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It has been another busy week for Australia’s top brokers. This has led to the release of a large number of broker notes.

Three broker buy ratings that have caught my eye are summarised below. Here’s why brokers think these ASX shares are in the buy zone:

Goodman Group (ASX: GMG)

According to a note out of Citi, its analysts have retained their buy rating and $26.00 price target on this commercial property company’s shares. This follows the release of a full year result ahead of both the market and Citi’s expectations. This was driven by higher investment income and lower interest expense/tax. And while its guidance for FY 2022 was lower than expectations, the broker sees upside risk to this guidance. The Goodman share price is trading at $22.82 today.

National Australia Bank Ltd (ASX: NAB)

A note out of Macquarie reveals that its analysts have retained their outperform rating and lifted their price target on this banking giant’s shares to $29.00. Macquarie was pleased with the bank’s third quarter update and notes that it is managing its margins much better than its rivals. It has also been pleased with its market share gains in lending. The NAB share price is fetching $27.64 on Friday afternoon.

Telstra Corporation Ltd (ASX: TLS)

Analysts at Morgans have retained their add rating and lifted their price target on this telco giant’s shares to $4.34. According to the note, the broker was pleased with Telstra’s FY 2021 results and particularly the performance of its mobile business. Looking ahead, it is very positive on the company’s future due to improving industry dynamics, its return to growth, and its valuation. In respect to the latter, it believes its current share price is less than the sum of its parts. The Telstra share price is trading at $3.95 today.

The post Brokers name 3 ASX shares to buy today appeared first on The Motley Fool Australia.

More reading

• ASX 200 midday update: Telstra 52-week high, PointsBet rises on US update
• Why the NAB (ASX:NAB) share price can keep rising
• Telstra (ASX:TLS) share of Digicel acquisition must be a minority — CEO
• Top brokers give their verdict on the Telstra (ASX:TLS) share price
• 5 things to watch on the ASX 200 on Friday

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 S&P/ASX 300 Index (ASX: XKO) is topping out another record high today, reflecting positive investor sentiment across the market.

At the time of writing, the ASX 300 is sitting around 7,615 points, up 0.42%.

Let’s take a peek below and see which shares are the biggest movers on the ASX 300 this Friday.

Who are the biggest winners on the ASX 300 today?

Australian Strategic Materials Ltd (ASX: ASM)

The biggest mover on the ASX 300 so far today is Australian Strategic Materials. With no news out of the company, investors are buying up its shares as the hype around rare earths continues.

The elements are super important in the making of high technology devices such as smart phones, computers, TVs, and more. In addition, rare earths are crucial in defence industries in the construction of aircraft, ships, and high-tech ground vehicles.

The Australian Strategic Materials share price is currently up 13.97% to $9.87.

Premier Investments Limited (ASX: PMV)

Following suit, shares in this ASX 300 company have jumped 4.75% to $28.44, nearing its all-time high of $29.35 attained earlier in June. The strong rise comes off the back of a broker note by UBS today, raising its price target by 22% to $30.00. Based on the current share price, this implies an upside of around 5%.

Star Entertainment Group Ltd (ASX: SGR)

The Star is also on the rise, elevating 4.18% to $3.49. With no recent news out of the company, however, it appears shareholders are reacting to news that the New South Wales cabinet may approve an extra 1,000 pokies for Sydney’s Star Casino. If so, this could stand to boost the company’s revenue.

And the biggest fallers?

Galaxy Resources Limited (ASX: GXY)

Heading the other way is the Galaxy Resources share price, which is down 3.7% to $5.46. This ASX 300 company’s shares have accelerated over the past 2 months – up approximately 67% from mid-June. With the lithium spot price stable for now, it seems as though investors are taking profit off the table.

Orocobre Limited (ASX: ORE)

Following suit is lithium peer, Orocobre. The company’s shares have also raced higher, up about 130% from March 2021. Currently, the company’s shares are down 3.31% to $9.63.

The post Which ASX shares are the biggest movers on the ASX 300 today? appeared first on The Motley Fool Australia.

More reading

• What’s lifting the Star (ASX:SGR) share price today?
• Why AGL, PointsBet, Premier Investments, & Star shares are charging higher
• ASX 200 midday update: Telstra 52-week high, PointsBet rises on US update
• 3 reopening ASX share ideas as potential buys
• Who are the biggest movers on the ASX 300 this Thursday?

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

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The Mineral Resources Limited (ASX: MIN) share price is up 59.2% year-to-date and has more than doubled in the past 12 months from $27.58 to higher than $60.

At the time of writing, the Mineral Resources share price is up 2%, trading at $61.19.

Looking back, shares in the mining company only started to gain traction in mid-2020, following the surge in iron ore prices.

How has Mineral Resources changed in recent years?

Mineral Resources has fundamentally been the same company over the years, operating mining services as well as iron ore and lithium production.

However, the weighting of these operations has drastically changed in the past two years.

In FY19, mining services delivered $209 million in earnings before interest, taxes, depreciation, and amortisation (EBITDA).

By comparison, iron ore and lithium production generated $214 million and $70 million in EBITDA respectively.

Fast forward to FY21, and the company’s earnings are far more skewed towards iron ore.

Mining services delivered EBITDA of $464 million, more than doubling FY19 figures.

However, iron ore EBITDA fired up almost fivefold on FY19 figures to $1,537 million.

During this time, iron ore production had lifted from 11.362 million tonnes in FY19 to 17,274 million tonnes in FY21.

Are iron ore prices driving the Mineral Resources share price?

Iron ore prices were relatively stagnant between 2017 and mid-2020, mostly trading around the US$85/tonne level.

During this time, the Mineral Resources share price also traded sideways between highs of ~$20 and lows of ~$12.

In early June 2020, Mineral Resources broke above pre-COVID highs of $19.59, the beginning of its monster run to $60.

During this time, iron ore prices rallied from ~US$100 in June to peak at ~US$230 in May.

What’s the outlook?

The recent weakness in iron ore prices is likely a contributing factor to the stalling Mineral Resources share price.

The Australian reported commentary from UBS analyst Myles Allsop, who said: “We are cautious on iron ore prices in the medium term as supply is lifting and demand is moderating.”

Allsop expects iron ore prices to stabilise by September, before falling to about US$100 a tonne next year, implying more than 50 per cent loss of value from the peak.

The post What can we learn from the Mineral Resources (ASX:MIN) share price history? appeared first on The Motley Fool Australia.

More reading

• The ASX reporting wrap-up: CBA, Mineral Resources, IAG
• Why ASX 200 lithium shares are surging to new highs
• Mineral Resources (ASX:MIN) share price slips on FY21 earnings
• How does the Mineral Resources (ASX: MIN) share price perform during lockdowns?
• The ASX reporting wrap-up: Challenger, Megaport, James Hardie

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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The Alexium International Group Ltd (ASX: AJX) share price is on the radar again as we close out the trading week.

Alexium gave further clarity on its “BioCool product – sales update“, that was announced after the company placed its shares in a trading halt on Thursday.

As of 12pm today, Alexium shares have recommenced trading, and have slipped 18% into the red to 7.9 cents. Here we discuss the reasons behind the trading halt and today’s share price action.

Let’s find out what this announcement from the specialty chemicals producer means for investors.

BioCool products clarification

Recall that Alexium rebranded its flagship materials product as BioCool last year. On 12 August, in a sales update, Alexium advised that sales traction and market adoption of BioCool had gained considerable steam.

In the update, Alexium said BioCool now accounts for almost 50% of total sales in its mattresses segment.

Moreover, the company believes BioCool products will capture revenue embedded into adjacent textile markets, such as foam bedding, moving forward.

As a result of the sales update, Alexium shares were placed in a trading halt on Thursday, while the company sought to provide “clarification” on its BioCool products. At this time the Alexium share price was 9.7 cents.

Alexium offered the clarification in the release that was put to market just before lunch today.

In it, Alexium stated that sales of BioCool “began in earnest” in April this year, and “already accounted for around 48% of (its) revenue streams from the mattress market segment by July 2021”.

The mattress market segment “contributed US$5.3 million” to the company’s FY21 revenue, in both foam and textile.

However, in Alexium’s “conversion of customers to BioCool products”, the company “does not have insight into the exact end-use” for its customers. This is even though the “sales are to new and established businesses”.

From what it seems, this serves as the clarity Alexium sought to provide investors. However, the market hasn’t welcomed the news well, pushing the Alexium share price into the red in afternoon trade.

What did the company have to say?

Touching on the BioCool products themselves, Alexium stated:

More than a year of research and product development went into this technology, and is strong evidence of our strategies in action. In the Quarterly Report, the company announced that the introduction of its BioCool products had seen strong market adoption with an expected upward sales trend into the first half of FY22.

Expanding on the growth vision of BioCool, the company added:

This rapid adoption by our customers of this new BioCool product demonstrates the significance of ecoconscious products to the US bedding market. Consumer demand for these goods is on the rise, and the company’s commercialisation strategy for BioCool has positioned us to maximise the value of the opportunity.

Alexium share price snapshot

Investors have reacted unfavourably to the company’s announcement today, driving Alexium shares into the red as they recommenced trading from midday.

The Alexium share price has posted a year-to-date gain of 67%, and a 12-month climb of 33%.

These results have outpaced the S&P/ASX 200 Index (ASX: XJO)’s return of around 25% over the past year.

In the last month alone, Alexium shares have climbed 94% into the green.

The post What’s going on with the Alexium (ASX:AJX) share price? appeared first on The Motley Fool Australia.

More reading

• Alexium (ASX:AJX) share price rockets 34% on sales update
• Here’s why the Alexium (ASX:AJX) share price surged 9% today

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 Star Entertainment Group Ltd (ASX: SGR) share price is lifting off today, up 5% in early afternoon trading.

This comes as the New South Wales government is set to debate a potential increase in the number of poker machines for Sydney’s Star casino.

Why the extra pokies for the Sydney Star casino?

Star’s share price bump could be aligned with the news that up to 1,000 extra pokies may soon be given the green light for its Sydney asset.

But these won’t be new pokies. Meaning they’ll be moved from smaller, regional gambling outlets in other parts of New South Wales.

That’s because the government remains concerned about money laundering issues tied to gambling in general and Crown specifically.

As the Sydney Morning Herald reports:

The NSW government is likely to support the transfer of poker machines licences to the Star because it believes the casino can be more highly regulated than some smaller venues in regional NSW.

The New South Wales government is scheduled to debate the proposal on Monday.

Of the 96,000 registered poker machines spread over 4,000 locations in New South Wales, the Star currently has only 1,500. Should the proposal pass on Monday, that figure could almost double to 2,500.

Star share price snapshot

Star’s share price has managed to navigate around the wider issues of money laundering plaguing the gambling industry over the past year. In the past 12 months Star’s share have gained 29%, surpassing the 25% gains posted by the S&P/ASX 200 Index (ASX: XJO).

Year-to-date the Star share price has struggled, down 6% in 2021.

Star pays a 2.7% dividend yield, fully franked.

The post What’s lifting the Star (ASX:SGR) share price today? appeared first on The Motley Fool Australia.

More reading

• Why AGL, PointsBet, Premier Investments, & Star shares are charging higher
• 3 reopening ASX share ideas as potential buys
• Here are the 10 top moving ASX shares on Monday
• ASX 200 Weekly Wrap: ASX grinds to a halt following new all-time high
• ASX 200 employee busted stealing $470,000: Watch it unfold

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 Clean TeQ Water Ltd (ASX: CNQ) share price rose strongly at one point today following a significant contract award.

During early morning trade, the metals recovery and water treatment solutions company’s shares hit an intraday high of 77 cents. However, some profit-taking has led its shares to retrace to 73.5 cents, up 3.52%.

What did Clean TeQ announce?

Investors are pushing Clean TeQ shares into the green after the company revealed it won an important contract.

According to its release, Clean TeQ Water advised it has been selected to design and deliver a High Recovery Reverse Osmosis (HIROX) water recovery plant in the Middle East.

The facility will be used to treat bore water used for enhanced oil recovery with minimum waste within the region.

Clean TeQ Water’s technology is able to attain more than 90% water recovery compared to traditional methods which achieve around 30%. The treatment involves reducing sulphate in bore water to prevent scaling when the water is used for reinjection.

The HIROX plant will produce approximately 1,200 tonnes per day of treated water.

Clean TeQ Water’s counterparty on the contract, National Energy Services Reunited Corp (NESR) will assist with delivery of the project.

NESR is one of the largest oilfield services providers in the Middle East, North Africa, and the Asia Pacific. The company has a water conservation and management business focused on improving water availability and reuse in the oil and gas sector.

Under the agreement, NESR will be the owner and operator of the plant’s first installation.

The contract is expected to generate revenue of roughly $3 million.

Clean TeQ Water CEO, Willem Vriesendorp commented:

The award of this significant contract is further testament to our ability to provide the best water treatment solutions across multiple industries.

The Oil and Gas sector is a tremendous opportunity for the adoption of high recovery water and reuse technology. Our HIROX process is one of our world-leading treatment technologies that will ensure Clean TeQ Water can compete with the world’s best water treatment companies.

About the Clean TeQ Water share price

Since debuting on the ASX boards on 2 July, Clean TeQ Water shares have flatlined. The company’s share price hit an all-time high of $1.45 in mid-July and have treaded lower ever since.

Clean TeQ Water presides a market capitalisation of about $32.8 million, with more than 44.6 million shares outstanding.

The post Clean TeQ Water (ASX:CNQ) share price edges higher on contract win appeared first on The Motley Fool Australia.

More reading

• Why AGL, PointsBet, Premier Investments, & Star shares are charging higher
• Why US celebrities are buying into this ASX share
• Why is the Firefinch (ASX:FFX) share price halted on Friday?
• Why ASX 200 gold shares are deep in the red this year
• Could it be time to consider buying Santos (ASX:STO) shares?

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

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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to end the week on a positive note. At the time of writing, the benchmark index is up 0.45% to 7,621.6 points.

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

AGL Energy Limited (ASX: AGL)

The AGL share price is up 4% to $7.48. This gain appears to have been driven by a broker note out of Credit Suisse this morning. According to the note, the broker has upgraded the energy company’s shares to a neutral rating with an improved $7.30 price target. This follows the release of a full year earnings that was largely in line with its expectations.

PointsBet Holdings Ltd (ASX: PBH)

The PointsBet share price is up 2% to $11.36. Investors have been buying this sports betting company’s shares after it announced the receipt of regulatory approval from the West Virginia Lottery Commission. This has allowed the company to launch online sports betting operations in West Virginia with immediate effect. This is the seventh operational US state for PointsBet’s premium sports betting product.

Premier Investments Limited (ASX: PMV)

The Premier Investments share price is up 5% to $28.48. This gain appears to have been driven by a bullish broker note out of UBS this morning. According to the note, the broker has resumed coverage on the retail conglomerate’s shares with a buy rating and $30.00 price target. It is positive on the company’s Peter Alexander and Smiggle brands, believing that they have strong growth potential.

Star Entertainment Group Ltd (ASX: SGR)

The Star share price has risen 5% to $3.51. Investors have been buying the casino and resorts operator’s shares amid reports that its Sydney casino could be allowed an extra 1,000 poker machines. According to the SMH, the NSW government plans to discuss whether to move under-used gaming machine licences from regional areas to the casino.

The post Why AGL, PointsBet, Premier Investments, & Star shares are charging higher appeared first on The Motley Fool Australia.

More reading

• ASX 200 midday update: Telstra 52-week high, PointsBet rises on US update
• Here’s why the PointsBet (ASX:PBH) share price is racing higher today
• 3 reopening ASX share ideas as potential buys
• The ASX reporting wrap-up: Telstra, AGL Energy, Downer
• Why AGL, Appen, CBA, & Rio Tinto shares are tumbling lower

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Pointsbet Holdings Ltd. The Motley Fool Australia owns shares of and has recommended Premier Investments Limited. 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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There is an ASX share that is looking ready to break out as the world moves to a post-COVID and post-vaccination lifestyle.

Watermark Funds Management portfolio manager Harry Dudley reckons technology company Life360 Inc (ASX: 360) had a troubled first 18 months of its listed life. 

But it has now well and truly turned it around.

“The company was listed at $4.79 and after some short-lived fanfare, it continued to trade under its IPO price for nearly two years, only passing it back in March,” he posted on Livewire.

“It’s now nearly doubled this hurdle in the past 3 months.”

Life360 is an app that allows parents to track their children’s mobile phone movements. The predominant market is the US.

Some famous personalities have recently joined the shareholder register.

“Names included Vanessa Bryant (wife of the late Kobe Bryant), Tony Hawk (professional skateboarder), Nicole and Michael Phelps (Olympic swimmer),” said Dudley.

“They have agreed to also establish an advisory council to execute on the product and marketing strategy.”

Why was the Life360 share price in the doldrums?

As well as the impact of the coronavirus pandemic, the stock price went nowhere until March this year because of a misconception, according to Dudley.

“We think the key misunderstanding from Australian investors was that phone-based Apps have high churn rates,” he said.

“We are normally accustomed to sticky software-as-a-service (SaaS) companies such as Xero Limited (ASX: XRO) and Wisetech Global Ltd (ASX: WTC).”

However, despite a 20% revenue hit during calendar year 2020 due to COVID-19, the company is showing industry-leading growth.

“360 has grown annualised recurring revenue (ARR) from $45 million when it listed in 2018 to more than $120 million, as guided by management, for this calendar year. This is a 3-year compounded rate of 38%,” said Dudley.

“It is the clear category leader. These kinds of growth rates from a market leader give us confidence that 360 will assert dominance in the family location market.”

Share price has rocketed but it’s not expensive yet

The Life360 share price has zoomed up more than 112% this year, to trade Thursday afternoon at $8.25.

Despite this ballooning valuation, Dudley thinks it’s still a value buy.

“It still trades on a relatively cheap 6-times price-to-sales multiple. This compares favourably to Bumble Inc (NASDAQ: BMBL), its closest peer in the US, which trades on an 11-times price-to-sales metric,” he said.

“With forecast growth that outstrips that of Bumble, we think 360 is only beginning its re-rate.”

Life360’s leadership have previously flagged their plan to eventually list on the NASDAQ, which Dudley would consider another upward catalyst. 

Watermark is not the only fan of the app provider, with Bell Potter only last month including it as one of the tech stocks to buy this year.

Its price target of $7 is already history.

More recently, Credit Suisse this week rated Life360 as “outperform” while slapping a price target of $10.

The post Why US celebrities are buying into this ASX share appeared first on The Motley Fool Australia.

More reading

• 3 excellent ASX tech shares that could be buys
• 3 excellent ASX tech shares
• 2 exciting ASX tech shares rated as buys
• Top brokers name 3 ASX shares to buy next week
• Why Eagers Automotive, Life360, Spark, & Virgin Money UK are pushing higher

Motley Fool contributor Tony Yoo owns shares of Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Life360, Inc., 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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The S&P/ASX 200 Index (ASX: XJO) is having a pretty decent start to the week’s last day of trading today. At the time of writing, the ASX 200 is up a healthy 0.44% to 7,622 points after making yet another new intraday all-time high of 7,631.1 points earlier this morning. However, one ASX share isn’t joining the party today. That would be the Firefinch Ltd (ASX: FFX) share price.

Firefinch shares are currently priced for 57 cents a share. And that’s where they’ll be staying, at least for the remainder of the week. That’s because just after market open this morning, Firefinch put out a market announcement.

This ASX release told investors that Firefinch has requested that its shares be placed in a trading halt. For how long? According to the company “until the earlier of the commencement of normal trading on Tuesday, 17 August 2021 or when the announcement is released to the market”.

Here’s some of what the ASX release stated this morning:

The Company seeks the trading halt pending an announcement in relation to the joint venture between the Company and a wholly owned subsidiary of Jiangxi Ganfeng Lithium Co. Ltd for the development of the Goulamina Lithium Project. 

And that’s all we know for now folks!

About the Firefinch share price

Firefinch is an ASX gold and lithium miner with several assets located in the African country of Mali. This includes an 80% interest in the Morila Gold Mine. Back in June, Firefinch also announced a joint venture with the Chinese lithium and chemicals company Jiangxi Ganfeng Lithium Co Ltd.

As my Fool colleague Brooke covered at the time, these two companies announced that they plan to jointly develop and run Firefinch’s Goulamina Lithium Project in Mali. Under the arrangement, Ganfeng is scheduled to acquire a 50% stake in the joint venture company Mali Lithium BV. 

Firefinch has estimated that the Goulamina project will have a mine life of 23 years. Ganfeng has agreed to purchase any product that the mine produces under the agreement as well. Firefinch has also previously gazetted that it plans to spin off the Goulamina project on the ASX at some point, which will be named ‘Lithium Co’. 

So Firefinch has told us that its upcoming announcement is related to this joint venture. But we shall have to wait and see what the final details are.

At the current Firefinch share price, the company has a market capitalisation of $518.87 million. In 2021 so far, Firefinch sahres are up an impressive 200% year to date.

The post Why is the Firefinch (ASX:FFX) share price halted on Friday? appeared first on The Motley Fool Australia.

More reading

• Why ASX 200 gold shares are deep in the red this year
• Could it be time to consider buying Santos (ASX:STO) shares?
• Friday drinks: Why does the Endeavour (ASX:EDV) share price lift on Fridays?
• Move over Qantas (ASX:QAN). This ASX airline share is profiting during COVID
• The Global Lithium Resources (ASX:GL1) share price is up 52% in a week

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

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The S&P/ASX 200 Index (ASX: XJO) is up 25% over the past 12 months and has gained 14% in 2021.

ASX 200 gold shares, however, have not contributed to that strong performance.

With a sliding gold price, it’s been a difficult period for gold miners.

In fact, if you run your slide rule across the 32 gold shares listed on the All Ordinaries Index (ASX: XAO), you’ll find that only 5 are in the black for the calendar year 2021. Meaning 27 are showing a loss.

This, while the All Ords index itself is up 14% year to date.

The S&P/ASX All Ordinaries Gold Index (ASX: XGD) tells a similar story. Over the past year, the All Ords Gold Index is down 27%. Year to date, it’s lost 17%.

And the biggest producers, those topping the list of ASX 200 gold shares in terms of market caps, have not been spared.

How have these top ASX 200 gold shares been tracking?

Sticking with the 4 biggest gold producers by market cap:

• The Newcrest Mining Ltd (ASX: NCM) share price is down 26% over the past 12 months and down 6% in 2021
• The Northern Star Resources Ltd (ASX: NST) share price is down 34% over 12 months and down 30% year to date
• The AngloGold Ashanti CDI (ASX: AGG) share price is down 41% since this time last year and down 20% so far in 2021
• And the Evolution Mining Ltd (ASX: EVN) share price is down 31% over the past 12 months and down 25% year to date.

So, what’s dragging on ASX 200 gold shares?

Miners are leveraged to the price of gold

While many factors impact the share prices of specific ASX 200 gold shares, the price of the yellow metal they dig up from the ground is a key factor.

And the gold price has been bouncing lower since hitting all-time highs of US$2,035 per troy ounce just over 1 year ago, on 7 August.

At the time of writing, an ounce of gold is worth US$1,755, down 14% from the August 2020 peak.

Now if you look at the share price losses for the ASX 200 gold shares listed above again, you’ll notice all 4 have lost significantly more than 14% in 12 months.

Why is that?

Well, you may have heard it said that gold miners are leveraged to the price of gold.

That’s because a miner’s fixed costs generally don’t change when the price of gold rises or falls.

Here’s a quick, hypothetical example.

Say it costs a company $1,200 per ounce to recover gold and bring it to market. And say the current price of gold is $1,500. The company is therefore making a profit of $300 per ounce.

Now imagine the price of gold falls by $200 to $1,300 per ounce. The miner’s profit margin is now down to $100 per ounce.

In our example, that’s a 66% reduction in profit margins from only a 13% drop in the gold price. Hence, miners are said to be leveraged to the price of the minerals they produce.

As for our top 4 ASX 200 gold shares above, you can see they’ve all been impacted by falling gold prices. Some more than others.

The post Why ASX 200 gold shares are deep in the red this year appeared first on The Motley Fool Australia.

More reading

• ASX 200 midday update: Telstra 52-week high, PointsBet rises on US update
• Evolution (ASX:EVN) share price higher on major funding announcement
• 5 things to watch on the ASX 200 on Friday
• ASX 200 edges higher, Telstra climbs, NAB up
• Healthcare, miners among top performing ASX ETFs in July

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