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Could the Fortescue Metals Group Limited (ASX: FMG) share price fall as low as $12.50 by Christmas 2021?

A few months ago Fortescue shares reached a height of $26.30. But since then, it has fallen more than 45% to $14.

Could the Fortescue share price fall even further?

Morgan Stanley, one of the leading brokers operating in Australia, rates Fortescue shares as a sell.

It has a price target on the business of $12.50.

That suggests that the broker believes the miner could fall by another 10% from where it is now.

However, the price target represents where the broker believes the business will be trading at in 12 months from now, not necessarily around Christmas 2021.

Currently, Morgan Stanley thinks that the iron ore market situation doesn’t favour low-trade iron ore, which describes Fortescue, not the other large S&P/ASX 200 Index (ASX: XJO) iron ore miners of Rio Tinto Limited (ASX: RIO) and BHP Group Ltd (ASX: BHP).

Fortescue generates its profit from iron ore, so the rise and fall of iron ore can impact the profit and investor thoughts on the Fortescue share price.

What has the miner been up to recently?

FY21 was a big year for Fortescue. It generated net profit after tax (NPAT) of US$10.3 billion, increasing 117% from FY20. It made net operating cashflow of US$12.6 billion, with free cashflow of US$9 billion.

The Fortescue CEO Elizabeth Gaines outlined the two growth focuses of the business:

Through the Iron Bridge Magnetite project and Fortescue Future Industries, we are investing in the growth of our iron ore operations, as well as pursuing ambitious global opportunities in renewable energy and green industries.

Iron Bridge is located 145km south of Port Hedland and incorporates the “world class” North Star and Glacier Valley Magnetite ore bodies. The total cost of this project is expected to be US$3.3 billion to US$3.5 billion, which will deliver 22mt per annum of high grade 67% Fe magnetite concentrate product.

The Fortescue Future Industries (FFI) division is looking to take a global leadership position in the renewable energy and green products industry by harnessing the world’s renewable energy resources to produce green electricity, green hydrogen, green ammonia and other green industrial products.

FFI is aiming to make renewable green hydrogen as the most globally traded seaborne energy commodity in the world. This division is a key enabler of Fortescue’s decarbonisation strategy, with plans for green boats, trains and trucks.

Fortescue recently announced a target to achieve net zero Scope 3 emissions by 2040, with green hydrogen being the key enabler of that.

The Fortescue share price could be impacted by a lower iron ore price

Some brokers believe that the iron ore price could fall even further. UBS reckons the iron ore could fall to US$70 per tonne to US$80 per tonne.

UBS also rates Fortescue as a sell, though the price target is $15.

The post Could the Fortescue (ASX:FMG) share price slide to $12.50 by Christmas? appeared first on The Motley Fool Australia.

More reading

• Leading brokers name 3 ASX shares to sell today
• Broker warns Fortescue (ASX:FMG) share price could sink a further 20%
• Fortescue (ASX:FMG) share price at 16 month lows. What’s next for iron ore?
• Fortescue (ASX:FMG) share price slides to fresh year-to-date low
• Why did the Fortescue (ASX:FMG) share price have such a lousy month in September?

Motley Fool contributor Tristan Harrison owns shares of 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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The Beach Energy Ltd (ASX: BPT) share price is sliding today, down 1.3% in late morning trade to $1.41 per share.

But even with today’s retrace, Beach Energy shares remain up 33% over the past month. A month that saw the S&P/ASX 200 Index (ASX: XJO) fall more than 4%.

So, what’s been boosting the Beach Energy share price?

Energy demand is outstripping supply

As they teach in economics 101, when demand growth for an asset outpaces new supply growth, you can expect prices to rise.

And this is precisely what we’ve been witnessing with crude oil, natural gas, and coal prices around the globe.

New crude supplies have been hindered by the COVID pandemic, hurricanes in the oil rich Gulf of Mexico, and limited new exploration over the past year and a half.

The supply crunch comes just as the world begins to reopen. This is driving increased demand for ground and sea transport, along with gradual increases in aviation fuel consumption and industrial energy demand.

The result?

International benchmark, Brent crude prices have stormed higher, from US$72.22 per barrel on 6 September to reach US$81.08 per barrel today. That’s more than a 12% price rise.

As you often see with resource producers, their shares tend to gain (or lose) significantly more than any price changes in the commodities they dig and pump from the ground. Hence a 12% rise in crude oil prices has helped to spur the Beach Energy share price to a 33% gain.

Now crude prices did slip from yesterday’s multi-year highs, when Brent was fetching US$82.56 per barrel. That fall is likely driven by Russia offering to help supply Europe with much needed gas, and the United States mulling releasing some oil from the nation’s strategic reserves.

That fall could help explain why the Beach Energy share price is sliding today.

What’s next for the Beach Energy share price?

A range of factors come into play to determine any company’s share price.

The Beach Energy share price is no different, with investors examining the quality of management and project reserve estimates, among many others.

But the price of oil and gas certainly will have an impact on the future share price.

And if the Bank of America’s analysts have it right, crude oil could be set to top US$100 per barrel for the first time in 13 years.

As Bloomberg reports, “Natural gas prices have already surged to almost double that level in oil equivalent terms, and BofA says a spike in demand for diesel could push crude into similar territory.”

The analysts said that with gas prices at such heady levels, crude could get a boost from gas-to-oil switching, along with increased demand for aviation fuel as borders reopen. And all this just as northern winter hits, which sees a spike in demand for heating fuel.

“If all these factors come together, oil prices could spike and lead to a second round of inflationary pressures around the world,” the analysts said. Adding, “A multiyear run up in crude oil prices is now in the cards.”

If Bank of America has this one right, that will provide a healthy tailwind for the Beach Energy share price.

The post Why has the Beach Energy (ASX:BPT) share price rallied 33% in a month? appeared first on The Motley Fool Australia.

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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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It’s fairly safe to say that global cybersecurity has never been more important. As the internet entrenches itself deeper and deeper into our daily lives, the need to protect valuable information and data is more important than ever.

Consumers expect governments and businesses to keep their personal information confidential and safe. This means employing the use of cybersecurity.

As my Fool colleague Tristan pointed out just this morning, the global cybersecurity market was worth $137.63 billion in 2017 but is expected to grow to $248.26 billion by 2023.

Luckily, if an investor wants to invest in this important industry, there is an easy way to do so on the ASX boards.

HACK or be hacked

The BetaShares Global Cybersecurity ETF (ASX: HACK) is an exchange-traded fund (ETF) that hones in on the global cybersecurity industry.

According to BetaShares, this ETF offers a “simple and cost-effective way to gain exposure to the world’s leading cybersecurity companies in a single ASX trade – a sector with strong growth prospects”.

So, what exactly are you investing in if you own or are thinking of buying units of this ASX ETF?

Well, here is a look at HACK’s current top 10 holdings and weightings, as of 6 October:

1. Palo Alto Networks Inc (NYSE: PANW) with a portfolio weighting of 6.6%
2. Accenture plc (NYSE: ACN) with a weighting of 6%
3. Cisco Systems Inc (NASDAQ: CSCO) with a weighting of 5.7%
4. Crowdstrike Holdings Inc (NASDAQ: CRWD) with a weighting of 5.5%
5. Okta Inc (NASDAQ: OKTA) with a weighting of 5.5%
6. Cloudflare Inc (NYSE: NET) with a weighting of 3.5%
7. Tenable Holdings Inc (NASDAQ: TENB) with a weighting of 3.3%
8. VMware, Inc (NYSE: VMW) with a weighting of 3.2%
9. Leidos Holdings Inc (NYSE: LDOS) with a weighting of 3.1%
10. Booz Allen Hamilton Holding Corporation (NYSE: BAH) with a weighting of 3.1%

As you may have gathered from this list, HACK is an ETF heavily weighted towards the United States of America. In fact, according to BetaShares’ latest report, 90.7% of HACK’s holdings are US companies. A further 3.4% come from Israel, while 2.7% hail from Britain and 1.5% from Japan.

How has the BetaShares Global Cybersecurity ETF performed recently?

Looking at an ETF’s holdings is all well and good, but how has HACK performed in recent years? Well, this ETF has returned an impressive 32.2% over the past year alone.

It has also managed to hit a 20.43% per annum average return over the past 3 years, and 21.63% over the past 5 years. Since this ETF’s inception in August 2016, HACK has averaged an annual performance of 21.79%.

The BetaShares Global Cybersecurity ETF currently has $657.84 million in funds under management and charges a management fee of 0.67% per annum.

The post Own BetaShares Global Cybersecurity ETF (ASX:HACK)? Here’s what you’re invested in appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen owns shares of Cloudflare, Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended BETA CYBER ETF UNITS, Cloudflare, Inc., and CrowdStrike Holdings, Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended VMware. The Motley Fool Australia owns shares of and has recommended BETA CYBER ETF UNITS. 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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Shares in Province Resources Ltd (ASX: PRL) are gaining steam today after the company announced a key update on a planned hydrogen study.

The Province Resources share price is currently trading at 15.2 cents after earlier hitting an intraday high of 15.5 cents, up 7%. Here’s what we know.

Province Resources to start hydrogen study

The company advised that energy transition company Global Energy Ventures Ltd (ASX: GEV) is set to start an export feasibility study on Province’s HyEnergy Zero Carbon Hydrogen project.

Three consultant companies have been appointed, including engineering company WSP as project lead, Environmental Resources Management (ERM) for environmental management, and port developer Oropesa for offshore terminal design.

Province Resources said the HyEnergy export study objective was to “demonstrate the technical feasibility and commercial advantages of Global Energy’s compressed hydrogen shipping solution”.

It will analyse the requirement of a fleet of the Global Ventures’ compressed hydrogen ships, including a 430-tonne pilot sale ship, and a 2,000-tonne commercial-scale ship under the company’s fleet.

It will also focus on how best to integrate Province’s proposed green hydrogen production facility with an onshore compression facility.

This will be built out with an offshore mooring and loading system, alongside the operation of a fleet of “compressed hydrogen ships for marine transport to nominated markets in Asia Pacific”.

Both of these moves are in an attempt to construct a viable export solution, using Province’s green hydrogen, and Global Energy’s compressed hydrogen ships.

Global Energy anticipates the study to be completed by midway next year, according to the release.

Backgound on the project

The announcement builds on previous work at the HyEnergy project, where Province received a Section 91 licence to commence on-ground project studies at the site around a month ago.

There was little change in pricing levels for Province Resources’ share price afterwards, as it finished the 7 days afterwards flat at 16.5 cents.

However, it appears to be a different story today, as investors continue buying the company’s shares and push its market capitalisation to $163 million.

Province Resources share price snapshot

The Province Resources share price has soared into the green this year to date, gaining almost 1,100% since 1 January.

Over the 12 months, it has climbed 1,360%, but still trades well off its 52-week high of 21 cents back in April this year.

Nonetheless, these results have far outpaced the S&P/ASX 200 index (ASX: XJO)’s return of about 25% this past year.

The post Province Resources (ASX:PRL) share price jumps 7% on hydrogen update appeared first on The Motley Fool Australia.

More reading

• Up 1,450% in 2021, why Province Resources (ASX:PRL) share price is up again today
• A closer look at how ASX hydrogen shares are faring in 2021?

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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The S&P/ASX 200 Index (ASX: XJO) is back on form on Thursday and charging higher. In afternoon trade, the benchmark index is up 0.7% to 7,257.7 points.

Four ASX shares that are climbing more than most today are listed below. Here’s why they are pushing higher:

Collins Foods Ltd (ASX: CKF)

The Collins Foods share price is up 6.5% to $12.76. Investors have been buying the quick service restaurant operator’s shares after it announced an agreement with KFC Europe. According to the release, Collins Foods will become KFC’s corporate franchisee in the Netherlands. This means Collins Foods has the rights to develop, manage, and operate the KFC business in the country. The agreement provides a framework for the development of up to 130 new KFC restaurants over a 10-year period.

Pilbara Minerals Ltd (ASX: PLS)

The Pilbara Minerals share price is up 6% to $1.98. The catalyst for this rise was the release of an update on its Ngungaju Plant. The release reveals that the lithium miner has now started the commissioning of the plant after a period in care and maintenance. Management expects the old Altura Mining operation’s production to increase to approximately 180,000 to 200,000 dry metric tonnes (dmt) from mid-2022 onward.

Sezzle Inc (ASX: SZL)

The Sezzle share price has jumped 9% to $5.38. Investors have been buying this buy now pay later (BNPL) provider’s shares after US retail giant Target launched Sezzle’s BNPL service across its store network. The two parties signed a three-year deal earlier this year. Affirm is also being offered to Target’s customers.

Super Retail Group Ltd (ASX: SUL)

The Super Retail share price is up over 7% to $12.33. This strong gain appears to have been driven by a bullish broker note out of UBS. According to the note, UBS has upgraded the retailer’s shares to a buy rating with a $13.50 price target. The broker believes Super Retail is well-placed to benefit from an increase in consumer spending post-lockdowns.

The post Why Collins Foods, Pilbara Minerals, Sezzle, & Super Retail are pushing higher appeared first on The Motley Fool Australia.

More reading

• ASX 200 (ASX:XJO) midday update: Pilbara Minerals jumps, Whitehaven Coal sinks
• Why is the Collins Foods (ASX:CKF) share price climbing 5% today?
• Pilbara Minerals (ASX:PLS) share price higher on lithium project update
• Top broker upgrades the Super Retail (ASX:SUL) share price to buy
• Why the Sezzle (ASX:SZL) share price is storming 9% higher on Thursday

Motley Fool contributor James Mickleboro owns shares of Collins Foods Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Super Retail Group Limited. The Motley Fool Australia owns shares of and has recommended Super Retail Group Limited. The Motley Fool Australia has recommended Collins Foods 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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Most investors in BHP Group Ltd (ASX: BHP) shares are well aware of the company’s copper and iron ore operations. However, fewer people likely know that BHP also mines nickel, which is used to make lithium-ion batteries for electric vehicles (EVs).

This fact has become much more relevant in recent days, with BHP entering a memorandum of understanding (MOU) with Prime Planet Energy & Solutions (PPES) and Toyota Tsusho Corporation (TTC) (TYO: 8015).

Under the MOU, BHP will supply nickel sulphate to PPES from its new production plant in Nickel West, Western Australia.

BHP shares are trading relatively flat on Thursday. At the time of writing, the mining giant’s shares are at $36.60, down 0.14%.

BHP is positioning for EV demand

Firstly, for some background, PPES was formed as a joint venture between Toyota Motor Corporation (TYO: 7203) and Panasonic (TYO: 6752). The formed entity operates as one of Japan’s leading lithium-ion battery producers.

According to a press release, BHP plans to supply PPES with the nickel sulphate it requires to produce its cells. As a result, Toyota is effectively the mining company’s second automotive manufacturer customer.

This follows Tesla Inc (NASDAQ: TSLA) signing a supply agreement with BHP in July — a point in time when BHP shares were trading above $45 apiece.

In addition, the trifecta of companies will collaborate to establish a more sustainable battery supply chain. For instance, end-to-end raw material traceability, ethical sourcing, and human rights reporting are elements in focus.

BHP will also explore the recycling of battery scraps and used batteries at its Nickel West facility.

Commenting on the development, BHP Nickel West asset president Jessica Farrell stated:

Demand for nickel in batteries is estimated to grow by over 500 per cent over the next decade to support increasing demand for electric vehicles. We have invested in our Nickel West facilities and power agreements so that we can now deliver some of the world’s most sustainable and lowest carbon emission nickel to customers.

We are excited to work with our partners to potentially increase the use of electric vehicles at our operations and further advance our sustainability agenda.

BHP estimates that there will be 314 million EVs on the road by 2035. If that is the case, the demand for materials required in batteries is set for an explosive surge. Hence, BHP is vying to grab its share of the potential market opportunity.

BHP shares in review

It has been a wild ride for BHP shareholders over the past year. A couple of months ago, we would have been telling a completely different story about the returns provided by BHP shares. However, the swift drop in the iron ore price has left its mark on the mining giant’s share price.

In the past year, the mining company has gained 2%. For comparison, the S&P/ASX 200 Index (ASX: XJO) has delivered a return of 20%.

The company is trading on a price-to-earnings (P/E) ratio of 19.13 based on the current BHP share price.

The post Own BHP shares? Here’s the latest on the miner’s nickel and EV battery play appeared first on The Motley Fool Australia.

More reading

• What is the BHP (ASX:BHP) share price outlook?
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Motley Fool contributor Mitchell Lawler owns shares of Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Tesla. 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 Wesfarmers Ltd (ASX: WES) share price is rising this Thursday. The positive price movement comes as the retail conglomerate confirms it has acquired nearly a fifth of takeover target Australian Pharmaceutical Industries Ltd (ASX: API).

At the time of writing, shares in the company are trading for $54.51 – up 0.82%. For context, the S&P/ASX 200 Index (ASX: XJO) is 0.75% higher.

Let’s take a closer look at today’s news.

Wesfarmers up the stakes with its stake in API

In a statement to the ASX, Wesfarmers confirmed its acquisition of 95.1 million shares in API – or roughly 19.3% of the company. The purchase was made pursuant to an agreement with API’s largest shareholder, Washington H. Soul Pattinson and Co. Ltd (ASX: SOL).

Wesfarmers says this is not the end of its interest in API. The retail conglomerate says it still wishes to purchase 100% of API for $1.55 per share.

Wesfarmers also says now it owns nearly a fifth of API, it will use its voting power to try and stop Sigma Healthcare Ltd (ASX: SIG) buying the retail pharmacist. Sigma submitted a mostly scrip bid for API, ratcheting up the bidding war for the retail pharmacist. The Wesfarmers share price, however, was not too affected by this news.

The company paid Soul Patts $1.38 per share and has agreed to pay the remainder should its bid for API be successful.

Wesfarmers managing director Rob Scott said:

Wesfarmers continues to see opportunities to invest in and strengthen the competitive position of API and its community pharmacy partners. Exercising our option to acquire 19.3 per cent of API reflects the group’s commitment to the transaction and the continued progress of the Wesfarmers proposal.

What else has affected the Wesfarmers share price recently?

Another story that might have affected the Wesfarmers share price in recent days was the news the Australian Competition and Consumer Commission (ACCC) would not stand in the way of its subsidiary, Bunnings, acquiring privately held Beaumont Tiles.

The Wesfarmers share price ended that day higher.

The watchdog said Bunnings doesn’t currently have a large presence in tile sales in Australia. However, it did warn it will pay particularly close attention to any further acquisitions the home improvement and lifestyle retailer might make.

ACCC chair Rod Simms said of the takeover and his organisation’s decision:

Specialist tile retailers have a far more extensive range [than Bunnings], displayed in dedicated tile showrooms with specialist staff who can provide design and product advice to customers and referrals to tilers…

Stronger competition may pose challenges for some tile retailers, but it is unlikely to lead to a substantial lessening of competition in this market.

Wesfarmers share price snapshot

Over the past 12 months, the Wesfarmers share price has increased by more than 18%. Year-to-date, shares in the company are up 6%. It should be noted both these figures are poorer than the performance of the ASX 200 Index.

Wesfarmers has a market capitalisation of approximately $61.2 billion.

The post Wesfarmers (ASX:WES) share price lifts in latest push for API appeared first on The Motley Fool Australia.

More reading

• Australian Pharmaceuticals (ASX:API) share price lifts following Wesfarmers 19% stake
• The final Wesfarmers (ASX:WES) dividend will be paid out today. Here’s what you need to know
• 5 things to watch on the ASX 200 on Thursday
• Here’s what happened to the Wesfarmers (ASX:WES) share price in September
• Here’s why the Wesfarmers (ASX:WES) share price is down 4% in a week

Motley Fool contributor Marc Sidarous 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 shares of and has recommended Washington H. Soul Pattinson and Company Limited and Wesfarmers 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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There’s no doubt ASX shares have been shaky the past month.

The S&P/ASX 200 Index (ASX: XJO) has plunged 5.5% since its 13 August high, sending it ever so close to correction territory.

And we’re now into October, which is traditionally the ‘month of crashes’.

“Think back to the Wall Street Crash of October 1929, Black Monday of October 1987, the Great Financial Crisis that started in October 2007,” said Switzer Financial director Paul Rickard.

“…or even the “mini-crashes” of 1989, 1997 and 2002.”

What changes should we make to our ASX shares?

With such a dip, it’s tempting for investors to fiddle with their portfolios.

But stop it.

Since the dawn of time, experts have warned stock investors to not try to time the market. And that message is especially vital during turbulent times like this.

AIM Funds, in a recent memo to clients, stated its team always remembers one piece of old school advice.

“There are two types of investors when it comes to market timing: those who cannot do it, and those who know they cannot do it.”

Investing is a long-term game of compounded returns, and trying to time the market is antithetical to that.

“Investors will only enjoy the effect of the compounding process if they remain invested for the medium to longer-term,” the memo read. 

“An investor’s friend is time, conviction, fundamental research and a business ownership mindset.”

If someone makes money out of timing the market, it is a rare fluke — because logic and history dictates no one can do this intentionally and consistently.

AIM’s memo pointed out a couple of reasons why short-term timing never works.

Missing the biggest market rises

Firstly, selling out in anticipation of a correction or crash inevitably leads to missing out on stock rises.

“Not surprisingly, the big ‘up’ days tend to be clustered around the big ‘down’ days during periods of increased volatility,” the memo read. 

“Giving in to the temptation to ‘get out’ on the big down days dramatically increases the risk of missing the rebound.”

To demonstrate this, AIM cited a JP Morgan study where a hypothetical $10,000 was invested in the S&P 500 Index (SP: .INX) on 3 January 2000.

That amount would have become $32,431 by 31 December 2020, which equates to a yearly return of 6.06%.

“Missing the 10 biggest ‘up’ days cuts that compound rate of return to 2.44%, while missing the 20 biggest days reduces it yet further to a paltry 0.08% per year.”

If you miss the 30 best days, that portfolio actually goes backwards over those 21 years, ending up with a negative -1.95% return per year.

“‘Getting out’ to avoid the psychological pain of short-term paper losses is not worth the increased risk of long-term damage to returns, in our opinion.”

Stock markets are second-level systems

The AIM team also pointed out that share markets are “second-level systems” that are impossible to predict correctly.

“It is not enough to accurately predict an event; one must also correctly predict what the market was anticipating prior to the event and then correctly deduce how the market might react to the new information,” the memo read.

“We think that getting all 3 of those variables correct – and then being right on the timing, to boot – is nigh-on impossible to do [repeatedly].”

Corrections, pullbacks and crashes are all an “unavoidable” part of investing, according to AIM.

“When seen in perspective as a period of prudent capital allocation with a margin of safety, is more likely to provide opportunity than lasting damage.”

Again looking at the S&P 500 as an example, it has copped a correction of 10% or more 36 separate times since 1950.

“If there have been 36 double-digit drawdowns over the past 70-odd years, it works out that investors should expect this to happen with a frequency of about once every 2 years.”

The post Warning: 2 reasons why you can’t time the market appeared first on The Motley Fool Australia.

More reading

• Why is the Whitehaven Coal (ASX:WHC) share price is slumping 7% today
• Could the Rio Tinto (ASX:RIO) share price reach $123 by the end of 2021?
• Scentre (ASX:SCG) share price lifts amid Westfield Direct launch
• Prophecy (ASX:PRO) share price rockets 22% on major US health deal
• Why has the Appen (ASX:APX) share price hit three 52-week lows in the last fortnight?

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 Whitehaven Coal Ltd (ASX: WHC) share price is tumbling on Thursday.

At the time of writing, the coal-producing company’s shares are down 7.24% to $3.33.

Despite this weakness, the Whitehaven Coal share price has still doubled since the beginning of this year.

What’s going on with the Whitehaven Coal share price?

Investors might be left scratching their heads after taking a look at energy shares today. Reports continue to point towards coal supply shortages. As a result, supply and demand dynamics have kicked in, pushing the price of coal above $220 per tonne.

For context, supply chain disruptions and carbon emission reduction targets have left countries short-handed on energy supplies. Reports have stated the shortage in China has led to factory shutdowns, shortened operating hours, and left residents without power.

Analysts at Goldman Sachs estimate around 44% of China’s industrial operations have been impacted to some extent by the energy shortage. In turn, coal-based energy producers have been forced to secure supply at any cost. Unfortunately, the available supply is scarce as many suppliers have been hit by heavy rainfall and flooding.

Similarly, a story from ABC News out on Tuesday indicated that India could soon run out of coal. This might have serious implications considering coal accounts for more than 70% of the country’s electricity supply. According to the data, around 80% of India’s power plants had less than a week’s worth of coal remaining.

However, this morning the onslaught of seemingly ever-increasing coal prices has had a reprieve. According to coal futures, prices have slipped 15.7% from a peak of approximately $270 per tonne. In response, the Whitehaven Coal share price looks set to break its 3-day green streak.

Recapping the company

The upwards pressure on coal prices has certainly been beneficial to the Whitehaven Coal share price. In the past 12 months, shares in the coal producer have gained 209%. Meanwhile, the S&P/ASX 200 Index (ASX: XJO) has climbed 20% higher.

Furthermore, investors will be hoping the stronger commodity price will reflect improved financials in the next reporting period. Looking back, Whitehaven reported $1.564 billion in revenue for the year ending 30 June 2021, this was down 9.3% on the prior year.

Lastly, the bottom line swung to a considerable $543.9 million loss at the end of FY21.

The post Why is the Whitehaven Coal (ASX:WHC) share price is slumping 7% today appeared first on The Motley Fool Australia.

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Motley Fool contributor Mitchell Lawler 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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It has been a difficult couple of months for the Rio Tinto Limited (ASX: RIO) share price because of the falling iron ore price.

For example, since this time in August, the mining giant’s shares have fallen 26% to $96.68.

This means the Rio Tinto share price has given back its year to date gains and is now down 16% in 2021.

Can the Rio Tinto share price bounce back and hit $123 by the end of the year?

While the recent weakness in the Rio Tinto share price is disappointing for shareholders, one leading broker sees it as a buying opportunity for non-shareholders.

According to a note out of Goldman Sachs this week, its analysts have retained their buy rating but trimmed their price target on the company’s shares to $123.40.

Based on the current Rio Tinto share price, this implies potential upside of 28% over the next 12 months.

In addition, Goldman expects Rio Tinto to pay an US$8.28 (A$11.37) per share fully franked dividend in FY 2022. This represents an 11.8% dividend yield at current prices, which increases the total potential return to almost 40%.

What did the broker say?

Goldman is bullish on the Rio Tinto share price for four key reasons. One of those is its attractive valuation.

It explained: “Valuation: trading at 0.8xNAV and discounting a long run iron ore price of US$59/t (vs. GSe long run of US$67/t real).

The broker also notes that Rio Tinto is in a position to generate significant free cash flow, which will support bumper dividend payments in the near term.

“Strong FCF and dividend yield: FCF/dividend yield in 2022 (14%/12% yield) & 2023 (12%/11%), and a still attractive 9% FCF yield in 2022 at a lower US$80/t scenario,” the broker said.

And while Goldman Sachs isn’t expecting production growth over the next six months, it believes 2022 will herald a return to growth

It explained: “Return to production growth in 2022: RIO is not a growth story over the next 6 months (we forecast -4% Cu Eq growth for RIO at the group level in 2021) it is a FCF story in our view, however, we see the company returning to growth in 2022 & 2023 with a 5% and 3% increase in Cu Eq production respectively.”

Finally, the broker is a fan of the mining giant due to its exposure to aluminium.

Goldman said: “Compelling low emission aluminium exposure: In addition to copper production growth, RIO has one of the highest margin, the lowest carbon emission aluminium businesses in the world, with over 2.2Mt of Ali production powered by hydro, and we think the ELYSIS inert anode technology could be worth billions.”

All in all, if everything goes to plan, this broker sees potential for the Rio Tinto share price to reach $123.00 again by the end of the year.

The post Could the Rio Tinto (ASX:RIO) share price reach $123 by the end of 2021? appeared first on The Motley Fool Australia.

More reading

• Rio Tinto (ASX:RIO) share price dips on new contract news
• These were the 5 worst performing ASX shares in September
• Why did the Rio Tinto (ASX:RIO) share price have such a lousy month in September?
• 2 ASX dividend shares with BIG yields
• Rio Tinto (ASX:RIO) share price lifts as CEO eyes critical minerals expansion

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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