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The Pointsbet Holdings Ltd (ASX: PBH) share price is getting dunked on today… and not the celebratory Gatorade shower type.

As we head into the afternoon, shareholders are pushing the company’s shares 8.2% lower to $1.52 on Friday. The negative reaction follows the publishing of Pointsbet’s third-quarter results for FY23 this morning.

Initially, the market responded positively, pushing the wagering platform’s shares into the green by 9%. However, the excitement has since resided as investors digested the information contained in the quarterly report.

Read the room or suffer the sell-down

Pointsbet shareholders are not holding any punches today as the Pointsbet share price topples. Here are the hard-hitting headlines figures from today’s report:

• Total sports betting turnover up 4% year-on-year to $1,449.9 million
• Sports betting net win (revenue) up 28% to $91.2 million
• iGaming net win up 181% to $15.4 million
• Total group net win up 39% to $106.6 million
• Net cash outflow of $88.7 million during the third quarter
• Corporate available cash at the end of 31 March 2023 of $251.7 million

The market appears unimpressed with the topline growth exhibited by Pointsbet in the latest quarter, coinciding with continued bottom-line losses. Such losses are expected to persist in the second half, adding to the weight anchoring the Pointsbet share price.

According to the company, normalised group EBITDA losses are forecast to range between $77 million and $82 million in the second half of FY23. However, a recently completed cost review of Pointsbet’s North American operations led to a 12% reduction in its workforce.

On a positive note, net win growth was achieved while cutting marketing and promotion expenses. Compared to the prior corresponding period, these items were reduced by 12% and 28% respectively.

Despite the efforts, the market seems apprehensive to reward Pointsbet as economic headwinds swirl. Contrast this with the skyrocketing share price of Megaport Ltd (ASX: MP1) today following its focus on positive EBITDA.

What else could be moving the Pointsbet share price?

Pointsbet is in discussions with multiple parties regarding a possible transaction for its North American business. According to the release, this is in a bid to ‘add value for our shareholders’. These negotiations are said to be ‘well advanced’.

Additionally, management is also keeping an open line of communication with third parties interested in the Australian business. Though, it was noted these discussions are not with the same potential suitors addressed with media speculation back on 27 December 2022.

Whatever the outcome, many shareholders are deciding today not to stick around to find out.

The Pointsbet share price is down 41.7% compared to a year ago. Meanwhile, the S&P/ASX 200 Index (ASX: XJO) is approximately flat over the same period.

The post Pointsbet share price dives 8% amid potential to cash in with an offload appeared first on The Motley Fool Australia.

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More reading

• 2 ASX 300 shares going gangbusters on Wednesday
• Why Core Lithium, Kogan, Northern Star, and Pointsbet shares are storming higher
• These are the 10 most shorted ASX shares this week
• Are short sellers wrong about Pointsbet shares?
• These are the 10 most shorted ASX shares this week

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Megaport and PointsBet. The Motley Fool Australia has recommended Megaport and PointsBet. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Lake Resources N.L. (ASX: LKE) share price is enjoying a day in the green after the company released its March quarter update.

Investors appear pleased with the report, which shows the clean lithium producer is flush with cash and financing options and has no debt on its books.

The Lake Resources share price has hit an intraday high of 44 cents, up 4.76% on yesterday’s close.

Let’s take a closer look at the numbers.

Lake Resources share price lifts off 52-week low

Today’s bump in the Lake Resources share price is welcome news for shareholders after the ASX lithium share hit a new 52-week low yesterday.

Here are the key points:

• Cash and cash equivalents of $113,310,00 as of 31 March
• Unused financing facilities of $206,200,000
• Funding for 15.5 quarters available

Lake Resources says it is “well-funded” as it continues to progress its flagship Kachi project in Argentina.

What else happened during the quarter?

Going clean

Lake’s biggest advancement during the quarter was receiving independent verification of above 99.8% grades and purity for lithium carbonate produced at Kachi Project using its ion exchange DLE technology.

The Lake Resources share price went up 6.7% on the news.

Lake Resources CEO David Dickson said this was “a new process now proven“. This was an important development as it debunked one of the concerns raised by United States short-seller J Capital.

The DLE technology is essential to Lake Resources establishing itself as a cleaner lithium producer.

In its statement, the company said Project Kachi was “poised to lead the industry in the production of high-quality lithium with minimal environmental footprint”.

Lake Resources continued to work on its definitive feasibility study for producing 50,000 tonnes of lithium carbonate per year. It expects to complete the study by mid-2023.

New leaders on board

The company welcomed two corporate recruits during the quarter.

Gentry Brann joined the company as chief people and administration officer. She has 25 years of HR experience and previously worked at energy industry engineering services provider McDermott.

The company also appointed energy industry lawyer, Amalia Sáenz, as Argentina country Manager and head of Argentina corporate affairs.

Based in Argentina’s capital, Buenos Aires, Sáenz has served on Lake’s board as a non-executive director since July 2021 and has significant expertise in Argentine regulatory affairs.

She was previously a partner at law firm, Zang, Bergel & Viñes in Buenos Aires, where she led the firm’s energy and natural resources practice.

What did management say?

In its statement, the company said:

Lake continues to make good progress in its transition from the evaluation and exploration phase to the next stage of development.

With the ongoing recruitment of talented experts, the realignment and new focus of the organization and the enrichment of the Lake Board, Lake is well positioned to complete the development of Kachi, while pursuing the development of Cauchari, Olaroz and Paso.

What’s next?

Earlier this month, Lake Resources announced another “major milestone” for Kachi with first production of 2,500kg of lithium carbonate equivalents (LCE).

In a joint statement from Lake and its DLE technology partner, Californian company Lilac Solutions, the two company CEOs commented:

Today, we’ve proven that it is possible to produce high-purity lithium faster and without evaporation ponds – all while protecting surrounding communities and ecosystems.

Investors were impressed with the Lake Resources share price soaring 19.5% on the day.

Lake Resources said Kachi is now “on track to move from its pilot phase into commercial-scale development”.

It added:

[Kachi will be] the first lithium brine project in South America to produce lithium at commercial scale without the use of evaporation ponds for lithium concentration.

Lake Resources share price snapshot

It’s been a dismal 12 months for the ASX lithium share.

The Lake Resources share price is down 78% over the past 12 months and down 43% in 2023 to-date.

The post Lake Resources share price spikes 5% on quarterly update appeared first on The Motley Fool Australia.

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More reading

• Lake Resources share price hits new 52-week low. Has it bottomed?
• Why BHP, InvoCare, Lake Resources, and South32 shares are dropping today
• Why are ASX lithium shares powering higher today as the resource sector bleeds?
• ‘A new process now proven’: Lake Resources share price stabilises as short seller’s claim debunked
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Bronwyn Allen 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 Scott Phillips.

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Looking for a high-yielding S&P/ASX 200 Index (ASX: XJO) dividend stock?

How does an 18% dividend yield sound? Oh, and that’s fully franked.

If it’s passive income you’re after, that’s likely gotten your attention.

Which ASX 200 dividend stock is yielding 18%?

The ASX 200 dividend stock in question is New Hope Corp Ltd (ASX: NHC).

The coal share, with a market cap of $4.7 billion, has benefited enormously from recent record-level thermal coal prices. While prices have come down from their all-time highs, thermal and coking coal prices remain elevated by historic standards.

That’s also helped drive the New Hope share price up an impressive 55% over the past 12 months.

Now, investing in an ASX 200 dividend stock focused on coal may not appeal to everyone.

But it certainly fits our diamond in the rough thematic.

Coal, after all, when exposed to enough pressure and high temperatures in the Earth’s mantle, will eventually produce diamonds. If you’ve got a few million years to wait, that is.

For those of us with decidedly less time to earn out fortunes, we return to ASX 200 dividend stock, New Hope.

Before continuing, do note that the 18% yield we’re quoting here is a trailing yield. It’s derived from the dividend payouts over the past 12 months.

Future dividend payments will rely on numerous factors. Those may be higher or lower, depending on the company’s cost efficiency and coal prices, among other factors.

Why are New Hope shares paying such a juicy yield?

On the back of a 102% year-on-year leap in net profit after tax (NPAT) for the six months through to 31 January, New Hope paid out an all-time high interim dividend, which followed on the miner’s prior all-time high final dividend.

New Hope paid out a 56 cents per share final dividend on 8 November. The miner will pay a 40 cents per share interim dividend next week, on 3 May. The stock traded ex-dividend on 17 April.

Accounting for next week’s payout, this ASX 200 dividend stock will have paid a total of 96 cents per share in dividends over the prior 12-month period, with full franking benefits.

At the current share price of $5.36, that works out to a yield of 17.9%.

The post ASX 200 dividend stocks: Here’s a diamond in the rough yielding 18%! appeared first on The Motley Fool Australia.

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More reading

• 12 ASX dividend shares with yields over 10%. Are they too good to be true?
• Here are the top 10 ASX 200 shares today
• How to mine $100 a month in passive income from 2 ASX 200 coal stocks
• Guess which ASX 200 energy stock insiders have been buying up big in April
• Why AMA, New Hope, Regis Resources, and St Barbara shares are dropping

Motley Fool contributor Bernd Struben 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 Scott Phillips.

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The Rio Tinto Ltd (ASX: RIO) share price has gone up slightly after the ASX mining share revealed an appealing acquisition in the scandium space.

In the last few years, Rio Tinto has been looking to grow its exposure to materials that are essential for the low-carbon transition. Copper and lithium have taken the headlines, but now it’s expanding with a different commodity.

Rio Tinto acquires Platina scandium project

The ASX mining share has spent $14 million to buy the Platina scandium project, based in New South Wales, from Platina Resources Limited (ASX: PGM).

The project is located near Condobolin in central New South Wales, which is a “long life, high-grade scalable resource that could produce up to 40 tonnes per annum of scandium oxide, for an estimated period of 30 years.”

This isn’t a complete new commodity for Rio Tinto – it currently produces scandium oxide from titanium dioxide production waste streams at Sorel-Tracy in Quebec. But, once the Platina project is operational, it would enable the business to more than double its annual scandium production.

What’s so good about scandium?

Rio Tinto explained that scandium is a “rare, versatile and use mineral” which is important for the ‘green’ economy and the energy transition. Countries like the US, Canada and Australia believe it’s a critical mineral.

Scandium is very effective at strengthening aluminium, while also improving “flexibility and resistance to heat and corrosion.” It is used in applications like aerospace, automotive, heat exchangers, sporting goods, 3D printing and energy transmission applications.

The mineral can also be used to improve the performance of solid oxide fuel cells which are used as a “green power source for buildings, medical facilities and data processing centres, as well as in niche products such as lasers and lighting.”

Rio Tinto pointed out that with its aluminium businesses, it’s “well-positioned to produce more high-performance aluminium-scandium alloys to meet global customers’ needs.”

Executive comments

Rio Tinto’s minerals CEO Sinead Kaufman said:

This acquisition supports our commitment to critical minerals and finding better ways to provide materials the world needs.

It will enable us to further develop and grow with the global scandium market, complementing our existing scandium production in Quebec, where we have the expertise, technology and capacity to produce pure, highly reliable scandium through sustainable methods.

Foolish takeaway

While this is an exciting development for Rio Tinto, it may not be surprising that the Rio Tinto share price hasn’t moved much considering it’s a $14 million acquisition by an ASX mining share worth many billions of dollars.

The post Rio Tinto share price rises amid rare earths acquisition appeared first on The Motley Fool Australia.

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More reading

• Buy these ASX shares with big dividend yields: brokers
• Why Allkem, Blackmores, Helloworld, and St Barbara shares are charging higher
• Why has the Rio Tinto share price dived 9% in 5 days?
• Investing in ASX 200 mining stocks? Here’s Citi’s latest iron ore price forecast
• Want to buy ASX 200 mining shares? Goldman Sachs says these are top buys

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

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It’s been a fairly positive day for ASX shares and the share market so far this Friday. At present, the All Ordinaries Index (ASX: XAO) has risen by a healthy 0.39%, pulling it back over 7,500 points. But it’s a very different story when it comes to All Ords tech share BrainChip Holdings Ltd (ASX: BRN).

The BrainChip share price is having a shocker today. The company closed at 42 cents a share yesterday but opened at 38 cents this morning before falling as low as 35 cents a share (down 16.67%). That’s a new 52-week low for Brainchip. 

The shares have recovered somewhat at the time of writing, but are still trading at 38 cents each, down a nasty 8.43%.

So what on earth is going on with Brainchip today that would elicit such a dramatic slump in value?

Well, it seems the culprit is the quarterly cash flow announcement Brainchip has released to investors today.

Over the three months to 31 December 2022, Brainchip reported that it had experienced net cash outflow of US$1.9 million. But in the quarter ending 31 March 2023, this spiked to an outflow of US$6.3 million.

This wasn’t helped by the fact that cash inflows from customers were US$41.1 million for the December quarter, but just US$0.04 million (read US$40,000) for the March quarter.

Brainchip ended March with a cash balance of US$17.7 million, down from US$23.1 million on 31 December.

Brainchip share price snapshot

Just yesterday, we discussed what was then a new 52-week low for Brainchip. At the time, we noted the high short-seller interest in the Brainchip share price, and what it would take for the shares to either jump higher or lower.

Investors knew this cash flow report was due this week, so it seems many were taking a bet that it would be bad news. Well, the shorts have certainly been proven right here. Brainchip shares are now down 49% in 2023, and down by around 58.5% over the past 12 months:

The company has also lost a painful 80% or so of its value since the all-time highs of close to $2 a share we saw way back in early 2022.

At the current Brainchip share price, this All Ords tech share has a market capitalisation of $742.16 million.

The post Why did the BrainChip share price crash 16% today? appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• BrainChip share price sinks to multi-year low. What now?
• How ASX short sellers have been cashing in on BrainChip shares in 2023
• Why Brainchip, Domain, Star, and Tietto shares are dropping today
• Capital deities and destroyers: The best and worst at putting money to work among ASX 200 shares

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 Scott Phillips.

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It’s looking like the S&P/ASX 200 Index (ASX: XJO) and ASX shares are on track to end the trading week on a positive note so far this Friday.

At the time of writing, the ASX 200 has gained a rosy 0.45%, pulling the index back above 7,320 points. But some exchange-traded funds (ETFs) on the ASX today are doing even better than that.

In fact, three top ASX ETFs have just hit new 52-week highs today. Let’s discuss.

It’s Friyay for these 3 ASX ETFs at new 52-week highs

First up, we have the Vanguard MSCI Index International Shares ETF (ASX: VGS). This comprehensive ETF from Vanguard has climbed more than 1% today and is currently trading at $101.60 a unit. But earlier this morning, this ETF touched a new high of $101.85 a unit. Not only is that a new 52-week high, but the highest VGS units have traded at since February 2022.

Then we have the iShares S&P 500 ETF (ASX: IVV). The S&P 500 Index is the flagship index covering the US share market. The iShares S&P 500 ETF is also climbing today, currently up by 1.32% at $41.52 a unit. Earlier this morning, we saw this fund climb to a new 52-week high of $41.55. Again, we’d have to go back to early 2022 to find the last time this ASX ETF was at these kinds of levels.

Finally, we have the BetaShares NASDAQ 100 ETF (ASX: NDQ). Another US-focused ETF, this NASDAQ-tracking fund has lifted by 1.66% at present to $30.65 a unit. But NDQ units were slightly above this price earlier today, hitting a new 52-week high of $30.66 a unit this morning.

So all of these ETFs are having a top end to the trading week so far. But what do they all have in common? It can’t just be a coincidence that three ASX ETFs all hit new 52-week highs on the same day.

US tech stocks drive new highs

Well, these three ETFs all share one important trait – they are dominated by the US’s largest tech companies.

Looking at the Vanguard International Shares ETF, its current largest three holdings are Apple Inc (NASDAQ: AAPL), Microsoft Corporation (NASDAQ: MSFT) and Amazon.com Inc (NASDAQ: AMZN).

These three largest holdings are exactly mirrored (albeit with slightly different weightings) in the iShares S&P 500 ETF. In the BetaShares NASDAQ 100 ETF’s case, Apple and Microsoft’s positions have been swapped, but the song remains the same.

Each of these ETFs also features NVIDIA Corporation (NASDAQ: NVDA), Meta Platforms Inc (NASDAQ: META) and Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL) at the top of their respective holdings too.

Over on the US markets last night, most of these American tech giants had a stellar time. Apple stock was up a healthy 2.84%, while Microsoft rose by 3.2%. Amazon shares were up by 4.61%, while Meta (the owner of Facebook and Instagram) rocketed a whopping 13.93% and hit a new 52-week high of US$241.68. A well-received earnings report sparked this massive share price spike.

With these top holdings in our ETFs performing so impressively last night, it’s perhaps no surprise to see all three funds notch new 52-week highs this Friday.

 

The post 3 top ASX ETFs hitting new 52-week highs on Friday appeared first on The Motley Fool Australia.

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More reading

• Sunk $5,000 into the Betashares Nasdaq 100 ETF (NDQ) in 2020? Here’s how much passive income your investment has provided
• 3 highly rated ETFs for ASX investors to buy in May
• I think this underrated reason is key to why ETFs can be great investments
• I’m a dividend investor. Should I buy the iShares S&P 500 ETF (IVV)?
• 3 reasons why the Vanguard MSCI Index International Shares ETF (VGS) could be an excellent investment for beginners

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Motley Fool contributor Sebastian Bowen has positions in Alphabet, Amazon.com, Apple, Meta Platforms, and Microsoft. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Amazon.com, Apple, BetaShares Nasdaq 100 ETF, Meta Platforms, Microsoft, Nvidia, and Vanguard Msci Index International Shares ETF. The Motley Fool Australia has positions in and has recommended BetaShares Nasdaq 100 ETF. The Motley Fool Australia has recommended Alphabet, Amazon.com, Apple, Meta Platforms, Nvidia, Vanguard Msci Index International Shares ETF, and iShares S&p 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Blackmores Ltd (ASX: BKL) shares are trading in a fairly tight range today.

Shares in the vitamin and health supplement manufacturer are up 0.2% at the time of writing to $94.48.

That’s just below the $95 per share takeover offer lobbed by Japan’s Kirin Holdings Company yesterday. That offer values Blackmores at $1.85 billion.

Yesterday’s price action, as you may recall, was markedly different.

Following the takeover announcement, released before market open, Blackmores shares rocketed higher. The stock closed up 22.8% yesterday.

What’s happening with Blackmores shares?

Blackmores has officially entered into a scheme implementation deed with Kirin to acquire all of its shares.

That remains subject to the usual conditions, including approval from the Foreign Investment Board.

Blackmores’ board unanimously recommended shareholders support the scheme. If all goes to plan, management expects a court-convened shareholder meeting sometime in July.

Now, you may be wondering why a company best known for its beer is looking to acquire a vitamin company.

Kirin’s CEO Yoshinori Isozaki explained the benefits to his company of acquiring all of Blackmores shares.

“Blackmores presents an exciting opportunity to transform the scale and reach of our health science domain,” he said.

Isozaki said Kirin has been transforming itself from a brewing business “to the business model creating value across food & beverages and pharmaceuticals domains, based on the concept of creating shared value”.

Takeshi Minakata, director of Kirin’s board added:

We believe Blackmores will accelerate the transformation of our health science domain as both Kirin and Blackmores share a vision to improve people’s lives through our products as well as a commitment to quality, innovation and investment.

Kirin intends to maintain Blackmores’ headquarters and manufacturing operations in Australia.

What is the company’s largest shareholder saying?

Marcus Blackmore, the company’s largest shareholder, with some 18% of Blackmores shares, is a strong proponent of the scheme.

And he’s been less than pleased with the performance of the company that bears his name over the past few years.

Indeed, while last year’s performance ticked up, Blackmores shares are far below their $217.98 peak, reached on 31 December 2015.

According to Blackmore (quoted by The Australian):

We’ve certainly made some dramatic mistakes in the last four years where our earnings per share has gone from more than $4, and then at the AGM last year the board announced a ‘solid year and increased earnings per share to $1.25’.

Well, I accused the board of gilding the lily.

Blackmore said that kind of criticism had made him unwelcome at the company over the past two years.

As for why he supports the Kirin offer, he said, “I’ve had the opportunity of spending a lot of time with Kirin and I don’t have any doubt that they would be a good custodian of the brand.”

Blackmore added:

When people ask me why would I support a company like Kirin, that’s a beer company, I say, well, they’re trying to develop their health sciences division. They’ve already got the number one immunity product in Japan, they’ve got partial interest in other vitamin companies … so they’re not blind to the whole exercise and opportunity.

How have Blackmores shares been tracking?

While still far below their 2015 peak, Blackmores shares are now up 36% over the past year, aided by the big boost delivered from the Kirin takeover bid.

The post Here’s what’s happening with Blackmores shares following yesterday’s Kirin fuelled surge appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• 3 All Ords stocks rocketing over 10% on Thursday
• Why Allkem, Blackmores, Helloworld, and St Barbara shares are charging higher
• Blackmores share price rockets 22% on $1.9 billion takeover bid
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Bernd Struben 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 Blackmores. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Pilbara Minerals Ltd (ASX: PLS) shares are soaring today despite the company revealing tumbling lithium prices – and the downturn isn’t expected to ease for months.  

The S&P/ASX 200 Index (ASX: XJO) lithium giant updated the market on its quarterly performance yesterday evening, as The Motley Fool Australia reported earlier.

Shares in Pilbara Minerals are taking off right now, rising 4.67% to trade at $4.145.

Meanwhile, the ASX 200 is up 0.39%.

Let’s dive into the quarter just been, and what the company expects for the quarters to come.

Pilbara Minerals share price soars despite falling lithium prices

The Pilbara Minerals share price is in the green today. That’s despite the company’s realised spodumene concentrate sales price falling 15% quarter-on-quarter to around US$4,840 per dry metric tonne.

And that’s not expected to improve soon. The company believes pricing will continue to soften this quarter, before potentially strengthening in the second half of 2023.

Meanwhile, it lifted its full-year unit operating cost guidance to between $600 and $640 per dry metric tonne. That’s up from $580 to $610 a tonne.

However, looking longer-term, the company is still expecting big things from the battery-making material.

Speaking to shareholders and analysts this morning, Pilbara Minerals CEO and managing director Dale Henderson said the company remains “very positive on the structural deficit for lithium”.

There were two major trends bolstering its bullishness last quarter: Major investment in the space and electric vehicle uptake.

Pilbara Minerals ‘remains bullish’ on lithium long-term

Of course, ASX 200 lithium fans were likely overjoyed by a $2.50 per share takeover bid put to Liontown Resources Ltd (ASX: LTR) by giant Albemarle in March.

Other examples of cash being poured into lithium last quarter include General Motors’ US$650 million partnership with Lithium Americas and LG Energy Solution‘s multi-billion commitment to a battery manufacturing facility in North America.

Meanwhile, Henderson pointed to the long-term rise of EV sales in China and around the globe. He said it’s “the key consumption driver [of lithium] right now”.

However, a slump in adoption last quarter likely weighed on lithium prices. Chinese buyers seemingly turned away from EVs amid the end of government subsidies and heavy discounts on fossil fuel-powered vehicles ahead of the introduction of emission standards in the nation.

Still, the ASX 200 lithium producer is hopeful of long-term lithium pricing, with Henderson concluding:

Pilbara Minerals remains bullish on the at the long-term outlook for the market, and remains committed to our expansion and getting on with the job of developing this incredible tier 1 asset [the Pilgangoora Project] and enjoying, hopefully, strong margins from many quarters and many years to come.

How has the stock performed over the longer-term

Pilbara Minerals shares have outperformed the ASX 200 in recent months and years.

The stock has lifted 15% since the start of 2023. It’s also currently 55% higher than it was this time last year.

Meanwhile, the ASX 200 has gained 5% year to date and fallen 1% over the last 12 months.

The post Pilbara Minerals share price leaps 5% despite tumbling lithium prices appeared first on The Motley Fool Australia.

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More reading

• Pilbara Minerals share price on watch following tough quarter
• 5 things to watch on the ASX 200 on Friday
• 5 things to watch on the ASX 200 on Thursday
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• Here are the top 10 ASX 200 shares today

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 recommended General Motors and has recommended the following options: long January 2025 $25 calls on General Motors. 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 Scott Phillips.

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The Megaport Ltd (ASX: MP1) share price is off like a racehorse on Friday morning following the company’s third-quarter report.

Early into the trading day, shares in the software-defined network provider are fetching $5.59 – a staggering 40% above yesterday’s closing price. The move is a refreshing one for shareholders after enduring a debilitating 35% decline throughout this year prior to today, as shown below.

Fortunately, the market is rejoicing in the latest results. Let’s unpack the quarterly figures to understand why that might be.

Growing revenue and improving earnings

Before we dive into the thick of it, here are some of the high-level numbers posted by Megaport this morning:

• Total quarterly revenue up 38% year-on-year to $38.1 million
• Monthly recurring revenue (MRR) up 48% to $14.1 million
• Reported EBITDA swinging to a positive $7.2 million from a $12.1 million loss
• Total services added during the quarter of 607, down from 762 in the prior quarter
• Cash burn of $8.9 million from the third quarter with $48.6 million in cash remaining

Indicative of today’s response to the Megaport share price, it was a solid quarter for the on-demand cloud connector. Receipts from customers reached $40.9 million, marking an improvement of 14% compared to the prior quarter.

Furthermore, shareholders are possibly pleased to see Megaport’s management recognise and address issues that may have inhibited the company’s performance. For example, an operational review found the ‘Scale Up, Scale Out‘ did not produce the expected returns from the increased costs.

Following the review, management plans to implement strategy changes and reduce costs. As a result, management is now forecasting drastically improved EBITDA guidance for FY23 and FY24 compared to market consensus, bolstering the Megaport share price.

The updated forward guidance is as follows:

• FY23: Normalised EBITDA of $16 million to $18 million vs. $9 million consensus
• FY24: Normalised EBITDA of $41 million to $46 million vs. $30 million consensus

The improved earnings and cash flow mean management does not foresee the need to raise additional capital to further fund operations.

Why the rocket-like reaction to the Megaport share price?

It’s not every day a company leaps 40% or more — even on positive earnings — so why is the market responding in such extreme fashion to Megaport?

Well, as we covered on Monday, the technology company found itself on the most shorted ASX shares list once again this week. Racking up a mighty 11.2% short interest, Megaport was the second most-shorted share on the ASX heading into its quarterly report.

Likely many shorters are scampering to exit their positions and buy back shares to stem the bleeding today. In turn, the Megaport share price has behaved like a tightly compressed spring set free.

The post Megaport share price launches 40% higher amid rosy guidance appeared first on The Motley Fool Australia.

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• These are the 10 most shorted ASX shares this week
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• These are the 10 most shorted ASX shares this week
• ‘Meaningful growth’: 2 ASX shares to buy for cheap after a terrible month

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Megaport. The Motley Fool Australia has recommended Megaport. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Have you ever eyed an absolute bargain at a clothing store? Marked down 60% off, too good to miss, right? At least that’s what you thought until it started falling apart after the first few wears. In hindsight, a higher quality product at a higher price might have made a better purchase.

The analogy sheds light on a common pitfall in investing. Somewhere along the line the term value investing was hijacked, leading many investors to think ASX shares with a low price-to-earnings (P/E) ratio were cheap and presented value.

Coveted British fund manager, CEO, and founder of Fundsmith, Terry Smith, discusses this grave misconception in his book Investing for Growth. The issue with buying shares (ASX or otherwise) based on a trailing earnings multiple is that it gives no credence to the future — whether good or bad.

When a bargain turns into a bin fire

Much like the above-mentioned clothing example, cheap does not equate to value in the investment arena. In his book, Smith puts it in this eloquent way:

A stock may have a low valuation but an even lower intrinsic value. Buying such a stock is not a recipe for investment success.

Typically, there is a good reason why a company is carrying a low earnings multiple. The market is forward-looking — so if there is an expectation of lower earnings in the future, the price will be discounted in anticipation of this.

To borrow a thoughtful table from Smith — and translate it with ‘cheap’ ASX shares — below is a collection of so-called value shares from late 2017:

ASX-listed company	LTM EPS Nov 2017	LTM EPS Nov 2022	% change	Trailing PE 1 Dec 2017	Trailing PE 1 Dec 2017 Price / Nov ’22 LTM EPS	5-year share price performance
G8 Education Ltd (ASX: GEM)	$0.19	$0.04	-79%	22	100	-39%
Sigma Healthcare Ltd (ASX: SIG)	$0.05	$0.00	-100%	15	N/A	-7%
Monash IVF Group Ltd (ASX: MVF)	$0.11	$0.04	-64%	12	30	7%
Westpac Banking Corp (ASX: WBC)	$2.33	$1.52	-35%	16	21	-22%

At the time, these companies may have appeared lowly valued. At 22 earnings, G8 Education operated in a steady industry and was throwing off cash — not a bad proposition.

Fast forward five years, and suddenly G8’s earnings per share (EPS) has plunged 79%. At today’s earnings, the price paid back on 1 December 2017 would equate to a 100 times multiple… now that looks expensive!

High-quality ASX shares don’t need to be cheap

You might now be wondering, ‘Well, what’s the alternative? What is a truly ‘cheap’ ASX share?’. As pointed out in Investing for Growth, the trick is to find those companies which could offer more value in the future than is being valued in the present.

Back to our shopping analogies — imagine a pair of boots that are marked at full price, going for around $500. At face value, that may seem expensive, considering other boots are available at a third of the price.

However, you do some research and find out the ‘expensive’ boots come with lifetime free repair and complimentary polish every two years. At that moment, you realise the more premium-valued pair offer a far better deal in the long run.

Searching for high-quality ASX shares is a similar experience.

How many times do you hear a company trading on an earnings multiple above 50 as ‘good value’… hardly ever. Yet, as shown in the table below, some of the best-performing ASX investments over the past five years were trading on such lofty valuations.

ASX-listed company	LTM EPS Nov 2017	LTM EPS Nov 2022	% change	Trailing PE then	Trailing PE 1 Dec 2017 Price / Nov 22 LTM EPS	5-year share price performance
REA Group Ltd (ASX: REA)	$0.39	$2.76	608%	222	29	75%
WiseTech Global Ltd (ASX: WTC)	$0.11	$0.69	527%	112	18	592%
Netwealth Group Ltd (ASX: NWL)	$0.06	$0.24	300%	72	22	83%
Pro Medicus Limited (ASX: PME)	$0.07	$0.49	600%	85	15	680%

As Smith states in his book, “The level of valuation which may represent good value at which to buy shares in a high-quality company may surprise you.”

The overarching lesson here is: A growing company can still be valuable at high prices, while a shrinking company can be expensive at nearly any price. Pick the better boots now and avoid the disappointment of cheap boots later.

The post Don’t get duped: Why cheap ASX shares can still rip you off appeared first on The Motley Fool Australia.

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More reading

• Buy these ASX growth shares right now: Goldman Sachs
• Which is the best ASX 200 bank share to buy right now?
• First Republic Bank shares just crashed 50%. Here’s how ASX 200 bank stocks are responding
• Own Westpac shares? What to expect from its half-year results
• Pro Medicus shares: Bull vs. Bear

Motley Fool contributor Mitchell Lawler has positions in Pro Medicus. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Netwealth Group, Pro Medicus, and WiseTech Global. The Motley Fool Australia has positions in and has recommended Netwealth Group, Pro Medicus, and WiseTech Global. The Motley Fool Australia has recommended REA Group and Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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