares named as buys appeared first on The Motley Fool Australia.

More reading

• Top broker names 2 of the best ASX shares to buy in October
• Why this broker sees 17% upside for the Coles (ASX:COL) share price
• 5 defensive ASX shares to guide you through the market correction
• 2 highly rated ASX dividend shares to buy
• 2 ASX 200 dividend shares named as buys for October

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 recommended ResMed. The Motley Fool Australia owns shares of and has recommended COLESGROUP DEF SET. The Motley Fool Australia has recommended ResMed Inc. 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 caught my eye are summarised below.

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

Premier Investments Limited (ASX: PMV)

According to a note out of Macquarie, its analysts have retained their outperform rating and lifted their price target on this retail conglomerate’s shares to $33.00. The broker was pleased with Premier Investments’ performance in FY 2021. And while it expects earnings and margins to normalise in FY 2022, it still sees value in its shares. It also notes that the company’s decision to stock up on inventory looks well-timed due to supply chain headwinds that could impact its rivals. The Premier Investments share price ended the week at $30.28.

Redbubble Ltd (ASX: RBL)

A note out of Morgan Stanley reveals that its analysts have commenced coverage on this ecommerce company’s shares with an overweight rating and $6.50 price target. Morgan Stanley likes Redbubble due to its position as the largest print-on-demand marketplace globally with over 700,000 independent artists on its platform. The broker believes the company has a large addressable market and sees opportunities to monetise its growing user base. The Redbubble share price was trading notably lower than this price target at $4.52 at Friday’s close.

Qantas Airways Limited (ASX: QAN)

Analysts at Ord Minnett have retained their buy rating and lifted their price target on this airline operator’s shares to $6.50. According to the note, the broker believes that there is significant pent-up demand in the travel market. As a result, Ord Minnett expects Qantas to benefit once border reopen. Especially with Virgin Australia downsizing and seemingly conceding market share to Qantas. The Qantas share price ended the week at $5.59.

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

More reading

• 2 impressive ASX shares that could be buys in October 2021
• International borders will reopen soon. Why is the Qantas (ASX:QAN) share price stalling?
• Travel stocks soar. Hopes for a new COVID treatment. Evergrande drags on. Scott Phillips on Nine’s Late News
• These are the 10 most shorted ASX shares
• Redbubble (ASX:RBL) share price surges 7% following broker upgrade

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 Premier Investments 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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Is it possible that the Woolworths Group Ltd (ASX: WOW) share price could rise to $45 by the end of 2021?

At the moment the supermarket giant is sitting at around $40. In the middle of August 2021 it had reached up to $42.

But can it rise by approximately 12.5% before the end of the 2021 calendar year?

Broker opinions on the Woolworths share price

Most brokers don’t think Woolworths is a buy right now, with several price targets around the $40 mark. That effectively means that they don’t think that Woolworths shares are going to go anywhere over the next 12 months.

But there are a couple of opinions that are a bit different than that.

Credit Suisse has a sell on the company, with a price target of around $31. That suggests the broker believes that Woolworths shares are going to drop by more than 20% over the next 12 months. It thinks it’s overvalued for its expected earnings and potential (limited) growth. Using Credit Suisse’s forecast, the Woolworths share price is valued at 32x FY22’s estimated earnings.

But there is a broker with a $45 price target – Ord Minnett. However, that’s where the broker sees the Woolworths share price being in 12 months, not in the next two or three months. The thought is that supermarkets could see continued elevated levels of sales for longer because of COVID-19.

How is the supermarket business trading?

The FY21 announcement was the latest trading update that investors received.

FY21 total group sales were up 5.7% to $67.3 billion in FY21, with e-commerce sales up 58.1% to $5.6 billion. Group earnings before interest and tax (EBIT) increased 13.7% to $3.66 billion, whilst group net profit rose 22.9% to $1.97 billion. Within that, Australian food sales grew 5.4% and the EBIT rose 9% to $2.4 billion.

In terms of FY22, in the first eight weeks, Australian food sales were up 4.5% and Big W sales were down 15.1% (after a strong performance at the start of FY21 and store closures in FY22). For New Zealand, it said the two-year average growth had “continued to improve” with “some benefit to sales from recent lockdowns”.

The Woolworths annual general meeting is on 27 October 2021, so investors are likely to get an update for the first quarter of FY22 in that presentation.

Share buy-back to help the Woolworths share price?

When Woolworths announced its FY21 result, it also announced that it was returning $2 billion of capital to shareholders with an off-market share buy-back. The completion of the demerger of Endeavour Group Ltd (ASX: EDV) and repayment of intercompany loans provided a catalyst for a detailed review of capital management options.

The leadership said that this capital return reflected a strong balance sheet and its franking credit balance, whilst allowing it to continue to invest in its businesses.

Woolworths said the buy-back would be done through a tender process.

The post Can the Woolworths (ASX:WOW) share price hit $45 by the end of 2021? appeared first on The Motley Fool Australia.

More reading

• Why this expert reckons the Woolworths (ASX:WOW) share price is on special
• Why do Pilbara Minerals (ASX:PLS) shares keep topping the volume charts?
• Woolworths (ASX:WOW) share price gains amid class action settlement
• The final Woolworths (ASX:WOW) dividend will be paid today. Here’s what you need to know
• 5 things to watch on the ASX 200 on Friday

Motley Fool contributor Tristan Harrison 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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Here at the Fool, we’ve recently been having a look at how some of the ASX 200’s blue chip shares performed over the most recent quarter. The 2022 financial year began on 1 July, which means its first quarter wrapped up on 30 September.

As many of you probably know, the S&P/ASX 200 Index (ASX: XJO) is dominated by the famous big four ASX bank shares. That’s Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd. (ASX: NAB) and Australia and New Zealand Banking Group Ltd (ASX: ANZ).

Presently, CBA, Westpac, NAB and ANZ together make up four of the ASX 200’s six largest companies. That means wherever the banks go, the ASX 200 usually isn’t too far behind.

So how did the big four banks perform over the first quarter of FY2022? To give some context, the ASX 200 began July at 7,313 points and finished the quarter at 7,332.2 points on 30 September. That translates into a fairly mild gain of 0.26%

Bank vs ASX bank

Well, let’s start off with the big dog, CBA. CBA shares kicked off July at a share price of $99.87. On 30 September, this bank closed at $104.33 a share. That puts CBA’s gains for those 3 months at an impressive 4.47%.

Turning to Westpac, and we see that this ASX bank started the quarter at a share price of $25.81. By the end of September, Westpac shares closed at $26 on the dot. That’s a far less impressive gain of 0.74%.

NAB shares seemed to tread a similar path to CBA. NAB (or JAB, as this bank likes to be known as these days) were trading at a price of $26.22 at the start of July. By the end of September, they had risen to $27.83. That’s a gain of 6.14%.

Lastly, we have ANZ. ANZ shares were asking $28.15 each at the dawn of the new financial year. They ended up finishing up September at a price of… $28.15. No joke, the ANZ share price went absolutely nowhere quarter-to-quarter. You can’t fault this bank for inconsistency at least.

So all of the major bank shares had a positive quarter, with the exception of ANZ. NAB seems to be the real banking winner of FY22 so far with its 6.14% gain, followed by CBA, Westpac and finally ANZ. It’s interesting to note that 3 of the 4 banks outperformed the ASX 200 over the period.

Let’s see how they go this quarter!

The post How did ASX bank shares perform in the last quarter? appeared first on The Motley Fool Australia.

More reading

• Is the Westpac (ASX:WBC) share price a buy for its 7% dividend yield?
• 2 ASX 200 dividend shares to buy next week
• Westpac and other ASX 200 banks face renewed shareholder pressure over climate policies
• 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?

Motley Fool contributor Sebastian Bowen owns shares of National Australia Bank 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 dividend shares to buy next week? If you are, then you may want to look at the two listed below.

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

Adairs Ltd (ASX: ADH)

The first ASX dividend share to look at is this leading retailer of homewares and home furnishings. Adairs has a growing network of stores across Australia and New Zealand and a strong online presence through both its core brand and the Mocka brand.

Thanks to a thriving housing market and a favourable redirection in consumer spending during the pandemic, Adairs reported strong sales and profit growth in FY 2021. And while lockdowns will make it hard to top this in FY 2022, the company’s longer term outlook remains very positive.

In the meantime, the team at Morgans are still expecting Adairs’ shares to provide very generous dividend yields in FY 2022 and FY 2023.

Its analysts have pencilled in fully franked dividends per share of 22 cents and 27 cents for the two financial years. Based on the current Adairs share price of $3.84, this will mean yields of 5.7% and 7%, respectively.

Morgans has an add rating and $4.20 price target on the company’s shares.

BHP Group Ltd (ASX: BHP)

Another ASX dividend share to look at is BHP. It could be a top option for income investors, especially after recent and significant weakness in the BHP share price.

That weakness has been driven by a sharp pullback in the iron ore price. However, while the iron ore price weakness is disappointing (but not unexpected), other commodities such as coal have been booming.

It is because of this that the team at Macquarie remains very bullish on BHP. In fact, the broker estimates that BHP’s shares are trading on a free cash flow yield of ~20% despite the iron ore price weakness.

This strong free cash flow is expected to underpin fully franked dividends of $3.97 per share in FY 2022 and $2.88 per share in FY 2023. Based on the current BHP share price of $37.74, this will mean yields of 10.5% and 7.6%, respectively.

Macquarie has an outperform rating and $56.00 price target on the mining giant’s shares.

The post 2 buy-rated ASX dividend shares with big yields appeared first on The Motley Fool Australia.

More reading

• 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
• Why do Pilbara Minerals (ASX:PLS) shares keep topping the volume charts?
• US warns Evergrande crisis could affect ‘entire world’

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 shares of and has recommended ADAIRS FPO. The Motley Fool Australia owns shares of and has recommended ADAIRS FPO. 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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Brokers are always on the search for ASX share opportunities that may be good ideas to consider.

Businesses are regularly updating the market and conditions are changing. Add in that fact that share prices are changing as well and investors can get the chance to regularly find potential options in different areas.

The two businesses in this article are ones that are liked by multiple brokers:

Monash IVF Group Ltd (ASX: MVF)

Monash IVF describes itself as a leading provider of assisted reproductive services and specialist women’s imaging and diagnostic services in Australia and Malaysia. It is a leading player in the development of new technology in the sector.

Over the last year the Monash IVF share price has risen by around 45%. However, brokers still think that the ASX share is an opportunity.

It’s currently rated by at least three brokers, including Morgans, which has a price target of $1.09 on the business. That suggests the Monash IVF share price could rise by more than 15% over the next 12 months, if the broker is right.

Morgans reckons that Medicare data shows there’s a good level of demand for reproductive services that could mean FY23 is promising.

On Morgans’ numbers, Monash IVF is valued at 13x FY23’s estimated earnings. It could pay a grossed-up dividend yield of 7.4%.

In FY21 the business generated revenue growth of 26.3% to $183.6 million, with Australian stimulated cycles up 36.6% (with Australian stimulated cycle growth of 36.6% and 0.6% market share growth). Ultrasound scan volumes increased 12.9% to 10,623 scans.

Monash IVF experienced rising profitability across the business. Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) increased 37.1% to $47.7 million and adjusted net profit after tax (NPAT) went up 61.5% to $23.3 million – this beat the profit guidance of $21 million to $23 million. It also generated free cashflow of $32.8 million.

The ASX share itself said there has been a fundamental shift as a result of the pandemic, changing people to focus on family, health and wellbeing, with a re-direction towards family extension.

Steadfast Group Ltd (ASX: SDF)

Steadfast describes itself as the largest general insurance broking network and the largest underwriting agency group in Australasia. It provides services to broker businesses across Australia, New Zealand, Asia and London. The ASX share also operates as a co-owner and consolidator through its equity interests in a number of broker businesses, underwriting agencies and other businesses.

It also has a stake in unisonSteadfast, a global general insurance broker network with 264 brokers in 140 countries.

Steadfast is currently rated as a buy by at least three brokers, including Macquarie Group Ltd (ASX: MQG) which has a price target on the business of $5.30. Based on Macquarie’s estimate, Steadfast is valued at 21x FY23’s estimated earnings. It’s expected to pay a grossed-up dividend yield of 4.1% for FY23.

The ASX share recently announced its FY21 result and also completed an acquisition.

It has bought Coverforce, one of the largest privately owned insurance brokers, which is predominately focused on the small and medium enterprise sector. The acquisition price was $411.5 million, funded with a capital raising. Management said this was expected to leverage the expertise and skills across both platforms, whilst also benefiting from increased scale.

In FY21, it generated revenue growth of 8.9% to $899.9 million, whilst underlying net profit surged 20.2% to $130.7 million. This allowed the business to grow its total dividend by 18.8% to 11.4 cents per share.

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Motley Fool contributor Tristan Harrison 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 Steadfast Group Ltd. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia has recommended Steadfast Group 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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