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Despite the woes of the last 18 months, the Qantas Airways Limited (ASX: QAN) share price is a winner for this financial institution’s retail investors.

Saxo Capital Markets has listed Qantas as one of its Australian retail investors’ top 10 most traded stocks for the month of August.

Interestingly, the enthusiasm for Qantas’ shares continued past the release of its financial year 2021 earnings, in which it posted a statutory loss of $2.35 billion.

Let’s take a closer look at what got Saxo’s retail investors excited about Australia’s largest airline.

Qantas one of August’s top retail shares

The Qantas share price gained 10.8% over the course of August. At the same time, it was one of Saxo’s Australian retail investors’ most traded stocks.

According to Saxo, it was the airline’s massive liquidity that caught the eyes of its clients.

Within its FY21 results, Qantas noted it had liquidity totalling $3.8 billion. The airline’s liquidity was made of $2.2 billion of cash and $1.6 billion worth of undrawn debt facilities.

Additionally, 95% of its domestic operations were still bringing in coin despite a seemingly continuous wave of border closures.

The Qantas share price took off 3.5% after the airline released its FY21 earnings.

The financial institution also made a note of Qantas’ plans to continue delivering cost saving measures over FY22.

Additionally, while Saxo didn’t mention Qantas’ debt reduction strategy, it’s also well underway.

The Motley Fool Australia recently reported that Qantas has received interest from 18 potential buyers of its land in Sydney. Qantas expects the sale to see hundreds of millions of dollars wiped from its borrowings.

However, Saxo warns that, while Qantas has managed to survive the pandemic so far, its future is still uncertain.

Qantas has predicted its earnings before interest, tax, depreciation, and amortisation (EBITDA) for the first half of FY22 will include a $1.4 billion impact from the current COVID-19 outbreaks in Australia.

The post With liquidity of $3.8b, Qantas (ASX:QAN) shares are still exciting these retail investors appeared first on The Motley Fool Australia.

More reading

• Leading broker reveals why these 10 big-name shares have been firing up its clients
• Qantas (ASX:QAN) share price slips despite data showing Aussies keen to fly
• The Qantas (ASX:QAN) share price is up 5% in a week. Here’s why
• Why the Qantas (ASX:QAN) share price is in focus on Tuesday
• The Qantas (ASX:QAN) share price is having a great start to the week

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 ASX financial sector includes insurers, banks, wealth management companies, and fintechs. August 2021 delivered a unique reporting season for ASX financial shares after an extraordinary trading year.

For wealth management group IOOF Holdings Limited (ASX: IFL), it has been a “transformational” year that culminated in the $1.4 billion acquisition of MLC.

Fellow wealth manager AMP Ltd (ASX: AMP) is also going through a transformative period, planning a demerger of part of its business. Insurance Australia Group Ltd (ASX: IAG) says its FY21 business performance was sound, reflecting the strength of its core insurance business. 

How have ASX financial shares performed against the market?

ASX financial shares have had a mixed performance over 2021. The IAG share price is up 13%, and the IOOF share price has gained 33%. In comparison, the All Ordinaries Index (ASX: XAO) has gained 11% over the year.

The AMP share price, on the other hand, is down 29% over the same period.

Investors had mixed reactions to the release of results last month, sending IOOF shares tumbling 10% in a day but pushing the AMP share price up slightly before backing away the following week. IAG shares also dipped slightly on the release of its results before recovering. 

Who are the winners this earnings season? 

IAG announced a 35.9% increase in insurance profit, which grew to $1.007 billion from $741 million in FY20. This was due to lower natural perils costs, favourable credit spreads, and a first-half COVID-19 benefit mainly from lower motor vehicle claims. It translates to an improved reported insurance margin of 13.5% compared to 10.1% in FY20.

Gross written premium increased 3.8%, mainly rate-driven, but IAG also reported promising new business growth and stronger customer retention. 

Despite the positive news, the insurer recorded a net loss of $427 million, compared to a $435 million profit in FY20. This resulted from significant one-off corporate expenses relating to business interruption, customer refunds, and payroll remediation.

IAG’s cash earnings, which exclude one-off items, increased to $747 million compared to $279 million in FY20. The company announced a dividend of 13 cents a share, giving IAG a payout ratio of 66% based on full-year cash earnings. 

IOOF reported an underlying profit of $147.8 million but a statutory loss of $143.5 million. The company attributed the loss to non-recurring costs such as goodwill write-downs and the costs of the MLC acquisition. IOOF completed the acquisition of MLC from National Australia Bank Ltd. (ASX: NAB) on 31 May 2021.

The acquisition effectively doubled the size of IOOF’s business to $494 billion in funds and management administration and advice. Plans for integration remain on track, with IOOF CEO Renato Mota expressing excitement about the future potential of the combined group. 

IOOF reported revenues of $770 million for FY21 (up 31%), including one month’s contribution from MLC. IOOF’s earnings before interest, tax, depreciation and amortisation (EBITDA) were $221.5 million (excluding MLC), an increase of 19% on FY20. The company declared a final franked dividend of 11.5 cents per share. This comprised 9.5 cents per share in ordinary interim dividends and 2.5 cents per share special dividends. It brings total FY21 dividends to 23 cents per share.

And the losers? 

AMP shareholders were pleased by the advised increase in the wealth manager’s earnings this reporting season but less happy about the lack of dividends on offer.

AMP’s earnings increased 57% thanks to the recovery in economic and market conditions. AMP Bank benefited from the release of credit loss provisions, and investment income was higher, up $48 million on 1H 20 to $57 million. Net profit after tax increased to $118 million, compared to $115 million in the prior corresponding period.

A conservative approach to capital management is, however, being maintained. While AMP is in a strong capital position with $452 million in surplus capital, no interim dividend was declared. 

AMP is in the process of finalising requirements for the demerger of AMP Capital’s private markets investment management business. The demerger is intended to unlock further value in the private markets business by simplifying its structure and providing operational independence.

AMP says the demerger is on track, with an ASX listing to occur in 1H 22. The board intends to review its capital management strategy and the payment of dividends following the demerger completion. 

Looking ahead

IAG reinstated guidance for FY22 in August, reflecting its confidence in the business and economic outlook. Low single digit growth in gross written premiums is predicted, with a 13.5% – 15% reported insurance margin. This aligns with the insurer’s goal to achieve a 15% – 17% insurance margin over the medium term.

IAG seeks to deliver an insurance profit of at least $250 million per year and is creating value by scaling up the use of artificial intelligence and automation. The company expects modest growth in customer numbers in FY22. This, combined with rate increases, will contribute to increases in gross written premium. 

AMP’s primary focus is on the delivery of its demerger and assessment of post-demerger operating models.

The company reports it is starting to see some positive signs of growth and innovation, particularly in its bank and platforms business, where new services are being introduced. There is also a focus on rebuilding the brand and culture.

AMP is still in the process of remediating customers for issues brought to light in the Banking Royal Commission four years ago. The total cost of the remediation program is expected to be $823 million, of which approximately $596 million represents payments to customers. 

IOOF is also transforming its business and expects to deliver synergy benefits during FY22 and beyond.

Priorities for the next financial year include decommissioning additional legacy platforms and delivering annualised run rate synergies of $80 – $100 million. The combination of MLC and IOOF is expected to provide scale and growth opportunities through wide-ranging capabilities and technical expertise. 

The post How have ASX financial shares performed during the August 2021 earnings season? appeared first on The Motley Fool Australia.

More reading

• What does the future look like for the AMP (ASX:AMP) share price?
• 2 ASX shares rated as strong buys by brokers
• 5 things to watch on the ASX 200 on Tuesday
• Here’s why the IAG (ASX:IAG) share price is slumping today
• When was the best day ever on the AMP share price chart?

Motley Fool contributor Katherine O’Brien 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 Insurance Australia Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The National Australia Bank Ltd (ASX: NAB) share price is up an impressive 26% in 2021.

This is more than double the return of the S&P/ASX 200 Index (ASX: XJO) over the same period.

Can the NAB share price keep climbing?

The good news is that it may not be too late to buy the banking giant’s shares.

According to a note out of Goldman Sachs, its analysts continue to see value in the NAB share price even after its meteoric rise this year.

The note reveals that the broker has a conviction buy rating and $30.62 price target on the bank’s shares.

Based on the current NAB share price of $28.85, this implies potential upside of 6% over the next 12 months before dividends.

And with Goldman forecasting fully franked dividends per share of 140 cents in FY 2022 and 145 in FY 2023, the potential return on offer stretches to 11% if you include FY 2022’s dividend.

Why does the broker like NAB?

There are a few reasons that Goldman is so positive on the NAB share price.

It explained: “We reiterate our Buy (on CL) on NAB and it remains our preferred sector exposure given: 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).”

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

All in all, the NAB share price may be on fire this year, but this broker doesn’t believe that fire is running out of fuel just yet.

The post Top broker says NAB (ASX:NAB) share price is a buy appeared first on The Motley Fool Australia.

More reading

• Analysts name 2 ASX dividend shares to buy
• How have ASX bank shares performed during the August 2021 earnings season?
• Why the NAB (ASX:NAB) share price has beaten the ASX200 in the last 3 months
• The Macquarie (ASX:MQG) share price is outperforming the ASX big 4 in the past month
• 3 buy-rated ASX dividend shares with big yields

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 Macquarie Group Ltd (ASX: MQG) share price was a strong performer on Thursday following the release of a trading update.

The investment bank’s shares rose as much as 7% at one stage to a record high of $182.66.

The Macquarie share price ultimately ended the day 4.5% higher at $179.13.

Can the Macquarie share price keep rising?

One leading broker has given its verdict on the Macquarie share price. And while it is a fan of the company, it unfortunately isn’t a fan of its valuation.

According to a note out of Goldman Sachs, its analysts have retained their neutral rating and lifted their price target by 9% to $170.62.

Based on the current Macquarie share price, this implies potential downside of almost 5% over the next 12 months.

What did the broker say?

Goldman was pleased with Macquarie’s trading update and has upgraded its earnings estimates to reflect a significantly better than expected start to FY 2022.

It commented: “MQG has provided updated guidance in which it now expects 1H22 NPAT to be slightly down on 2H21. We take this to mean down c.5% and note this compared to previous GSe of 1H22 NPAT down 17%.”

However, this isn’t enough for a more bullish rating due to valuation reasons.

Goldman explained: “The earnings upgrade cycle continues for MQG and since troughing in May-20, its 12-mo forward EPS has risen 52%, and sits within 2% of its Apr-19 peak. However, since Apr-19, its share price is nearly one-third higher. Therefore, with MQG currently trading on a 12-mo forward P/E of 20.5x, with incremental earnings upgrades still coming largely from investment income and trading, we stay Neutral. We also highlight that our revised TP offers -2% 12-mo TSR.”

All in all, the broker appears to believe the Macquarie share price may have peaked for the time being. This could make it worth looking elsewhere in the sector.

The post Top broker gives its verdict on the Macquarie (ASX:MQG) share price appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
• ASX 200 falls, Macquarie jumps, Aussie Broadband climbs
• Which ASX shares are making a move on the ASX 300?
• Why Aeris Resources, Macquarie, Novonix, & Qube shares are pushing higher
• ASX 200 midday update: Macquarie jumps, gold miners sink

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

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There are a select group of ASX shares that could provide a good combination of both growth and dividends over time.

These are businesses that may be able to grow earnings over the long-term, increase the dividend over the years and start with a solid starting yield today.

Here are two that might fit the bill:

Amcor CDI (ASX: AMC)

Amcor is a global packaging businesses. It provides packaging for a wide range of industries including drinks, food, healthcare, home care, personal care, pet care, technical applications and tobacco.

Examples would include things like the packaging you’d find on cheese or meat at the supermarket. Items like toilet paper packaging or wipes packaging are examples of packaging for home products.

Despite all the impacts of COVID-19, Amcor said that FY21 was an outstanding year, exceeding expectations. Net sales increased by 3% to $12.86 billion, adjusted earnings before interest and tax (EBIT) rose 8% to 1.6 billion and adjusted net income rose 13% to $1.16 billion.

The FY21 adjusted earnings per share (EPS) increased even faster thanks to the ongoing share buy-backs. The ASX share’s EPS rose 16% to 74.4 cents. It repurchased $350 million of shares in FY21, equating to 2% of shares outstanding.

In FY22, the business is expecting adjusted EPS to increase by a range of between 7% to 11% on a constant currency basis. It’s also expecting adjusted free cashflow to be between $1.1 billion to $1.2 billion. FY21 free cashflow was $1.1 billion. Management plan to repurchase another $400 million of shares.

In FY22, Commsec numbers suggest Amcor is going to pay a 4% dividend yield and then there could be a slight dividend increase in FY23.

Sonic Healthcare Ltd (ASX: SHL)

Sonic Healthcare is one of the world leading pathology businesses. The ASX share has operations in North America, Europe and ANZ.

It is playing a key role in doing millions of COVID tests around the world. These tests are being done using existing infrastructure. It had done around 30 million COVID tests globally at the time of the FY21 result. Sonic is also Australia’s largest non-government COVID vaccination provider.

FY21 saw a lot of operating leverage. Whilst revenue increased by 28% to $8.8 billion, net profit soared 149% to $1.3 billion.

That profit growth allowed Sonic to grow the final dividend by 8% to 55 cents per share. The total dividend was up 7% over FY21. The ASX share has also announced the acquisition of Canberra Imaging Group and moved to the majority ownership of Epworth Medical Imaging.

It’s looking for further acquisition opportunities. Sonic is also bidding on a number of outsourcing contracts.

Commsec forecasts suggest Sonic Healthcare will grow its annual dividend to $1 per share in FY22, which would be a yield of 2.4%. It’s valued at 20x FY22’s estimated earnings.

The post 2 ASX shares that could be buys for both growth and dividends appeared first on The Motley Fool Australia.

More reading

• These ASX 200 shares are trading ex-dividend today
• 5 things to watch on the ASX 200 on Tuesday
• 2 highly-rated ASX dividend shares named as buys
• Top performing ASX 200 healthcare shares in August
• Sonic Healthcare (ASX:SHL) share price struggles despite COVID passport positioning

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 owns shares of and has recommended Amcor Limited. The Motley Fool Australia has recommended Sonic Healthcare Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The TechnologyOne Ltd (ASX: TNE) share price was on form on Wednesday.

The enterprise software company’s shares stormed 5% higher to reach a record high of $11.77.

This means the TechnologyOne share price is now up over 42% since the start of the year.

Why did the TechnologyOne share price storm higher?

The catalyst for the rise in the TechnologyOne share price was a bullish broker note out of Bell Potter.

According to the note, the broker has upgraded the company’s shares to a buy rating and lifted its price target on them by 28% to $12.50.

Based on the current TechnologyOne share price, this price target still implies potential upside of 6.2% over the next 12 months even after yesterday’s gain.

What did the broker say?

Bell Potter notes that last month the company announced the progressive cessation of support from October for customers who use its on-premise solution.

The broker believes this move will accelerate the rate of customers switching to its software-as-a-service (SaaS) offering. And with support ending in October 2024, the broker highlights that this gives a clearer indication of when TechnologyOne will become pure SaaS company.

It believes this transition will make TechnologyOne a closer comparable to other pure SaaS companies listed on the ASX like WiseTech Global Ltd (ASX: WTC) and Xero Limited (ASX: XRO).

What else?

Bell Potter also notes that many of its peers have seen their respective share prices rise strongly recently. This has led to changes in the multiples it feels the TechnologyOne share price should trade at.

In light of this, the broker has updated each valuation used in the determination of its price target for market movements and also for time creep.

Its analysts explained: “The net result is a 28% increase in our PT to $12.50 which has largely been driven by an increase in the relative valuations due to the recent share price rally in some of the comps.”

“A potential catalyst for the share price is the release of the FY21 result in November where we expect the guidance to be met which would imply a strong 2HFY21 result and importantly strong SaaS ARR growth of 35% or more,” it added.

The post TechnologyOne (ASX:TNE) share price hits record high on broker upgrade appeared first on The Motley Fool Australia.

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• 2 ASX shares that may be worth looking at this weekend
• ASX 200 rises, TechnologyOne climbs, Milton up
• Why Metalstech, Mineral Resources, TechnologyOne, & Webjet are storming higher
• ASX 200 midday update: TechnologyOne hits record high, lithium miners rise

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 WiseTech Global and Xero. The Motley Fool Australia owns shares of and has recommended WiseTech Global and Xero. 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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Fortescue Metals Group Limited (ASX: FMG) shares have topped Saxo Capital Markets’ most popular traded stocks among its Australian clients in August 2021.

What did Saxo say about Fortescue shares?

Fortescue emerged as the “undisputed number-one stock” Saxo clients wished to trade in August.

At the beginning of August, Fortescue’s 20-day average volume was around 6.4 million shares.

By the end of the month, its 20-day average volume had climbed to 10.5 million shares.

This might come as no surprise following the company’s FY21 full-year results, final fully-franked dividend of $2.11 per share and recent volatility in iron ore prices.

Commenting on Fortescue shares, Saxo Markets sales trader Junvum Kim believes, “the short-to-medium term outlook for Fortescue could hinge on its investment in its Iron Bridge magnetite development, as well as its renewed focus on greener iron ore supplies.”

Kim commented that:

For FMG, its trading volume surged as it announced record annual profit that more than doubled (AU$10.3b vs $4.7b) and highest ever final dividend (AU$2.11 vs $1) implying 17% yield on the back of the strong iron ore prices despite the recent correction during August when iron ore price fell 30%.

He reiterated the potential impact Iron Bridge might have on Fortescue shares, saying:

While FMG forecasted fiscal 2022 iron ore shipments in the range of 180 to 185 million tons, risk and the performance is expected to be subject to its Iron Bridge magnetite development that could cost $1b more than its initial estimate taking the total hit up to $3.5b.  This CAPEX is a key for improvements in the overall quality of the ore but a number of factors including material costs, labour shortages and exchange rates could continue to be volatile heading into the first production date December 2022.

Renewables has been a major investment theme this year, and Kim highlights Fortescue’s ambitions to produce green iron ore at scale.

FMG declared it would be the world’s first major supplier of green iron ore focusing on emission reduction to diversify into renewable energy and green hydrogen through its unit Fortescue Future Industries (FFI). It set aside $10% of the earnings for FFI to target a supply of 15 million tonnes of green hydrogen a year by 2030.

The post Why this leading broker’s clients have been going nuts for Fortescue (ASX:FMG) shares appeared first on The Motley Fool Australia.

More reading

• Top brokers name 3 ASX shares to buy today
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• Fortescue (ASX:FMG) share price higher as China’s imports surge to record high in August
• Here are the 3 most heavily traded ASX 200 shares today
• Why the Rio Tinto (ASX:RIO) share price is in the red on Tuesday

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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Ask A Fund Manager

The Motley Fool chats with fund managers so that you can get an insight into how the professionals think. In this edition, Shaw and Partners senior investment advisor Adam Dawes tells how one hot ASX share is providing the ‘warehouse of the future’.

Hottest shares

MF: What are the 2 best stock buys right now?

Adam Dawes: In the large cap space, one that’s certainly been unloved is Treasury Wine Estates Ltd (ASX: TWE). Certainly, it has moved to the higher side from the $10 mark but I still think there’s a lot to go in that stock.

Certainly, we now know what the regulation or the issues from China are and it’s been quantified in the stock. Now the share price is starting to move because we were saying that, basically, Treasury Wines can still move their wine. 

China has obviously been a big supporter of them but they can get that wine into China somewhere else. Whether that’s via Vietnam, they’re finding other ways to get that wine [in] and to move the product. 

And there’s been a lot of talk about Penfolds being demerged from the TWE stable. I think that’s certainly going to be something that investors will really, really gravitate to, if and when that does happen. 

A smaller one for you is Calix Ltd (ASX: CXL). We’ve got a buy on the stock. That’s an interesting one because [of] the wall of ‘green’ money that is coming down and the ESG investors continuing to shape [the] investment landscape. 

Calix fits that bill quite nicely with their technology of taking heat out of cement production, as well as a couple of other things that they do. In the small cap space, that’s a really good pick for people to feel good about investing. 

The royalties that they’re getting just from Europe alone is a company maker. 

The ASX share for a comfortable night’s sleep

MF: If the market closed tomorrow for 5 years, which stock would you want to hold?

AD: Global Data Centre Investment Fund (ASX: GDC). It’s a sort of a small NextDC Ltd (ASX: NXT). 

These guys, instead of staying in Australia, are obviously global. So they’ve got data centres all around the world in Latin America, France, Guam, those kinds of [places]. 

I think that’s a storage warehouse of the future.

I talk to a lot of clients about future-proofing their portfolio because Exxon Mobil Corporation (NYSE: XOM) was the biggest company 10 years ago in the world. It’s not today. 

Let’s say Alphabet Inc (NASDAQ: GOOG), Apple Inc (NASDAQ: AAPL) and Microsoft Corporation (NASDAQ:MSFT) are the biggest companies in the world. Potentially they won’t be the biggest companies in the world in 10 years time as well. 

So you need to be able to future-proof your portfolio. And one of those ones I think is GDC. So we’ve got a ‘buy’ on that one as well.

Every time you open up your YouTube, email, internet — data has to go somewhere. It’s also the number of Internet of Things that has grown in your house. It used to be 3 to 4 devices. Now it’s up to 12 devices that are connected to the internet at any one time inside your house. 

Where does all that data go? It has to be stored somewhere and GDC fits that thematic.

The post Here are the 3 hottest ASX shares to buy right now: expert appeared first on The Motley Fool Australia.

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• How have ASX BNPL shares performed during the August 2021 earnings season?
• Afterpay’s done, so here’s the BNPL player we’re backing: expert

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Tony Yoo owns shares of Alphabet (A shares) and Microsoft. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Alphabet (A shares), Alphabet (C shares), Apple, and Microsoft. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool Australia owns shares of and has recommended Treasury Wine Estates Limited. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), and Apple. 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 an excellent year for the Telstra Corporation Ltd (ASX: TLS) share price.

Since the start of 2021, the telco giant’s shares have risen a market-beating 31% to $3.94.

As a comparison, the S&P/ASX 200 Index (ASX: XJO) has risen 12.4% over the same period.

Where next for the Telstra share price?

The good news for the company’s shareholders is that one leading broker is tipping the Telstra share price to extend these gains.

According to a note out of Morgans, its analysts have an add rating and $4.34 price target on the company’s shares.

Based on the latest Telstra share price, this implies a potential return of 10% over the next 12 months before dividends.

And if you include the 16 cents per share dividend the broker is forecasting in FY 2022, the total return on offer increases to just over 14%.

Why is Morgans positive on Telstra?

Morgans has picked out three key reasons for its bullish stance on the Telstra share price. This includes improving trading conditions, its valuation, and positive outlook.

The broker explained: “Three key reasons for our Add rating are: 1) industry dynamics are improving (mobile prices are finally increasing); 2) the SOTP [sum of the parts] for TLS is worth more than the current share price (and steps to release this value are underway); and 3) Underlying EBITDA has returned to growth from 2H21 (and should continue growing over the next few year) which means earnings have found a base.”

The broker also notes that Telstra has its strategy day coming up and sees this as something that could give the Telstra share price a lift. The company is expected to speak about its new T25 plan at the event. Shareholders will no doubt be hoping this strategy is as successful as the T22 plan.

The post Leading broker says Telstra (ASX:TLS) share price is a buy appeared first on The Motley Fool Australia.

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

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The tech sector is home to a number of companies with strong growth potential.

Three that are highly rated are listed below. Here’s what you need to know about these tech shares:

BetaShares Global Cybersecurity ETF (ASX: HACK)

The first ASX tech share to consider is actually an ETF that gives investors exposure to a group of tech companies.  The BetaShares Global Cybersecurity ETF gives investors access to the leading companies in the global cybersecurity sector. This includes quality companies such as Accenture, Cisco, Cloudflare, Fortinet, Okta, Splunk, Zscaler, Crowdstrike. Given the rising threat of cyber attacks, demand for their services is expected to grow strongly over the 2020s.

Hipages Group Holdings Ltd (ASX: HPG)

Another ASX tech share to look at is Hipages. It is a leading Australian-based online platform and software as a service (SaaS) provider connecting consumers with trusted tradies. There are currently over 34,000 tradies using the platform, which is underpinning strong growth across all its key metrics. For example, in FY 2021 Hipages outperformed its upgraded full year revenue guidance with a 22% year on year jump to $55.8 million. Goldman Sachs is very bullish on its growth prospects. As a result, it currently has a buy rating and $4.35 price target on its shares.

PointsBet Holdings Ltd (ASX: PBH)

A final ASX tech share to look at is PointsBet. It is a sports betting and iGaming provider with operations in the ANZ and US markets. PointsBet has been growing at a rapid rate, reporting a whopping 228% increase in full year turnover to $3,781.4 million in FY 2021. This was driven by a 117% increase in Australian active clients to 196,585 and a 661% increase in US active clients to 159,321. Credit Suisse is confident this strong form will continue. It has an outperform rating and $13.30 price target on its shares.

The post 3 ASX tech shares to buy appeared first on The Motley Fool Australia.

More reading

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• 3 growing mid cap ASX shares named as buys

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 BETA CYBER ETF UNITS, Hipages Group Holdings Ltd., and Pointsbet Holdings Ltd. The Motley Fool Australia owns shares of and has recommended BETA CYBER ETF UNITS. 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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