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It’s been a pretty dreary start to the week for most ASX shares so far this Monday. At the current point of the trading day, the All Ordinaries Index (ASX: XAO) has shed a miserly 0.05%. That puts the Index at just under 7,520 points. But one little ASX share is shining brightly today in the face of this broader market negativity.

The Duratec Ltd (ASX: DUR) share price is on fire today. Right now, Duratec shares are up a healthy 8.7% at exactly $1 each. But earlier this morning, the Duratec share price climbed as high as $1.03 a share, up around 12% at the time. Not only is $1.03 a share a new 52-week high for Duratec, but it’s also an all-time, record high. Yes, Duratec shares have never been higher than they were this morning:

So what’s going so right for this investment holding company?

Duratec shares hit record high as company reveals earnings bump

Well, it seems this fresh new high for Duratec is a result of an ASX announcement Duratec released to investors this morning before market open. In this announcement, the company revealed some changes to its revenue and earnings guidance for the 2023 financial year.

It was only back in February that Duratec declared that it was expecting to bring in between $420 million and $460 million in revenue for FY2023. But this morning, the company revised this target range to between $465 million and $495 million.

In terms of earnings before interest, tax, depreciation and amortisation (EBITDA), Duratec previously flagged EBITDA for FY2023 to come in between $32 million and $35 million. But this has also been revised, to a range of $36 million and $39 million.

In FY2022, the company pulled in a total of $310 million in revenue and $19.3 million in EBITDA.

So no wonder investors are in such a good mood today.

Duratec credited these optimistic revisions to the company’s “ability to convert key project awards to delivery in better–than–expected timeframes and a strong growth and profit contribution from Wilson’s Pipe Fabrication”.

Duratec managing director Phil Harcourt also had this to say:

We are very pleased to be delivering a strong result for FY23 and outperforming initial expectations through a combination of contributing factors. These include the recent approval of contract variation claims, commencement of recently secured projects, increased productivity and reduction in risk allowance on a number of projects and a stronger than anticipated contribution from Wilson’s Pipe Fabrication...

We continue to focus on maintaining and growing our order book, through the continually sourcing of identified opportunity and tendering at the required level to support the Company’s growth into the future.

So this explains why Duratec shares are having such a stellar time on the ASX today. No doubt shareholders will be impressed by what the company has come up with.

At the current Duratec share price, this All Ords share has a market capitalisation of $224.2 million, with a dividend yield of 2.5%.

 

The post Earnings upgrade: This little ASX share is leaping 12% to record highs today appeared first on The Motley Fool Australia.

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More reading

• Why are ASX lithium shares powering higher today as the resource sector bleeds?
• ASX 200 takeover target dives 15% after its deal is laid to rest
• Is the Vanguard Australian Shares High Yield ETF (VHY) a strong ASX buy for passive income?
• Another 52-week high: Are Wesfarmers shares stretched, or could they be a buy?
• South32 share price tumbles 9% on lower production and guidance downgrades

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 has been a great day for some ASX lithium shares on Monday.

Although the resources sector as a whole is having an off-day, a good number of lithium miners and developers are roaring higher.

Here’s a summary of how some of ASX lithium shares are performing today:

• The Core Lithium Ltd (ASX: CXO) share price is up 2.5% to 98 cents.
• The Liontown Resources Ltd (ASX: LTR) share price is up 1% to $2.75.
• The Mineral Resources Ltd (ASX: MIN) share price is up 2% to $80.33.
• The Pilbara Minerals Ltd (ASX: PLS) share price is up 4.5% to $4.21.

Why are some ASX lithium shares charging higher?

While there has been no news out of these ASX lithium shares today, as we covered here on Friday briefly, there has been some major news in the industry in the last few days.

That news is that the Chilean government plans to create a state-owned lithium company that owns controlling stakes in local lithium producers.

This sent the shares of lithium giants Albemarle Corporation (ASX: ALB) and Sociedad Quimica y Minera de Chile (ASX: SQM) crashing down to earth on Friday on Wall Street.

Bloomberg notes that the government will respect existing arrangements with the two companies, but then move to a state-controlled model once contracts expire in 2030 and 2043, respectively. Alternatively, the two mining giants could opt to give up a majority stake in their operations before then.

So why are some shares rising?

It is worth noting that not all ASX lithium shares are rising today. For example, Allkem Ltd (ASX: AKE) is flat, Lake Resources N.L. (ASX: LKE) is down 4.5%, and Argosy Minerals Limited (ASX: AGY) is down 3.5%.

The difference between these shares and the ones rising above is the location of some of their operations.

The ASX lithium shares that are rising have operations in low-risk jurisdictions, whereas the three listed above all have operations in Argentina.

This appears to indicate that some investors are concerned that Argentina might see what Chile is doing and try to replicate it. In light of this, it may have led some investors to switch out of these shares and into largely Australian-based lithium shares.

The post Why are ASX lithium shares powering higher today as the resource sector bleeds? appeared first on The Motley Fool Australia.

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More reading

• Here’s why Pilbara Minerals shares will be in the spotlight this week
• These are the 10 most shorted ASX shares this week
• Invested $3,000 in Mineral Resources shares in 2018? Here’s how much dividend income you’ve received
• 3 things ASX investors should watch this week
• Analysts say Pilbara Minerals and this ASX dividend share are buys

Motley Fool contributor James Mickleboro has positions in Allkem. 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 S&P/ASX 200 Index (ASX: XJO) and ASX shares have not had the pleasant start to the trading week that many of us hoped they would. At the time of writing, the ASX 200 has started the week off with some red ink, with the index currently still down by 0.02% at just over 7,328 points.

But one ASX 200 share is doing far worse than the broader market today. That would be funeral services provider InvoCare Limited (ASX: IVC).

InvoCare shares are having a shocker today. The company closed at $12.11 at the end of last week. But the company opened at $10.21 this morning and fell as low as $10.07 a share by mid-morning (down around 15%). At present, the InvoCare share price has recovered a little. But it is still down a meaty 9.33% at $10.98 a share.

So what on earth is going on with this company today that would elicit such a savage reaction from investors?

Why was this ASX 200 share down 15% today?

Well, it seems all of this is related to the takeover offer InvoCare received last month. As we covered at the time, InvoCare shares soared when news that the company had been approached by the Singaporean Blue Eternal, and private equity firm TPG Asia.

Under an indicative proposal, TPG offered to acquire 100% of the InvoCare shares on issue for a price of $12.65 in cash per share.

At the time this was made public, InvoCare shares soared by an impressive 37% to close to the offered pricing.

The company has stayed around that price level ever since. Well, until today.

This morning, just before the market open, InvoCare announced that TPG had withdrawn its proposed offer of $12.65 a share.

Investors clearly ramped up the price they were willing to pay for Incovare shares following the offer. In light of its dissolution, it makes sense that the company would be pulled back to the pricing levels it commanded before the offer was made public.

So this probably explains why the InvoCare share price is having such a disappointing start to the week today.

What’s next for InvoCare shares?

In its announcement this morning, InvoCare stated that “the Board remains willing to consider any proposal that represents fair value in the interests of all shareholders”.

It also revealed that TPG, despite withdrawing its offer, had requested that Genevieve Gregor be nominated to the InvoCare board. The company said it would “consider this request in due course”. 

But regardless, it seems that this chapter in InvoCare’s history has now come to a close. Investors seem disappointed, but who knows what the future may bring?

InvoCare shares have now lost all of the gains they have made in 2023 and are down by 0.36% year to date. At the current share price, Invocare has a trailing dividend yield of 2.23%.

 

The post ASX 200 takeover target dives 15% after its deal is laid to rest appeared first on The Motley Fool Australia.

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More reading

• Another 52-week high: Are Wesfarmers shares stretched, or could they be a buy?
• Fortescue share price plummets 5% amid weaker production
• Guess which ASX 200 stock just upped its guidance by as much as 60%
• Are BHP shares a buy following the ASX 200 miner’s latest update?
• 5 things to watch on the ASX 200 on Monday

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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Vanguard Australian Shares High Yield ETF (ASX: VHY) is an exchange-traded fund (ETF) that is known for paying a higher dividend yield for investors. But is it a buy for passive income?

The aim of this ETF is to provide low-cost exposure to ASX shares that have a higher forecast of dividends relative to other ASX shares.

Diversification is kept in mind, with the allocation of the portfolio to any one industry to 40% of the total ETF and 10% in any one company. Australian real estate investment trusts (REITs) are excluded from the index.

How big is the dividend yield?

Vanguard tries to make it easier for investors to see how much passive dividend income might come from the ETF in the next 12 months.

The ETF provider’s March 2023 fund characteristics metrics suggest that the forecast dividend yield for Vanguard Australian Shares High Yield ETF is 5.5% or 7.5% when grossed up to include the franking credits.

Those projections are reportedly sourced by Vanguard from FactSet. An ETF simply passes through the dividend income it receives from the underlying companies, so that’s why it needs to know what the dividend forecasts are for those businesses.

Which ASX shares does it own?

At the end of March 2023, it owned a total of 72 positions.

The biggest 10 holdings made up more than 60% of the Vanguard Australian Shares High Yield ETF portfolio. So let’s look at those names:

BHP Group Ltd (ASX: BHP) – 10.7% of the portfolio

Commonwealth Bank of Australia (ASX: CBA) – 8.9%

National Australia Bank Ltd (ASX: NAB) – 6.7%

Woodside Energy Group Ltd (ASX: WDS) – 6.4%

Westpac Banking Corp (ASX: WBC) – 5.8%

Wesfarmers Ltd (ASX: WES) – 5.8%

ANZ Group Holdings Ltd (ASX: ANZ) – 5.3%

Telstra Group Ltd (ASX: TLS) – 5%

Macquarie Group Ltd (ASX: MQG) – 4.7%

Rio Tinto Ltd (ASX: RIO) – 4.5%

So, a lot of the ETF’s dividend income is going to come from those names I’ve just mentioned.

Is the Vanguard Australian Shares High Yield ETF a buy for passive income?

Clearly, the ETF is designed to capture a lot of dividends, and it has been effective at doing that because of the nature of the businesses involved.

Vanguard’s performance table says that in the five years and ten years to March 2023, it paid an average distribution return of around 6%, excluding the franking credits.

So, if investors are only focused on the income, then it does what it says on the tin.

However, I think that it’s worth pointing out that over the five years to March 2023, the Vanguard Australian Shares High Yield ETF only produced capital growth of an average of 3.4%. In the prior ten years, it made an average return per annum of 1.1%.

I don’t think there’s as much compound growth potential with many of these large businesses that are paying large dividends. So, if I were focused on total returns, I’d rather focus on an ASX dividend share that can deliver more growth. I like to target businesses where I think they can deliver good total returns, including useful dividends, such as Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) and Brickworks Limited (ASX: BKW).

The post Is the Vanguard Australian Shares High Yield ETF (VHY) a strong ASX buy for passive income? appeared first on The Motley Fool Australia.

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More reading

• 2 fantastic ETFs for ASX investors to buy next week
• 5 steps to bring in $1,000 per month in passive income
• How I’d invest $20,000 to earn reliable passive income today
• One possible investing route to earning $1,000 monthly passive income
• Want $1,000 of passive income? Check out these ASX shares

Motley Fool contributor Tristan Harrison has positions in Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Brickworks, Macquarie Group, Telstra Group, Washington H. Soul Pattinson and Company Limited, and Wesfarmers. The Motley Fool Australia has recommended Vanguard Australian Shares High Yield ETF and Westpac Banking. 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 S&P/ASX 200 Index (ASX: XJO) has kicked off the trading week on a bit of a sour note so far this Monday. At the time of writing, the ASX 200 has clearly had a big weekend and gotten out of the wrong side of the bed this morning, with the index down by 0.14% at just over 7,320 points. But let’s talk about Wesfarmers Ltd (ASX: WES) shares.

The ASX 200 may have started the week off on the wrong foot, but no one seems to have told Wesfarmers. Shares in this ASX 200 industrial and retail conglomerate are currently defying the market, gaining 0.63% today to $52.36 apiece.

A new 52-week high for this ASX 200 blue-chip share

Not only that, but this Monday has seen Wesfarmers shares hit a new 52-week high. This morning, the Wesfarmers share price climbed as high as $52.46. That’s the company’s new 52-week high watermark.

It’s not too difficult to see why investors might be flocking to Wesfrmers shares today. The company announced some big news this morning, revealing that it has made an offer to acquire the skincare clinic operator Silk Laser Australia Ltd (ASX: SLA).

Wesfarmers has offered $3.15 a share for Silk Laser, which is a 30% premium to where this company closed last week. As we also covered this morning, this bid has seen the Silk Laser share price climb a whopping 25% following news of this bid.

So both Wesfarmers and Silk Laser investors clearly approve of this takeover offer.

But with Wesfarmers shares at a new 52-week high, this might cause some consternation. Wesfarmers is an ASX 200 share that has been on an absolute tear lately.

Not only are Wesfarmers shares up a hefty 15.3% year to date in 2023 so far, but the company is also now almost 30% higher than the 52-week low of $40.03 that we saw in the middle of last year:

So perhaps there might be some investors wondering if Wesfarmers shares are still worth buying today. One could argue that the company’s shares are stretched after rocketing so much higher in 2023.

Are Wesfarmers shares still a buy at a new 52-week high?

Well, at least two ASX brokers have recently given the Wesfarmers share price a buy rating and share price targets well above today’s new high.

As we covered earlier this month, ASX broker Morgans recently gave Wesfarmers shares an add rating, replete with a 12-month share price target of $55.6. That implies an upside of 6.2% from where the shares are right now.

Commenting on this recommendation, Morgans had this to say:

WES possesses one of the highest quality retail portfolios in Australia with strong brands including Bunnings, Kmart and Officeworks.

The company is run by a highly regarded management team and the balance sheet is healthy. We believe WES’s businesses, which have a strong focus on value, remain well-placed for growth despite softening macro-economic conditions.

So that’s pretty optimistic from this ASX broker.

But it’s not just Morgans that still likes the look of Wesfarmers right now. As we covered last week, fellow ASX broker UBS also rates Wesfarmers as a buy, with a share price target of $55.50.

We also recently looked at fund manager TMS Capital and its high-conviction view on Wesfarmers. TMS Capital reckons Wesfarmers’ Mt Holland lithium project could end up being in the top tier of global lithium mines, helping the company to access another avenue of earnings in the future, potentially worth up to $1 billion annually.

So a bevvy of ASX experts still like what they see with Wesfarmers shares right now, despite this company’s new 52-week high.

No doubt Wesfarmers shareholders will be comforted by these bullish views today.

At the current Wesfaremers share price, this ASX 200 blue chip share has a market capitalisation of just under $60 billion, with a dividend yield of 3.6%.

The post Another 52-week high: Are Wesfarmers shares stretched, or could they be a buy? appeared first on The Motley Fool Australia.

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More reading

• How lithium could unlock billions for Wesfarmers shares
• Fortescue share price plummets 5% amid weaker production
• Guess which ASX 200 stock just upped its guidance by as much as 60%
• Are BHP shares a buy following the ASX 200 miner’s latest update?
• 5 things to watch on the ASX 200 on Monday

Motley Fool contributor Sebastian Bowen has positions in Wesfarmers. 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 positions in and has recommended Wesfarmers. The Motley Fool Australia has recommended Silk Laser Australia. 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 South32 Ltd (ASX: S32) share price is plummeting on Monday after the company revealed a disappointing quarterly production and downgraded its guidance for numerous operations.

The stock in the diversified mining company is down 9.1% at the time of writing, trading at $4.045.

South32 share price falls on lower quarterly production

Here are the key takeaways from the S&P/ASX 200 Index (ASX: XJO) stock’s quarterly production update:

• Payable copper production fell 18% quarter-on-quarter (QoQ)
• Manganese and metallurgical coal production fell 15% and 16% respectively
• Payable silver production dropped 19%
• While payable production of lead and zinc saw the biggest falls, tumbling 24% and 23% respectively
• Alumina and aluminium production also slumped 9% and 3% respectively
• Finally, nickel production fell 6%

The company’s production was hampered by wet weather and other temporary impacts last quarter. Though, it notes improved market conditions supported higher prices across most commodities.

Other positives included its copper equivalent and aluminium production, which lifted 7% and 15% respectively in the financial year to date. The improvements were driven by previous investments in the company’s portfolio.

What else happened last quarter?

Weather took its toll on South32’s operations last quarter. Mozal Aluminium, Cannington, Sierra Gorda, and its South African Manganese operation were each impacted by flooding and wet weather.

Cannington was hit particularly hard, with mining operations temporarily suspended during the period.

Meanwhile, Australian Manganese achieved record production. Its Eastern Leases South extension was approved during the quarter, extending its operation’s life to at least financial year 2028.

The company also exercised its earn-in right to acquire a 50.1% interest in the Chita Valley copper exploration project.

What did management say?

South32 CEO Graham Kerr commented in the release driving the company’s share price lower today, saying:

We remain well positioned to capitalise on improved market conditions, with higher production volumes expected to finish the 2023 financial year and operating unit cost and capital expenditure guidance held largely unchanged.

We continue to reshape our portfolio towards commodities critical to a low-carbon future, progressing construction and development studies at Hermosa and adding the prospective Chita Valley copper project to our portfolio of greenfield options.

What’s next?

Production guidance downgrades at numerous operations are also likely weighing on the South32 share price today.

While much of its full-year guidance remains unchanged, it did downgrade its production forecast for its Mozal Aluminium and Cannington operations by 4% and 6% respectively.

Guidance also dropped 4% at Brazil Alumina on a conveyor outage, 7% at Cerra Matoso on less access to higher-grade iron ore, and 7% at Illawarra Metalogical Coal amid challenging strata conditions at its Appin mine.

It also upped its production guidance at its Australia Manganese operation by 3% on improved primary outputs.

Meanwhile, its operating unit cost guidance has been held steady, except at Cannington and Illawarra Metallurgical Coal, where it was increased due to lower planned volumes.

Finally, the company has revised its full-year underlying net finance costs guidance to US$190 million – up from US$150 million – as a reflection of its balance sheet at the end of the quarter.

South32 share price snapshot

Today’s fall included, the South32 share price has gained 3% so far this year. Though, it’s trading 8% lower than it was this time last year.

For comparison, the ASX 200 has risen 5% year to date and is trading flat year-on-year.

The post South32 share price tumbles 9% on lower production and guidance downgrades appeared first on The Motley Fool Australia.

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More reading

• Banking and mining: Analysts say these ASX 200 dividend shares are buys
• Get big gains and huge dividends from these ASX 200 mining shares: brokers
• Why 29Metals, NextDC, Sims, and South32 shares are racing higher
• South32 share price jumps on Goldman Sachs upgrade: broker tips monster yield
• ‘Attractive value’: 2 ASX 200 mining shares ‘worth adding’ right now

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

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Wesfarmers Ltd (ASX: WES) shares may get an impressive earnings boost from lithium in the coming years. Hence, I’m going to outline some of the most interesting features of the growth plans for the business below.

A few years ago, Wesfarmers acquired the ASX-listed Kidman Resources for $776 million, which had a 50% interest in the Mt Holland lithium project based in Western Australia. The project could have one of the world’s most significant lithium deposits.

The joint venture that Wesfarmers is involved with is called Covalent Lithium.

What’s so attractive about lithium?

Wesfarmers could have decided to invest in any resource, such as copper or nickel.

But, what attracted the ASX share was that there’s a “strong demand outlook” for battery grade lithium. This is being driven by “increasing penetration of battery electric vehicles (BEV) and battery energy storage systems (BESS).”

Wesfarmers’ research suggests that the forecast BEV and BESS demand growth of 18% per annum between 2022 to 2030 is thanks to a significant investment in BEV and lithium-based battery infrastructure.

The company noted that the lithium supply response is impacted significantly by how long it takes to get a new mining operation going.

Mt Holland

Wesfarmers believes the Mt Holland resource enables a “low-cost, long-term lithium production business.” Using Wesfarmers chemicals, energy and fertilisers (WesCEF), Covalent Lithium will be an “integrated producer of premium, battery-grade lithium hydroxide for the electric vehicle market.” I think it’s an exciting development for Wesfarmers shares.

Located in the Western Australia Goldfield region, the goal is that it will produce around 380 kt per annum of spodumene concentrate, which will then be transported to the Kwinana refinery to be refined into 50,000 tonnes per annum of battery-grade lithium hydroxide.

In terms of progress on the project, using an update from approximately a month ago, the concentrator is more than 85% complete and early commissioning has commenced, while the refinery civil works have been completed. A majority of the long-lead items have arrived at the refinery.

First production from the Mt Holland concentrator is expected by the end of 2023, while the first production from the Kwinana refinery is expected in the first half of the 2025 calendar year.

How much earnings could lithium generate for Wesfarmers?

The fund manager TMS Capital recently suggested that Mt Holland could generate over $1 billion of earnings for the company each year.

TMS Capital suggests that a full-year contribution will occur in FY25.

Commsec numbers currently have a projection of $2.43 of earnings per share (EPS) for the 2025 financial year.

That implies a valuation of 23 times FY25’s estimated earnings. That’s a reasonable valuation for Wesfarmers shares in my opinion, for a diversified, growing business with increasing exposure to areas with promising tailwinds like lithium and healthcare.

The post How lithium could unlock billions for Wesfarmers shares appeared first on The Motley Fool Australia.

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More reading

• Why Bank of Queensland, Link, Silk Laser, and Zip shares are pushing higher
• Silk Laser share price rockets 25% following Wesfarmers takeover bid
• Wesfarmers share price on watch amid $169m Silk Laser takeover offer
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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 positions in and has recommended Wesfarmers. 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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Me, 15 minutes ago: “What will I write about today?”

*ding*

(That’s the sound of the news fairy arriving, just in time to solve my conundrum.)

It was in the form of an update on the Fin Review’s Markets Live live blog.

And it was right up my alley.

See, apparently the good people at the Chicago Board of Exchange (that’s CBOE, to the cool kids) have released another ‘fear index’.

There’s already one, called the ‘VIX’ which gets CBOE lots and lots of free headlines.

I’m sure you’ve heard of it.

But that’s not enough.

See the VIX measures volatility (not really ‘fear’, but that four letter word gets all the headlines) over an extraordinarily long period.

Days.

That’s just way too long.

What if you could create headlines (sorry, ‘accurately report on volatility’) during a single market day?

I’m with you… I don’t know how Warren Buffett has managed thus far, either!!!

Now, just in case my attempt at humour is lost on you (it’s not new, ask my wife), let me come clean.

Clearly, I’m kidding.

You know that quote, ‘not everything that can be counted, counts, and not everything that counts, can be counted’?

Yeah, that wasn’t written about these indices… but it could have been.

A new ‘fear index’ is great for CBOE’s branding.

It’s great for the poor journos with huge workloads and oppressive headlines.

But… not for much else.

Still, as I said, the AFR is reporting today that there’s a new index to compete for our attention:

“CBOE Global Markets, the Chicago-based exchange operator behind the VIX, has announced that a new one-day version of its flagship volatility index is poised to launch.

“The CBOE 1-Day Volatility Index (ticker VIX1D) is scheduled to start Monday, according to a notice on CBOE’s website.

“If it succeeds in capturing the sentiment embedded in 0DTE (zero days to expiration) options, it could mark a significant moment for investors and traders across the spectrum.”

Again, let me say in my most sarcastic voice: “Thank God… what on Earth have I been doing without such an index to guide my investing?”

Then, without sarcasm, let me suggest to you that Warren Buffett has, since 1965, spent something like 14,500 market days investing without it.

And… he’s done pretty well.

But it’s not just Buffett, either. The market itself has done very nicely over the same time frame.

Of course, if you make money from other people trading (if you’re an exchange or a stock broker, for example), you’re genuinely excited about this.

After all, it’s going to give some people yet another reason to trade.

But if you’re an investor… I hope you yawned and moved on.

Because, truly, measures of volatility (over an hour, a day, a week or even a year) have nothing for you.

But they are, of course, constant temptations.

If everyone is talking about them…. Maybe there’s something to them?

Maybe I should be more ‘sophisticated’?

More ‘clever’?

More ‘active’?

And you know what? Those are exactly the questions those vested interests want you to ask yourself.

Because if they can convince you to abandon sensible, long-term investing… well, then you become a meal ticket.

But it probably won’t help your results.

In fact, it’ll probably hurt your results, I reckon.

Because if you’re going to compete with highly paid traders, with supercomputers and even faster internet connections…. you’re starting off with both hands tied behind your back.

I mean hey, it’s a free world. You’re welcome to give it a go, if you don’t like money!

And I guess the law of averages mean at least one person will do well.

Maybe.

Me?

I couldn’t care less about the VIX. Or the new VIX-with-a-poor-attention-span.

It has nothing to tell me. Nothing to help me with.

And can only be a distraction from the main game – finding great businesses and paying good prices.

Investing regularly.

And letting time do the rest.

Wondering where the excitement is? The action? The cafe-by-the-beach day-trading?

Yeah, it doesn’t exist. At least not in my world. And I hope not in yours, either.

I’m kinda keen to get rich slowly, rather than going broke, fast.

Or you can tell me again about how Buffett’s past it, and long term compounding is dead.

And I’ll introduce you to a bloke named Aesop and his tortoise and hare.

And remind you that not everything that can be counted, counts.

Fool on!

The post Just when you thought it was safe to stop day-trading appeared first on The Motley Fool Australia.

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Motley Fool contributor Scott Phillips 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 JB Hi-Fi Limited (ASX: JBH) share price has been through plenty of volatility over the past year. At the time of writing, it’s down close to 20% since 1 April 2023.

JB Hi-Fi operates three different businesses – JB Hi-Fi Australia, JB Hi-Fi New Zealand, and The Good Guys. Each of these businesses has a good position in the markets in which they operate.

The last few years have been a very profitable period for the ASX retail share. But that may be about to change if households don’t buy as many consumer goods in the next couple of years. Inflation and higher interest rates are making things tougher for people’s budgets.

Earnings expected to fall

In FY22, the business made earnings per share (EPS) of $4.80, which was growth of 8.8% year over year.

Then, in the FY23 half-year result, it generated $3.02 of EPS, which was growth of 20.4% after comparing it against a locked-down six months in the prior corresponding period.

But, in FY23, the business is expected to generate EPS of $4.50 according to Commsec. This would be a reduction of 6.25% year on year. EPS could then fall to $3.45 in FY24, which would represent a fall of around 28% compared to FY22.

However, I’m not sure many investors would have said they believed EPS was going to stay elevated forever. Demand for TVs, fridges, computers, and phones can go up and down through the economic cycle. But I think it would be a mistake for investors and the market to price JB Hi-Fi shares as though conditions will be like this for a very long time.

I believe that the RBA interest rate will reduce towards 3% if/when inflation settles back close to that level.

Why JB Hi-Fi shares could outperform

I think it particularly makes sense to look at ASX retail shares at a point in the economic cycle when conditions are uncertain.

I wouldn’t just buy any retailer though. I’d make to make sure that the retailer has a strong business model and is attractive for customers.

JB Hi-Fi itself says there are a few key advantages that it has: scale, low-cost operating model, multi-channel capabilities, and its people and culture.

It says it’s the number one player in the Australian consumer electronics and home appliance market, which is useful because it gives it more relevance to local and global suppliers. Being the biggest means it can spend more on marketing, benefit from efficiencies, and get a better deal buying products.

The low-cost operating model refers to its focus on “productivity and minimising unnecessary expenditure”, with “highly productive floor space with high sales per square model”. It also means it can respond to market price activity and maintain its focus on market share while competing with older competitors and new entrants.

The multi-channel capabilities mean customers can engage easily, making a sale potentially more likely. There are online, in-store, and over-the-phone sales channels that shoppers can utilise.

Finally, it suggests that exceptional customer service is a key selling point, while having a “dynamic and flexible environment” allows the business to pivot quickly to adapt to any changing market conditions.

I believe that, over the long term, JB Hi-Fi can continue to perform. Australia’s growing population can help overall demand over time, which can support sales.  

According to Commsec, the JB Hi-Fi share price is valued at just 13x FY24’s estimated earnings, with a possible grossed-up dividend yield of 7.25% for that year. I think it’s a good price to invest, but I wouldn’t expect it to deliver enormous capital growth from here because of how large it already is. However, I do think it can outperform — though a lower share price would be even more attractive.

The post Could buying JB Hi-Fi shares at under $45 make me rich? appeared first on The Motley Fool Australia.

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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 JB Hi-Fi. 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 looks set to be a big week for Pilbara Minerals Ltd (ASX: PLS) shares.

That’s because later this week, the lithium giant will be releasing its highly anticipated third-quarter update.

Ahead of the release on Thursday, let’s take a look to see what the market is expecting from the company.

Pilbara Minerals shares on watch ahead of quarterly update

According to a note out of Goldman Sachs, its analysts are expecting Pilbara Minerals to deliver spodumene production of 155kt during the third quarter. This would be down from 162kt during the second quarter but a touch ahead of the consensus estimate of 148kt.

Pleasingly, the broker believes that its sales volumes will be stronger quarter on quarter. It has pencilled in spodumene sales of 170kt for the three months, which is up from 149kt in the previous quarter. It is also ahead of the consensus estimate of 161kt.

And while Goldman expects Pilbara Minerals to report a slightly softer realised spodumene price of US$5,495 per tonne (Q2: US$5,668 per tonne), this is once again ahead of the consensus estimate of US$5,209 per tonne.

Finally, the broker also believes that the company’s costs will be better than expected. It is forecasting cash costs of US$623 per tonne (Q2: US$579), whereas the consensus is for a jump to US$865 per tonne.

However, despite this positive view on its performance, Goldman only currently has a neutral rating and $4.20 price target on Pilbara Minerals shares.

The post Here’s why Pilbara Minerals shares will be in the spotlight this week appeared first on The Motley Fool Australia.

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