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One ASX share is set to soar from its unique position within the S&P/ASX 200 Index (ASX: XJO), reckons a trio of portfolio managers.

Wilson Asset Management executives Matthew Haupt, Catriona Burns, and Oscar Oberg this week revealed their bullishness on QBE Insurance Group Ltd (ASX: QBE).

“QBE is a Sydney-headquartered general insurance and reinsurance company with 27 offices worldwide — the only truly global insurer in the ASX 200,” they wrote in an email to clients.

Wilson holds QBE in its WAM Leaders Ltd (ASX: WLE) listed investment company. 

Here are the reasons for their optimism.

Financial shares currently in favour

WAM Leaders has been overweight on the finance industry the last two quarters.

Haupt, Burns and Oberg cited the cyclical nature of these shares and their trading on “undemanding valuations” for their exposure.

“Exposure to real activity will be critical for outperformance when monetary policy is wound back, which we expect will be signalled from central banks in the coming months.”

As this happens, the portfolio managers noted money will move out from “companies artificially inflated by monetary policy”.

“We are confident in the outlook for cyclical stocks.”

Strong tailwinds for insurance

The insurance sector specifically has some forces working in its favour in the medium-term, according to the WAM memo.

“Tailwinds for QBE include the strong premium rate cycle globally, driving higher top-line growth in the coming years,” the portfolio managers said.

“Given their reliance on investment income, general insurers are also highly leveraged to bond yields, should these rise.”

It seems brokers at UBS agree with the Wilson managers. Last month the Swiss firm retained its ‘buy’ rating for QBE while upgrading the price target to $11.50.

QBE hit a new 52-week high in intraday trading on Friday, climbing 2.16% to $11.37 before closing the session at $11.33. But that’s still way below its pre-COVID high of $15.13 reached in February last year.

“QBE is trading at a discount to its peers such as Insurance Australia Group Ltd (ASX: IAG), and below its historical average.”

The insurance company now known as QBE started in 1886 as the North Queensland Insurance Company. The business now employs more than 11,000 staff in 25 countries.

The post Why we love this cheap ASX 200 share: Wilson appeared first on The Motley Fool Australia.

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ASX shares, on average, paid out fewer dividends during the first quarter of the year than they did in Q1 2020. The fall, however, was less than their international counterparts.

And analyst consensus opinion is that we’ll see ASX shares upping their dividend payments in the latter half of the year, primarily thanks to mining and bank shares.

Why these experts see higher dividend yields ahead

Jane Shoemake is a client portfolio manager for global equity income at Janus Henderson Investors. Janus Henderson forecasts that ASX shares will boost their dividends by 40% in 2021, year-on-year.

According to Shoemake (quoted by the Australian Financial Review):

We are optimistic that Australians will experience a good year for dividends in 2021. With Australia’s dividend payers still so heavily concentrated, investors will be well-placed to take advantage of the commodity price boom supporting mining dividends and the dividend recovery of the big banks…

Australia’s concentration in a small number of dividend payers is likely to prove a tailwind in the recovery, as the local economy gets back on track and banks look to normalise their dividend payments, albeit at lower levels than prior to the pandemic…

Considering the outlook for mining stocks is also good because of the commodity price boom, the country’s dividend concentration will – on this occasion – work to Australians’ advantage.

Hugh Dive, Atlas Funds Management chief investment officer, also has a bullish outlook for ASX shares dividend payouts. According to Dive:

We don’t see any massive cuts so the outlook for dividends is generally positive.

Refugees from term deposits and bonds will still be coming to the market… Banks are balancing being prudent and wanting to reward shareholders who were hit hard last year… It’s hard to see massive spikes in unemployment or loan losses from current levels and house prices don’t look to be falling, so it makes the banks’ security look better.

The big miners are expected to be quite generous with their dividends in the August reporting season and will probably be the peak for dividends there. Unlike other [commodity price] spikes, they haven’t made poor acquisitions. They’re in a much better situation to pass on higher commodity prices because they’re not doing anything new.

5 ASX shares tipped to pay higher dividends

Dive named 5 ASX shares he expects will be lifting their dividend payouts from last year’s corresponding levels. Though dividend yields may remain below their 2019 levels.

According to Dive (quoted by the AFR), “The miners will pay higher dividends and overall, the economy is in relatively robust shape. Stocks like Ampol, JB Hi-Fi, Macquarie Group, Sonic Healthcare and Wesfarmers should all pay higher dividends.”

Here are the trailing dividend yields for these 5 ASX shares:

• Ampol Ltd (ASX: ALD) pays a dividend yield of 1.7%, 100% franked.
• JB Hi Fi Limited (ASX: JBH) pays a dividend yield of 5.6%, 100% franked.
• Wesfarmers Ltd (ASX: WES) pays a dividend yield of 2.9%, 100% franked.
• Macquarie Group Ltd (ASX: MQG) pays a dividend yield of 3.1%, 40% franked.
• Sonic Healthcare Limited (ASX: SHL) pays a dividend yield of 2.5%, 30% franked.

You can find the list of 10 top ASX dividend shares here.

The post 5 ASX shares tipped to pay higher dividends: fund manager appeared first on The Motley Fool Australia.

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I like to keep an eye on substantial shareholder notices. This is because these notices give you an idea of which shares large investors, asset managers, and investment funds are buying or selling.

Two notices that have caught my eye are summarised below. Here’s what these fund managers have been buying:

Domino’s Pizza Enterprises Ltd (ASX: DMP)

A change of interests of substantial holder notice reveals that Bennelong Funds Management has recently been increasing its stake in this pizza chain operator.

According to the notice, Bennelong Funds Management has added a further 1,094,865 shares to its holding, lifting its interest to a total of 5,811,725 shares. This represents a ~6.72% interest, up from ~5.42% previously. The fund manager was buying shares for as low as $87.88 and as high as $112.94. This compares to the latest Domino’s share price of $116.32.

Analysts at Bell Potter are likely to give the thumbs up to these purchases. The broker currently has a buy rating and $122.00 price target on the company’s shares.

Qantas Airways Limited (ASX: QAN)

According to an initial substantial holder notice, First Sentier has been building a position in this airline operator since February.

The notice reveals that the fund manager, previously known as Colonial First State, has now accrued a total of 94,334,101 Qantas shares. This is the equivalent of a 5% stake in the airline. First Sentier was buying shares as recently as Monday when the Qantas share price closed the day at $4.71.

One leading broker that would be supportive of these purchases is Citi. On Monday the broker retained its buy rating but trimmed its price target slightly to $5.89. Based on the current Qantas share price, this implies potential upside of approximately 21% over the next 12 months.

The post Fund managers are buying Qantas (ASX:QAN) and this ASX share appeared first on The Motley Fool Australia.

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The Argosy Minerals Limited (ASX: AGY) share price is in negative territory today. This comes despite the company announcing a positive update on the construction works at the Rincon Lithium Project.

Argosy holds a 77.5% interest in the Rincon project, located in Salta Province, Argentina. The mine is situated within the ‘lithium triangle’ – the world’s dominant lithium production source.

During late afternoon trade, the lithium miner’s shares are down 3.03% to 9.6 cents apiece.

How is Argosy progressing?

Investors are selling Argosy shares regardless of the company providing a snapshot of its progress on the Rincon Lithium Project.

According to its release, Argosy stated that around 24% of the total works have now been completed to bring the Rincon Lithium Project online. The development of the modular 2,000tpa (tonnes per annum) of lithium carbonate production plant remains on schedule and on budget.

The company is targeting to achieve the first commercial production of lithium carbonate product from mid-2022.

Major construction works such as building the process plant, equipment and associated installations, and expansion of the brine system have all progressed. As such, Argosy provided a snapshot of the current progress:

• 74% of earthworks/land movements completed;
• 31% of site works completed (site camp/accommodation, laboratory, office, and other works);
• 65% of the brine system completed (pumping station and plant settling ponds);
• 25% of the process plant completed (plant equipment acquisition and plant warehouse);
• 13% of utilities and associated services (vapour system, communication system and ancillary services); and
• 2% plant commissioning works completed (raw materials acquisition and team development).

Argosy revealed that it is continuing discussions with a number of strategic groups on product off-take agreements and investment options. The company hopes to expand the 2,000tpa of lithium carbonate to a 10,000tpa project development.

Furthermore, Argosy believes that with lithium prices rising and tightening market supply and demand conditions, potential off-take arrangements will become more attractive.

What did management say?

Argosy managing director, Jerko Zuvela commented:

The Company’s Puna operations team have continued their strong progress with construction and development works, toward commencing 2,000tpa lithium carbonate production operations at our Rincon Lithium Project.

We are excited as we continue our works to transform Argosy into a battery quality lithium carbonate producer and cashflow generator, and to further progress the 10,000tpa project development expansion. We look forward to a significant near-term growth phase from increasing development activity at the Rincon Lithium Project

About the Argosy share price

Since the beginning of the year, Argosy shares have performed modestly, recording gains of around 20%. The company’s share price reached a 52-week high of 21.5 cents in January.

Based on valuation grounds, Argosy presides a market capitalisation of roughly $120 million, with approximately 1.25 billion shares outstanding.

The post Argosy (ASX:AGY) share price backtracks despite positive update appeared first on The Motley Fool Australia.

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The Commonwealth Bank of Australia (ASX: CBA) share price is up 1.3% in late afternoon trade. CBA is currently trading for $102.54 per share.

It was only last Friday, 28 May, that the CBA share price closed higher than $100 for the first time.

That psychological level didn’t last long. CommBank closed lower on the first 2 days of this week, with the CBA share price at $99.46 by Tuesday’s closing bell.

The tail end of this week has been a different story, with CommBank closing in the green the past 3 days. Assuming today’s gains hold, the CBA share price looks set to close at a new record high today.

CBA in the news

Over the past 3 months, CBA has been the best performing of the big 4 banks. And a growing chorus of analysts expect that CBA will be giving some of its profits back to shareholders by ramping up dividends.

Matthew Haupt, portfolio manager at Wilson Asset Management, calls CBA “the best bank in Australia.” As Reuters reports, Wilson Asset Management has a position in all the big 4 banks.

According to Haupt

[CBA] is absolutely flush with capital so they are in a great place to be able to return capital to shareholders… Probably around August, they’ll come out with a market buyback with a large franking credit portion. They should be leading the charge in capital management.

CommBank has roughly $11.5 billion more capital than it’s required to hold under the 10.5% core capital regulations.

That staggering sum has analysts at Morgan Stanley forecasting CBA will raise its dividend payment when it reports on its 2021 financial year earnings on 11 August. The broker also believes CommBank will make an off-market share buyback in the range of $5–5.5 billion.

CBA share price snapshot

The best performing of the big 4 banks in recent months, CommBank shares are up 52% over the past 12 months. By comparison, the S&P/ASX 200 Index (ASX: XJO) has gained 22% in that same time.

Year-to-date the CBA share price is up 22%.

The post Why the CBA (ASX:CBA) share price is at record highs appeared first on The Motley Fool Australia.

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If you haven’t already noticed, initial public offerings (IPOs) usually take advantage of industry strength in their timing. Copper mining company 29Metals is no different, with the possibility of it becoming the second-largest IPO so far this year.

The strategic timing is set to make the most of the red metal’s soaring price. Increasing demand for copper has pushed the commodity’s price up 44.5% in the last year. As of today, the conductive element is going for roughly US$9,810 per tonne.

Let’s take a look at the details of 29Metals and its anticipated IPO.

Billion-dollar copper company in the making?

Firstly, what is 29Metals? It’s not exactly a household name like BHP Group Ltd (ASX: BHP) or Rio Tinto Limited (ASX: RIO). The copper-focused miner operates two Australian producing mines and a Chilean exploration project.

A little more specifically, the miner’s portfolio includes Golden Grove in Western Australia – with a production rate of 1.4 million tonnes per year. Its other Australian project is Capricorn Copper in Queensland – with a production rate of 1.8 million tonnes per year.

29Metals is forecasting that it will achieve $658.4 million in revenue for the 2021 financial year, which would be a 25% increase on its 2018 revenue. The copper miner also expects net profit after tax of $39 million for the year – more than double its 2018 profit.

Credit Suisse, Macquarie Capital, and Morgan Stanley are jointly conducting the IPO. The brokers were closing their books at 12.30pm today, so now it’s a waiting game to see if the deal gained enough interest.

Bids were to be placed in 5 cent increments between $2 and $2.40 per share. However, closer to the books closing, that price range had narrowed to between $2 and $2.10. If the order books were filled, 29Metals could be looking to list at an enterprise value of between $1.05 billion and $1.2 billion.

What’s driving interest in copper shares?

Investors have been gobbling up shares in copper mining companies over the past year. There are various catalysts at play, namely the power and constructions sectors, and electric vehicles.

S&P Global has reported the surging pace of electrification means global copper production will need to rise by an estimated 3% to 6% by 2030. Analysts are expecting a lack of new mines and exploration will lead to demand outstripping our global supply.

Big #Copper pricing forecast

Goldman Sachs shifted its copper outlook in an April 13 research report, projecting a 2025 copper price of $15,000 per tonne, or $6.80 per pound, up from a prior price forecast under $10,000/t pic.twitter.com/LKkknmMJ5r

— Michael Bond (@MichaelBond_SP) April 15, 2021

https://platform.twitter.com/widgets.js

Analysts at Goldman Sachs have even gone as far as to say copper is “the new oil”. Additionally, Goldman slapped a price target of US$15,000 per tonne on the commodity by 2025. The analysts pointed to electric vehicles, solar power, and wind power being three key drivers for green copper demand.

What’s next for 29Metals?

If 29Metals managed to rally enough interest, a prospectus will be filed with the Australian Securities and Investments Commission.

From there, the mining company will hit the ASX boards on 23 June 2021, joining the likes of OZ Minerals Ltd (ASX: OZL) and Sandfire Resources Ltd (ASX: SFR).

The post 29Metals IPO heats up as books close on the copper miner appeared first on The Motley Fool Australia.

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The Purifloh Ltd (ASX: PO3) share price has been frozen after the company’s shares entered a trading halt this afternoon. At the time trading was halted, the purification and sterilisation company’s shares were sitting at $1.99, up 24.4% on yesterday’s close.

What’s going on?

Purifloh’s shares have been halted after investors drove the company’s share price 24% higher today. Additionally, the number of shares exchanged prior to the halt was 5 times greater than the average for a month.

Yesterday, the company posted a media release concerning the use of airborne prevention technology to minimise the risk of COVID-19 transmission in hotel quarantine.

Purifloh director Jon Evans said:

The recent COVID-19 outbreak in Victoria is the result of airborne transmission of the virus from hotel quarantine in Adelaide. While the long-term solution is clearly purpose-built facilities, in the short-term we need to set up those hotels with proven, effective airborne prevention transmission technology.

Furthermore, the press release stated that tests have shown Purifloh’s devices can destroy up to 99.9% of airborne contaminants.

While there has been no price-sensitive news out of the company today, the market could be speculating given the renewed attention on hotel quarantine processes this week as the Victorian lockdown rolls on and additional cases continue to be reported.

What next for the Purifloh share price?

Purifloh has yet to provide an additional update regarding its trading halt. At this point in time, the reason for Purifloh share price halt is unknown.

The post Purifloh (ASX:PO3) shares enter trading halt after surging 24% appeared first on The Motley Fool Australia.

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Australia’s top brokers have been busy adjusting their estimates and recommendations once again. This has led to the release of a 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:

Australia’s top brokers have been busy adjusting their estimates and recommendations once again. This has led to the release of a 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:

Afterpay Ltd (ASX: APT)

According to a note out of Morgan Stanley, its analysts have retained their overweight rating and $149.00 price target on this payments company’s shares. The broker has been looking at app downloads in the United States during the month of May. It notes that Afterpay’s app was downloaded twice as much as it was a year earlier. It feels this is particularly impressive given that this is a seasonally quiet period. Outside this, Morgan Stanley remains positive on the company, believing that its recent launch in the European Union sets it up to build a global platform. The Afterpay share price is fetching $94.08 today.

Eagers Automotive Ltd (ASX: APE)

A note out of the Macquarie equities desk reveals that its analysts have retained their outperform rating and increased their price target on this auto retailer’s shares to $17.50. The broker believes that Eagers Automotive is well-placed to benefit from favourable trading conditions which continue to see demand outstripping supply. This has led to the broker increasing its margin assumptions and making material upgrades to its near term earnings forecasts. The Eagers Automotive share price is trading at $15.96 this afternoon.

Healius Ltd (ASX: HLS)

Another note out of Macquarie reveals that its analysts have retained their outperform rating and lifted their price target on this healthcare company’s shares to $4.70. The broker made the move after looking at current COVID-19 testing volumes. It believes Healius is well-placed to benefit from increasing demand for testing and appears to expect volumes to remain robust into FY 2022. The Healius share price is trading at $4.30 today.

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

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The energy sector is chalking up another day of gains as the outlook brightens for the oil price and a leading broker is urging you to buy this ASX share today.

The Brent crude benchmark has jumped by nearly 10% in two weeks from a low of US$65.11 to over US$70 a barrel.

ASX shares linked to the oil price have joined the party and most continued to rally today.

Broker lists one ASX energy share to buy

The Viva Energy Group Ltd (ASX: VEA) share price added 2.2% to $2.10, Oil Search Ltd (ASX: OSH) share price jumped 2% to $4.11 and Worley Ltd (ASX: WOR) share price gained 1% to $12.17.

But there’s one often overlooked ASX share that should be on your radar. This is the Karoon Energy Ltd (ASX: KSR) share price as Morgans reiterated its “add” recommendation on the stock.

The broker’s bullish call follows Karoon reaching a final investment decision (FID) on its Patola oil field.

Karoon production to double

“Given the high IRR (24%) and fast payback period (~3 years), we never saw much risk of Patola not reaching FID,” said Morgans.

“But the development should bolster market confidence in what we see as a low-risk/high-return organic growth profile that will double KAR’s current production.”

Karoon’s current production stands at around 12,500 barrels of oil equivalent per day (bopd). Management is expecting to produce 10,000 bopd from Patola starting from the March quarter of 2023.

Higher costs offset by other tailwinds

But it isn’t all good news. The capital expenditure (capex) on the project is higher than originally forecast. Bringing Patola into production is expected to cost US$175 million to US$195 million. That’s ahead of initial estimates of US$130 million.

“More than offsetting the higher capex was the debt KAR has secured,” said Morgans.

“Both larger (actual US$160m vs MorgE US$100m) and cheaper (actual 4.25% vs MorgE 5.5%) than we had expected KAR to be able to achieve. This is material for KAR’s cost of capital, which we have now adjusted lower.”

Karoon share price valuation uplift

The lower cost of debt means that the broker’s weighted average cost of capital (WACC) for the Karoon falls to 8% from 9.5%.

The lower the WACC, the higher the valuation on the Karoon share price. Additionally, the reduction in the expected Patola decline rate is a further boost to valuation.

These two positives more than offsets the higher-than-expected capex for the project.

Morgans increased its 12-month price target on the Karoon share price to $1.90 from $1.80 a share.

This implies a close to 40% upside for the shares.

The post Morgans picks this ASX share to buy for the oil recovery trade appeared first on The Motley Fool Australia.

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BetMakers Technology Group Ltd (ASX: BET) shares have been having a tough week following the company’s indicative proposal to acquire the wagering and media businesses of Tabcorp Holdings Limited (ASX: TAH). At the time of writing, the BetMakers share price has fallen 2.78% today to $1.05.

With today’s slide included, the company’s shares have slumped by 21.64% this week.

Let’s take a look at what’s been driving them lower.

BetMakers’ acquisition proposal

BetMakers released its acquisition proposal last Friday morning, to the dismay of the market. BetMakers shares slumped by more than 15% on that day alone.

If accepted, the proposal would see BetMakers acquire Tabcorp’s wagering and media business for $4 billion.

$1 billion would be paid in cash that BetMakers would get its hands on through debt financing.

The other $3 billion would be paid in new BetMakers shares – priced at a 15% premium to the BetMakers share price at the time of signing.

The acquisition would see Tabcorp shareholders given an approximate 65% interest in the merged BetMakers and Tabcorp wagering and media business.

BetMakers’ strategic advisor Matt Trip commented on the proposal, saying:

I am excited by the potential opportunity to reinvigorate the Tabcorp Wagering and Media business. There is significant potential for the business to grow in partnership with BetMakers and I hope to get the opportunity to support the Australian racing industry which relies on the success and growth of TAB

Tripp’s positivity hasn’t quite translated to the market, which has pushed the BetMakers share price down nearly every day since the indicative proposal was released.

Tabcorp did acknowledge the proposal, though it hasn’t responded further.

Tabcorp shares have ended the week not far from where they started – down 0.58% on last Friday’s close.

BetMakers share price snapshot

Despite the poor performance of the BetMakers share price over the past week, it’s still sitting around 55% higher than it was at the start of the year. It’s also gained more than 180% since this time last year.

The company has a market capitalisation of around $845 million, with approximately 812 million shares outstanding.

The post Why has the BetMakers (ASX:BET) share price fallen 22% this week? appeared first on The Motley Fool Australia.

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