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Looking for growth shares to buy this month? Then you may want to consider the three listed below.

Here’s why they have been tipped as growth shares to buy:

NEXTDC Ltd (ASX: NXT)

The first ASX growth share to look at is NEXTDC. It is a leading data centre operator benefiting greatly from the structural shift to the cloud. This shift has led to growing demand for data centre capacity over the last few years, which has resulted in strong revenue and operating earnings growth. And with this shift still ongoing, the future looks bright for NEXTDC. Particularly if its overseas expansion is a success.

UBS is positive on the company. It currently has a buy rating and $15.40 price target on its shares.

PointsBet Holdings Ltd (ASX: PBH)

Another ASX growth share to look at is this sports betting company. Its operations in the ANZ and US market are growing very quickly and generating significant revenue. Positively, the latter market is still in its infancy and only just opening up to this type of betting. This bodes well for the future given the size of the market. For example, Goldman Sachs expects the US sports betting market to grow at a compound annual growth rate of 40% out to 2033. At that point it believes it will be worth US$39 billion a year.

Goldman currently has a buy rating and $14.90 price target on its shares.

Zip Co Ltd (ASX: Z1P)

A final ASX growth share to look at is Zip. This buy now pay later (BNPL) provider has been growing at a strong rate over the last few years thanks to the increasing popularity of the payment method and its international expansion. The good news is the company still has a very long runway for growth. Management notes that the US market alone is worth $5 trillion.

Analysts at Citi currently have a buy rating and $14.90 price target on its shares.

The post Why Zip (ASX:Z1P) and these growth shares could be buys appeared first on The Motley Fool Australia.

More reading

• Here’s why the Zip (ASX:Z1P) share is down 11% in a week
• PointsBet (ASX:PBH) share price falls despite US NFL news
• What is the outlook for the Zip (ASX:Z1P) share price?
• The PointsBet (ASX:PBH) share price is down 7% on Monday
• These are the 10 most shorted ASX shares

Motley Fool contributor James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Pointsbet Holdings Ltd and ZIPCOLTD FPO. 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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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:

Baby Bunting Group Ltd (ASX: BBN)

According to a note out of Macquarie, its analysts have retained their outperform rating and lifted their price target on this baby products retailer’s shares to $6.15. This follows the release of a full year result ahead of the broker’s expectations. Macquarie notes that while online sales surged, the vast majority of its sales involve customer store visits. It feels this highlights the strength of the company’s store assets. Looking ahead, it is partly for this reason that Macquarie remains positive on its medium term outlook. The Baby Bunting share price ended the week at $5.50.

Breville Group Ltd (ASX: BRG)

Another note out of Macquarie reveals that its analysts have retained their outperform rating but trimmed their price target on this appliance manufacturer’s shares to $34.37. Macquarie notes that Breville delivered a result in line with its estimates in FY 2021. Positively, the broker appears confident there’s a lot more to come from Breville. It highlights its increasing investment and expansion into new geographies. The Breville share price was fetching $32.68 at the end of the week.

Westpac Banking Corp (ASX: WBC)

Analysts at Citi have retained their buy rating and $30.00 price target on this banking giant’s shares. This follows the release of Westpac’s third quarter update last week. According to the note, Citi highlights that Westpac’s update appears to indicate that it is trading slightly ahead of expectations in the second half. Looking ahead, the broker is optimistic that its system growth will recover in both mortgage and business lending. The Westpac share price was trading at $25.76 at Friday’s close.

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

More reading

• Analysts name 2 ASX dividend shares with attractive yields as buys
• August has been a good month so far for the Westpac (ASX:WBC) share price
• 2 fantastic ASX growth shares named as buys this week
• These ASX 200 bank experts are forecasting a bumpy ride for our economy
• Westpac (ASX:WBC) share price rises after broker tips $5bn buyback

Motley Fool contributor James Mickleboro owns shares of Westpac Banking Corporation. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Baby Bunting. 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 reporting season was not kind to the Audinate Group Ltd (ASX: AD8) share price.

Shares in the audio tech company tanked nearly 7% after Audinate released its results for FY20 last August.

Investors will be hoping that the Audinate share price doesn’t repeat its performance this reporting season.

Audinate specialises in hardware and software solutions for the audio-visual (AV) market. The company’s flagship and award-winning Dante program is a global leader in AV connectivity.

Here’s how the Audinate share price responded last year

In its full-year results for FY20, the company reported revenue of $30.3 million for the financial year, with a 30% increase in software revenue.

Audinate noted that royalties from its Dante platforms and retail software sales had fuelled growth.

However, the impact of the COVID-19 pandemic was reflected in the company’s bottom line, with Audinate reporting a net loss of $4.1 million after tax.

Despite the cancellations of major music festivals, the company was able to offset losses with higher demand in education and conferencing applications.

In addition, the company noted a stronger balance sheet after raising $40 million in an oversubscribed placement.

Snapshot of the Audinate share price

Fast-forward to 2021 and it’s a very different picture for the Audinate share price.

Shares in the audio technology company have stormed more than 29% higher since the start of the year and are currently nudging record-highs.

In October last year, Audinate noted that sales momentum had started recovering. This was reinforced in the company’s results for the first half of FY21, which saw revenue return to pre-COVID levels.

A major catalyst for the company was its trading update for FY21.

Audinate noted that the company had generated unaudited revenue of US$25.0 million for FY21, up 23% from FY20.

The company also cited 74% quarter-on-quarter growth, highlighting a strong Aussie dollar.

However, Audinate did note constraints from global supply chains as a near-term risk.

What do the brokers say?

Analysts have also jumped behind the Audinate share price. A note from UBS last month saw analysts retain their buy rating on Audinate and initiate a share price target of $11.30.

The broker cited Audinate’s strong fourth quarter update with analysts backing the company’s outlook.

The proof will be in the pudding when Audinate reports its full-year results.

The company is scheduled to report on Monday.

The post The Audinate (ASX:AD8) share price tanked 7% last time the company reported appeared first on The Motley Fool Australia.

More reading

• Brokers name 2 mid cap ASX shares as buys
• 2 mid cap ASX shares that analysts love
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• 2 exciting mid cap ASX growth shares to watch

Motley Fool contributor Nikhil Gangaram 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 AUDINATEGL FPO. The Motley Fool Australia owns shares of and has recommended AUDINATEGL 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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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:

ARB Corporation Limited (ASX: ARB)

According to a note out of Macquarie, its analysts have downgraded this 4×4 accessories company’s shares to an underperform rating but lifted their price target on them to $44.00. This follows the release of a very strong result for FY 2021, with its EBIT almost doubling. However, although its sees plenty of growth opportunities and expects a strong result in FY 2022, it isn’t enough to stop the downgrade. Macquarie feels its valuation is stretched. The ARB share price ended the week at $51.47.

Coles Group Ltd (ASX: COL)

A note out of UBS reveals that its analysts have retained their sell rating and $16.50 price target on this supermarket operator’s shares. UBS notes that Coles delivered a full year result in line with expectations in FY 2021. However, this wasn’t enough for a change of rating. UBS continues to believe that Coles will struggle to gain market share and isn’t convinced the cost savings it is targeting with its Smarter Selling strategy will underpin margin expansion. The Coles share price was fetching $18.72 at Friday’s close.

Domino’s Pizza Enterprises Ltd (ASX: DMP)

Analysts at Credit Suisse have retained their underperform rating but lifted their price target on this pizza chain operator’s shares to $82.28. According to the note, the broker was pleased with Domino’s performance in FY 2021 and notes that its guidance for new store openings has been upgraded. This has led to Credit Suisse increasing its estimates and price target accordingly. However, it still feels its shares are overvalued at the current level and has retained its underperform rating. The Domino’s share price ended the week notably higher than this price target at $141.72.

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

More reading

• 3 of the best ASX results from week three of reporting season
• 2 ASX dividends shares with attractive yields
• Brokers name 3 ASX shares to buy today
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• The Coles (ASX:COL) dividend climbed 6% in FY 2021

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 COLESGROUP DEF SET. The Motley Fool Australia has recommended ARB Corporation Limited and Dominos Pizza Enterprises 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 A2 Milk Company Ltd (ASX: A2M) share price has risen by 11% since the start of August 2021.

But it’s still down heavily over the last six months and the past year. In the past half-year A2 Milk shares have fallen by 38% and over the last 12 months it has dropped 65%.

Why has it fallen so much?

A2 Milk has seen demand for its products fall significantly.

In the third quarter of FY21, infant nutrition sales in the ANZ segment were $99.5 million and in the cross-border e-commerce channel was $22.1 million, compared to the third quarter of FY20 this was a decline of 56% and 77% respectively.

Management pointed out that these declines compared to the third quarter of FY20 reflected the “extraordinary uplift” in sales last year as the initial effects of the pandemic were beginning to be felt. Sales were down compared to the second quarter of FY21 in the CBEC channel due to actions taken to reduce distributor levels as planned, and ANZ segment sales were down reflecting lower daigou offtake.

In the interest of the long-term health of the A2 brand and the medium-term outlook of the business, management are/were taking more aggressive actions to address its excess inventory which will benefit consumers and the company’s customers, distributors and partners.

The daigou margin support program will cease and it will work with its customers and distributors to improve the dating of inventory. It will improve the freshness of product available in store and online and should improve the competitiveness to consumers, particularly new users.

Rebalancing inventory continued for the fourth quarter of FY21. A2 Milk also warned this may continue into the first quarter of FY22. It is also spending on marketing to ensure it can shift its products.

What could be driving the A2 Milk share price higher?

A2 Milk hasn’t released any market updates recently. And guidance was lowered a few months ago.

It said that it was targeting revenue for FY21 in the range of $1.20 billion to $1.25 billion. Management said an immediate recovery was not expected. The earnings before interest, tax, deprecation and amortisation (EBITDA) margin is expected to be between 11% to 12% (excluding acquisition costs). However, that included a stock provision of between $80 million to $90 million, which was in addition to the $23 million stock provision recognised in the first half of FY21.

But in terms of the A2 Milk share price, there has been media speculation, such as in the Australian Financial Review, which suggests that the food giant Nestle is thinking about launching a takeover bid for A2 Milk.

There hasn’t been an official response from A2 Milk yet. But the AFR reported the company said it “does not comment on media speculation or rumours”.

Time will tell whether an offer eventuates from Nestle for A2 Milk.

At the current A2 Milk share price, it is valued at 24x FY23’s estimated earnings.

The post Here’s what has been moving the A2 Milk (ASX:A2M) share price in August 2021 appeared first on The Motley Fool Australia.

More reading

• Here’s why the A2 Milk (ASX:A2M) share price is up 11% this week
• A2 Milk (ASX:A2M) share price lifts amid trademark stoush
• Why the A2 Milk (ASX:A2M) share price has underperformed the ASX 200 in the last year
• Here are 3 ASX 200 share investors can’t leave alone today
• Here are the top 10 ASX shares today

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 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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AGL Energy Limited (ASX: AGL) released its earnings for financial year 2021 (FY21) last week, to the detriment of its share price.

As The Motley Fool Australia reported at the time, the AGL share price slipped after the release of its annual report. It ended the day 5.53% lower than the previous session.

But AGL is just one of the ASX’s big energy providers and comparing its results to those of its peers could be a useful exercise.

One obvious listed competitor to AGL is Origin Energy Ltd (ASX: ORG). While there are marked differences between the two energy companies, the demerger AGL is currently battling towards being one, they still tend to run in the same pack.

So, how do AGL’s earnings stack up against those of Origin? Let’s take a look.

AGL earnings report detailed a $2 billion loss

As mentioned above, the market reacted poorly to AGL’s earnings. Here’s a snapshot of how it performed during FY21:

• Revenue dropped 10% to $10.9 billion
• Underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) of approximately $1.66 billion –down 18% on that of FY20
• Statutory loss of around $2.05 billion
• Underlying profits of $537 million – FY20 saw $816 million of underlying profits
• 35-cent final dividend, 33% less than the final dividend of FY20

The day after AGL released its earnings, the company’s share price regained some ground before falling once more. It’s currently 5.9% lower than it was before AGL’s release.

Let’s see if Origin offered up any competition.  

How does Origin’s FY21 compare?

Origin didn’t do much better during FY21.

Like AGL, Origin saw its share price drop after it released its earnings on Thursday. Origin’s shares fell 4% on the back of its annual report.

However, Origin’s shares bounced back on Friday to end the session 1.3% lower at Wednesday’s close.

Here’s how it performed:

• Revenue down 8% to around $1.2 billion
• Around $2 billion of underlying EBITDA – 35% less than in FY20
• Statutory loss of approximately $2.2 billion
• Underlying profit of $318 million – FY20 saw around $1.03 billion of underlying profits
• Unfranked 7.5 cent final dividend – 25% less than FY20’s final dividend.

As you can see, there are some noticeable similarities between the two energy companies’ financial years.

Most obviously, both AGL and Origin reported an earnings loss of more than $2 billion. They were both plagued by lower wholesale energy prices and lessening demand due to COVID-19.

However, AGL’s revenue fell further than Origin’s, and it cut its dividend more enthusiastically.

All in all, FY21 wasn’t great for either AGL or Origin. Their significantly differing paths forward will likely make interesting viewing.

AGL share price snapshot

The AGL share price has been underperforming for a while.

As of Friday’s close, it has dropped 41% year to date. It has also slipped 53% since this time last year.

Right now, shares in AGL are worth $7.15 apiece.

The post How does the AGL (ASX:AGL) earnings result compare to Origin? appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX 200 shares today
• When was the worst-ever day on the AGL (ASX:AGL) share price chart?
• The Origin (ASX:ORG) dividend has dropped 20%
• The ASX reporting wrap-up: Origin Energy, Redbubble, Treasury Wine
• Why BHP, Codan, IGO, & Origin shares are dropping

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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Some leading ASX dividend shares have reported their FY21 results which showed profit growth as well as much higher dividends.

Reporting season is a useful time to get insights into how a business is performing. A board’s decisions into the dividend declarations can potentially provide insight into the leadership’s thoughts about the strength and medium-term outlook for the business.

Here are two ASX dividend shares that just reported increased dividends:

Inghams Ltd (ASX: ING)

Poultry business Inghams announced that for FY21 its annual dividend would be 16.5 cents per share, fully franked. That was an increase of 17.9% year on year. That represented a dividend payout ratio of 71%. It was in line with its policy of paying between 60% to 80% of underlying net profit after tax (NPAT).

The company experienced both volume growth and operating leverage. Group core poultry volume increased by 4.2% to 446.9kt. Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) increased 9.6% to $448.7 million, underlying net profit after tax grew 57.4% to $86.7 million and statutory net profit after tax rose 107.7% to $83.3 million.

The ASX dividend share also managed to reduce its inventory by $30 million. There was excess frozen processed poultry stock that had built up as a result of the effects of COVID-19. Inventory is now in its desired band.

It has been busy making investments for further growth. Inghams made progress with its two new hatcheries, with the Victorian facility now operational and WA expected to commence around the middle of FY22. In addition, the NZ$17 million investment in a new fully cooked processing line in Auckland is “progressing well” and is expected to be completed in the first half of FY22.

Inghams said it expects to see the consumer recovery restart when vaccination rates increase and the current lockdowns are lifted. Volumes are expected to show continued growth with new business across various channels. Feed costs have stabilised.

Citi rates the ASX dividend share as a buy, with a price target of $4.35. It thinks the Inghams share price is valued at 16x FY22’s estimated earnings

Adairs Ltd (ASX: ADH)

Adairs was another business to unveil a much bigger dividend. It announced a final dividend of 10 cents per share, taking the FY21 full year dividend to 23 cents per share. That was an increase of 109% compared to FY20.

It saw group sales rise by 28.5% to $499.8 million (with a 33.2% increase of Adairs online sales). The underlying Adairs gross margin went up 520 basis points to 66.7%. Underlying earnings before interest and tax (EBIT) grew 97.3% to $109.1 million, statutory net profit rose 80.7% to $63.7 million and earnings per share (EPS) jumped 79% to 37.7 cents.

Physical stores are still an important part of the picture for Adairs. That’s why it opened four new homemaker stores and upsized six stores (four homemakers and two regular stores). The company said that the store upsizing strategy continues to deliver a strong return on investment. The FY22 pipeline for new and upsized stores is a net new two to four stores and it’s planning to upsize a further eight to ten stores. That equates to an increase of 8% or more in gross lettable area over the next 12 months.

The ASX dividend share’s new national distribution centre is expected to be fully operational by the end of September 2021, which, once transitioned, is expected to lead to annual savings of around $3.5 million per annum.

Adairs noted that restrictions are impacting sales in FY22. Adairs stores have seen a 27% decline of sales in the first seven weeks of FY22, contributing to a 11.7% drop in total sales (including online sales). Adairs online sales were up 12.9% and Mocka sales were up 16.1%.

The post 2 top ASX dividend shares that just delivered big growth appeared first on The Motley Fool Australia.

More reading

• The Adairs (ASX:ADH) dividend more than doubled in FY21
• Why Adairs, Redbubble, Treasury Wine, & Western Areas are storming higher
• ASX 200 midday update: Cochlear & TPG sink, Inghams jumps
• Adairs (ASX:ADH) share price surges 9% on record FY21 result
• Inghams (ASX:ING) share price leaps 7% as FY21 profits double

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 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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The Western Areas Ltd (ASX: WSA) share price is shaping up to be one of the hottest merger and acquisition (M&A) candidates on the ASX.

The potential takeover frenzy was unleashed when IGO Ltd (ASX: IGO) and Western Areas confirmed they were in preliminary merger discussions.

Is BHP next to launch a takeover bid for Western Areas?

The news sparked speculation that BHP Group Ltd (ASX: BHP) could enter the fray. Both Western Areas and IGO are key suppliers to BHP’s Nickel West operations, reported the Australian Financial Review.

BHP’s chief executive Mike Henry has made it known that he has big ambitions when it comes to nickel. He recently signed an agreement with Tesla Inc (NASDAQ: TSLA) to supply nickel to Elon Musk’s electric vehicle (EV) juggernaut.

BHP will need to invest big in Nickel West and the industry is seen as ripe for consolidation thanks to the EV revolution.

IGO could force BHP’s takeover hand

Euroz Hartleys speculated the potential M&A between IGO and Western Areas could force BHP’s hand, reported the AFR. IGO may be looking to give itself commercial leverage when dealing with giant partners like BHP.

Nickel West relies on smaller suppliers like IGO and Western Areas for around 30% of its ore. The quality of the ore from both miners are key to the efficiency of BHP’s nickel smelters. Merging the two smaller miners could give IGO an upper hand in dictating terms.

Three-way takeover battle for Western Areas

But this may soon turn into a three-horse race for Western Areas. The takeover target revealed on Friday that Fortescue Metals Group Limited’s (ASX: FMG) high profile founder Andrew Forrest has entered the fray.

His investment vehicle, Wyloo Consolidated Investment, has gone substantial and taken a 5.3% stake in Western Areas.

Perhaps it’s a bit of payback after BHP outbid him for Canadian nickel miner Noront Resources.

Foolish takeaway

It’s interesting that Twiggy Forrest is such an active player in the M&A scene too. His interest isn’t confined to mining as he went added to his position in Huon Aquaculture Group Ltd (ASX: HUO) following a takeover bid by JDS.  

But not all experts believe that BHP will have to go into the running for Western Areas. They point to comments by Henry that nickel doesn’t need to make up a big part of the miner’s portfolio, as long as BHP becomes an important player in the sector.

Regardless of how the takeover battle for Western Areas pans out, most will agree that we have not seen the last of M&As in the nickel sector.

The post Can the Western Areas (ASX:WSA) takeover prompt BHP (ASX:BHP) to go nickel shopping? appeared first on The Motley Fool Australia.

More reading

• After ASX mining shares crashed last week, top brokers are backing this miner
• These were the worst performing ASX 200 shares last week
• Western Areas (ASX:WSA) share price jumps 10% after Twiggy Forrest buys stake
• What’s going on with ASX lithium shares today?
• Why Adairs, Redbubble, Treasury Wine, & Western Areas are storming higher

Motley Fool contributor Brendon Lau owns shares of BHP Billiton Limited, Fortescue Metals Group Limited, and Independence Group NL. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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ASX mining shares took one of their biggest drubbings last week, but top brokers reckon this is the time to buy this ASX miner.

The mining heavy materials sector was the worst performer on the ASX in the past week. The BHP Group Ltd (ASX: BHP) share price, Rio Tinto Limited (ASX: RIO) share price and Fortescue Metals Group Limited (ASX: FMG) share price led the falls.

Falling commodity prices were a large driver for the losses as the US dollar rallied on safe haven demand.

South32 share price could appeal to bargain hunters

But this could be the time to be bargain hunting. And several leading brokers reckon the South32 Ltd (ASX: S32) share price should be on your shopping list after it posted its full year results.

The analysts at Macquarie Group Ltd (ASX: MQG) is one that is recommending the ASX miner as a buy.

While the diversified miner’s earnings were inline with the broker’s forecast, its cash flow was better than Macquarie had anticipated.

Stronger cash and bigger dividends

“The strong result drove the additional capital returns to shareholders. S32 declared a final dividend of US¢5.5, which included a US¢2.0 special dividend,” said the broker.

“The total payout for the year of US¢6.9 was 60% higher than we had anticipated. S32’s share buy-back has been increased by US$120m with US$252m in total remaining.”

Macquarie’s 12-month price target on the South32 share price is $4 a share compared to the miner’s Friday closing price of $2.78.

Missing expectations but hitting targets

But not everyone was impressed by South32’s dividend. The payout missed JPMorgan’s estimate of US6 cents a share. What’s more, the miner’s FY22 cost guidance for Worsley and Illawarra was above what the broker was expecting.

Nonetheless, these negatives weren’t enough to convince JPMorgan to change its “overweight” recommendation on the shares as South32 still looks cheap.

“We believe S32 offers a compelling investment proposition as an inexpensive non-iron ore diversified miner,” said JPMorgan.

“We also expect consensus to move higher on aluminium price strength. We retain our Overweight rating based on attractive P/NPV of 0.79x, strong balance sheet, and solid ~7% yield.”

South32 share price boosted by its strong balance sheet

South32’s attractive valuation was not lost on Morgan Stanley either. Even though the miner also failed to meet its lofty US7.9 cent a share dividend expectation, the broker remains a fan.

Morgan Stanley pointed to South32’s strong balance sheet and better than expected cash flows as reasons to buy its shares.

The broker reaffirmed its “overweight” recommendation on the South32 share price and $3.40 a share price target.

The post After ASX mining shares crashed last week, top brokers are backing this miner appeared first on The Motley Fool Australia.

More reading

• These were the worst performing ASX 200 shares last week
• Here are the 3 top trading ASX 200 shares this Friday
• What’s going on with ASX lithium shares today?
• Fortescue (ASX:FMG) share price lifts despite weaker iron ore prices
• BHP (ASX:BHP) share price slides for 4th straight session, down 14% this week

Motley Fool contributor Brendon Lau owns shares of BHP Billiton Limited, Fortescue Metals Group Limited, Macquarie Group Limited, Rio Tinto Ltd., and South32 Ltd. 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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If you’re in the process of building an income portfolio, then you might want to look at the shares listed below.

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

Charter Hall Social Infrastructure REIT (ASX: CQE)

The first ASX dividend share to consider is the Charter Hall Social Infrastructure REIT. It is a high quality real estate investment trust with a focus on properties with specialist use, limited competition, and low substitution risk.

Among its portfolio you will find bus depots, police and justice services facilities, and childcare centres. The latter is its main focus, with the Charter Hall Social Infrastructure REIT the largest owner of early learning centres in Australia. At the last count, it actively partnered with 35 high quality childcare operators.

The Charter Hall Social Infrastructure REIT was on form in FY 2021. It recently released its full year results and reported a 13.5% increase in operating earnings to $58 million. It also revealed that it ended the period with a weighted average lease expiry of 15.2 years and 73.2% of its properties on fixed rent reviews.

Goldman Sachs is a fan. It currently has a conviction buy rating and $3.81 price target on the company’s shares. The broker expects its shares to provide attractive yields of ~4.5% in FY 2022 and ~4.7% in FY 2023.

Westpac Banking Corp (ASX: WBC)

Another ASX dividend share to consider is Westpac. Australia’s oldest bank has returned to form this year following a tricky period during the pandemic. This led to the company reporting a bumper profit result in the first half, which has positioned it to return significant funds to investors this year.

In fact, last week the team at Goldman Sachs tipped the bank to return $5 billion to shareholders in the near future.

Commenting on changes to its earnings estimates, Goldman said: “We move our FY21E/22E/23E EPS by +0.7%/+4.3%/+7.2%, driven by i) improved balance sheet momentum, ii) lower 2H21E BDDs, and iii) our assumption of an A$5bn off-market buyback in light of its surplus capital and franking, partially offset by iv) lower NIMs, and vi) higher near term expenses.”

Goldman Sachs has a buy rating and $29.93 price target on the bank’s shares. It is also forecasting dividends per share of 116 cents in FY 2021, 128 cents in FY 2022, and 141 cents in FY 2023. Based on the latest Westpac share price of $25.76, this implies yields of 4.5%, 5%, and 5.5%, respectively.

The post Analysts name 2 ASX dividend shares with attractive yields as buys appeared first on The Motley Fool Australia.

More reading

• August has been a good month so far for the Westpac (ASX:WBC) share price
• These ASX 200 bank experts are forecasting a bumpy ride for our economy
• Westpac (ASX:WBC) share price rises after broker tips $5bn buyback
• Top brokers name 3 ASX shares to buy today
• ASX 200 midday update: Westpac update, Breville and Magellan sink

Motley Fool contributor James Mickleboro owns shares of Westpac Banking Corporation. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has 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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