Tag: Motley Fool

There can’t be much argument that ASX technology shares are the ones to suffer the most from the market downturn over the past 18 months.

From its November 2021 peak to the start of this year, the S&P/ASX All Technology Index (ASX: XTX) painfully lost roughly 40%. Over in the US the Nasdaq Composite Index (NASDAQ: .IXIC) didn’t fare much better, falling about 35%.

However, 2023 has brought some light to the tunnel.

The ASX tech index is up 15% so far this year while the NASDAQ is 17% higher.

So does this mean it’s time to stop being shy about buying tech shares?

Betashares portfolio analytics associate Alex Parker this week had some thoughts:

What hurdles does tech face in launching a revival?

The first point to note when deciding whether to return to tech stocks is the recent events in the US.

“The recent weakness in the US banking sector is a cause for consternation,” Parker said on the Betashares blog.

“However, the larger companies in the tech sector appear unlikely to fall victim to the contagion. These companies typically have high cash balances and low leverage, which will make them resilient to any coming financial downturn.”

Ironically, any signs of a downturn could compel the central banks to cut interest rates earlier than what we currently expect, which the tech sector would absolutely love.

Considering this uncertainty, Parker suggests that anyone wanting to wade back into tech might prefer to go for ASX shares rather than US ones.

“The Australian technology sector offers unique characteristics that could potentially benefit investors,” he said.

“The first thing that stands out when looking at Aussie tech – compared to the large global technology sectors in the US and China – is the prevalence of business-to-business (B2B) revenue models.”

Parker took WiseTech Global Ltd (ASX: WTC), Xero Limited (ASX: XRO) and Altium Limited (ASX: ALU) as prime examples of the global success of B2B tech out of Australia and New Zealand.

The great advantage of B2B tech companies is that they have much more certainty over earnings than their consumer-facing counterparts.

“The revenue streams of these businesses tend to be stickier than those of consumer discretionary focused firms like some US tech giants, with long term contracts and the difficulty of businesses switching essential software likely to provide support in the event of an economic downturn.”

Australia vs the world

Parker also noted that the companies that make up the ASX All Tech index source the majority of their sales from overseas.

With economic clouds looming, this is another ace up the sleeve for Aussie tech stocks.

“In economic downturns, history suggests investors typically sell off Aussie dollars in favour of traditional safe haven currencies such as US dollars,” said Parker.

“As a result, the services that Aussie tech firms provide become more attractive to foreign customers in terms of their own currencies – or sales denominated in foreign currencies become worth more in AUD terms.”

Even in the longer run, the Australian tech scene seems to have more potential for growth than overseas.

“Aussie tech’s growth runway appears attractive for long term investors,” Parker said.

“The sector is less mature than the US tech industry — or for that matter the Australian banking and resources sectors that dominate the S&P/ASX 200 Index (ASX: XJO). And while not as headline grabbing as some of the global tech giants, Australian home grown technology players such as WiseTech and Xero have already become globally recognised players in their respective fields.”

The post Why ASX tech shares are so much more attractive than US stocks appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Which stocks does Warren Buffett own (and what can ASX 200 investors learn from this)?
• 11 ASX shares to buy with 4 on-trend qualities right now
• Conviction list: Goldman Sachs says Xero share price can rise 37%
• Supercharge your portfolio with these 3 ASX growth shares: brokers
• This ASX 200 tech stock is up almost 40% in 2023 and has just hit an all-time high

Motley Fool contributor Tony Yoo has positions in Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Altium, WiseTech Global, and Xero. The Motley Fool Australia has positions in and has recommended WiseTech Global and Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/NW1ywdD

The Rio Tinto Ltd (ASX: RIO) share price came under pressure on Thursday after the mining giant released its first-quarter update.

The miner’s shares fell 2.5% to end the day at $120.33.

Is the pullback in the Rio Tinto share price a buying opportunity?

While the market may have been a touch disappointed with Rio Tinto’s quarterly update, the team at Goldman Sachs has seen enough to remain positive.

According to the note, the broker has retained its conviction buy rating with an ever so slightly trimmed price target of $136.20.

Based on the current Rio Tinto share price, this implies potential upside of 13% for investors over the next 12 months.

Making things sweeter is the broker’s forecast for a fully franked US$5.40 (A$8.09) per share dividend in FY 2023. This equates to a generous 6.7% dividend yield for investors at current prices.

What did the broker say?

Goldman highlights that there were positives and negatives from Rio Tinto’s quarterly update. It said:

RIO reported a broadly strong start to 2023 with record 1Q Pilbara iron ore shipments of 82.5Mt (+3% vs. GSe) due to the ongoing ramp-up of the Gudai-Darri and Robe Valley mines, positioning RIO to hit the top end of the of 320-335Mt guidance range (GSe 335Mt).

Copper production increased 10% QoQ to 145kt but fell short of our 157kt estimate due to lower than expected head grades at Escondida in Chile and equipment outages at Kennecott (Bingham) in the US. As a result, RIO has reduced copper production guidance by 60kt to 590-640kt (GSe revised to 636kt).

The broker also highlights that there are a few uncertainties in regard to growth projects, but was pleased with the Oyu Tolgoi ramp up. It adds:

On a positive note, the ramp-up of the Oyu Tolgoi block cave is tracking well with the UG rates increasing to ~3Mtpa (8ktpd) and ahead of our estimate. Other growth projects have seen some delays with the schedule and budget for the Rincon lithium project in Argentina under review and no further details on capex or timing for Simandou iron ore in Guinea.

Overall, thanks to its “compelling relative valuation” and strong free cash flow and dividend yield, the broker remains positive and keeps the miner on its conviction list.

The post Goldman Sachs says the Rio Tinto share price is ‘compelling value’ after Q1 update appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• ASX 200 mining shares sink as iron ore price nears 2023 low
• Why 29Metals, Allkem, Alliance, and Rio Tinto shares are falling today
• Rio Tinto share price falls despite record iron ore exports
• 2 ASX 200 dividend shares to buy now: brokers
• The latest Rio Tinto dividend is being paid today. Here’s what you need to know

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.

from The Motley Fool Australia https://ift.tt/HQkmoBl

On Thursday, the S&P/ASX 200 Index (ASX: XJO) had a volatile day and ended it with the smallest of declines. The benchmark index was down 3.3 points to 7,362.2 points.

Will the market be able to bounce back from this on Friday? Here are five things to watch:

ASX 200 expected to fall

The Australian share market looks set to end the week in a disappointing fashion following a poor night on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open 34 points or 0.45% lower this morning. In the United States, the Dow Jones was down 0.3%, the S&P 500 fell 0.6%, and the NASDAQ dropped 0.8%.

Oil prices tumble

ASX 200 energy shares Beach Energy Ltd (ASX: BPT) and Woodside Energy Group Ltd (ASX: WDS) could have a tough finish to the week after oil prices tumbled overnight. According to Bloomberg, the WTI crude oil price is down 2.35% to US$77.29 a barrel and the Brent crude oil price is down 2.65% to US$80.91 a barrel. Recession fears and swelling US gasoline inventories put pressure on prices.

BHP quarterly update

The BHP Group Ltd (ASX: BHP) share price will be one to watch on Friday when the mining giant releases its third-quarter update. According to a note out of Goldman Sachs, its analysts expect iron ore shipments of 64.7Mt for the quarter. This compares to the consensus estimate of shipments of 67.9Mt.

Gold price rises

Gold shares Newcrest Mining Ltd (ASX: NCM) and St Barbara Ltd (ASX: SBM) could have a good finish to the week after the gold price pushed higher overnight. According to CNBC, the spot gold price is up 0.35% to US$2,014.3 an ounce. Gold rose following the release of US economic data.

Cochlear dealt blow

The Cochlear Limited (ASX: COH) share price will be in focus today. That’s because the hearing solutions company has just been dealt a blow in the UK in relation to its proposed acquisition of Oticon Medical. The UK Competition and Markets Authority has found that the acquisition could result in a substantial lessening of competition in the supply of bone conduction solutions. Cochlear disagrees with the competition regulator.

The post 5 things to watch on the ASX 200 on Friday appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Which stocks does Warren Buffett own (and what can ASX 200 investors learn from this)?
• ASX 200 mining shares sink as iron ore price nears 2023 low
• Here are the top 10 ASX 200 shares today
• Are Star Casino shares finally cheap enough to buy?
• Here are the 3 most heavily traded ASX 200 shares on Thursday

from The Motley Fool Australia https://ift.tt/dDwKUm8

If you’re looking for dividend shares to add to your income portfolio, then it could be a good idea to check out the two listed below.

These ASX 200 dividend shares have been rated as buys by analysts and tipped to provide 5%+ yields. Here’s what brokers are saying about them:

Aurizon Holdings Ltd (ASX: AZJ)

The first ASX 200 dividend share for income investors to consider buying is Aurizon.

Australia’s largest rail freight operator connects miners, primary producers, and industry with international and domestic markets through its extensive national rail and road network.

The team at Morgans is very positive on the company and has an add rating and $3.81 price target on its shares. Its analysts revealed that they “see value in the stock at current prices, supported by the far higher quality Network and Coal haulage businesses.”

As for dividends, Morgans is forecasting partially franked dividends of 17 cents per share in FY 2023 and then 19 cents per share in FY 2024. Based on the latest Aurizon share price of $3.41, this will mean yields of 5% and 5.6%, respectively.

National Australia Bank Ltd (ASX: NAB)

Another ASX 200 dividend share that has been rated as a buy is this banking giant.

Goldman Sachs is a fan and currently has a buy rating and $33.06 price target on its shares.

The broker remains positive on NAB in the current environment due to its strong capital position and exposure to commercial lending. Goldman expects the latter to perform better than home lending due to the housing market downturn.

Another positive is the work NAB has already done on productivity and cost management. It feels this “leaves it well positioned for an environment of elevated inflationary pressure.”

In respect to dividends, Goldman Sachs is expecting the bank to pay fully franked dividends of $1.68 per share in FY 2023 and FY 2024. Based on the current NAB share price of $29.10, this means yields of 5.8% in both years.

The post Buy these ASX 200 dividend shares with 5%+ yields: analysts appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Which is the best ASX 200 bank share to buy today?
• Own NAB shares? Here’s why the bank’s CEO just personally emailed 4m customers
• How much I would need to invest in NAB shares to earn $150 a month in passive income?
• Investor or depositor? Warren Buffett sounds off on banking crisis
• Buy NAB and this ASX dividend share now: analysts

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

from The Motley Fool Australia https://ift.tt/ZlK9qNm

He’s called the Oracle of Omaha and is considered the world’s most successful investor, generating a personal fortune of US$107 billion over many decades of stock investing.

Luckily for us, his stock selections are public knowledge because the investment company he runs, Berkshire Hathaway Inc (NYSE: BRK.A) (NYSE: BRK.B), is listed. So, we get regular updates on his holdings.

Here are Buffett’s top 10 stocks by value, according to Berkshire Hathaway’s FY22 full-year results released in February.

Top 10 stocks that Warren Buffett owns

Stock	Number of shares	Value
Apple Inc. (NASDAQ: AAPL)	915,560,382	$139.7 billion
Bank of America Corp (NYSE: BAC)	1,032,852,006	$36.5 billion
Chevron Corporation (NYSE: CVX)	167,353,771	$27.3 billion
American Express Company (NYSE: AXP)	151,610,700	$26.9 billion
Coca-Cola Co (NYSE: KO)	400,000,000	$24 billion
Occidental Petroleum Corporation (NYSE: OXY)	278,210,498	$16.9 billion
Kraft Heinz Co (NASDAQ: KHC)	325,634,818	$13 billion
Moody’s Corp (NYSE: MCO)	24,669,778	$7.4 billion
Activision Blizzard Inc (NASDAQ: ATVI)	52,717,075	$4.1 billion
BYD Ord Shs H (OTCMKTS: BYDDF)	130,327,642	$3.8 billion

What are the lessons for investors buying ASX 200 stocks? 

Buy large-cap ASX 200 stocks

Buffett’s top 10 holdings are full of multi-billion-dollar global companies that own household-name brands.

Obviously, he’s extremely positive on Apple given the almost 40% allocation of his total portfolio!

He refers to Apple as Berkshire Hathaway’s “third-largest business” after its wholly-owned insurance and railroad companies. He reckons Apple is “probably the best business I know in the world”.

You could also say he’s in love with Bank of America, Chevron, and American Express, given they and Apple together comprise an astonishing 68% of the investment pie!

Large-cap companies are typically industry giants with large valuations (or market capitalisations). Their sheer size is a big factor enabling them to weather all types of economic conditions.

This means safety and stability for the investor.

As mature companies, their share price growth may be limited unless they are in rapidly growing and evolving industries, such as technology (like Apple), or have a global market for their products (also like Apple).

The trade-off in the limited share price growth is strong, reliable, and regular dividends. This makes them a favourite choice among income investors and those who want lower-risk investments.

Fun fact: Buffett’s Coca-Cola investment returns $704 million in annual dividends.

The three biggest large-cap ASX 200 stocks available to investors are BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX: CBA), and CSL Limited (ASX: CSL). 

Buy and hold high-quality businesses for the long term

Buffett is a value investor, meaning he targets high-quality businesses and buys them when they are trading below their intrinsic worth or book value.

He also describes himself as a “business picker” rather than a “stock picker”.

That means he uses fundamental analysis to get a real understanding of the companies he is considering buying, and to keep tabs on the ones he already owns. He spends most days in his office reading.

Buffett buys long, which means he’s patient. He doesn’t get caught up in the day-to-day price movements of his investments based on announcements with short-term share price ramifications.

Buffett’s strategy means he has fun in both bear markets and bull markets. How smart is that?

Bear markets provide opportunities to buy below value, and bull markets power up those share prices.

A few examples of long-term holds within Buffett’s top 10 stocks are Bank of America, which he first purchased in 2011, American Express (1964), Moody’s (2000), and Coca-Cola (1988).

He bought Coca-Cola just months after the Black Monday 1987 market crash. He saw an opportunity to nab a high-quality business while the share price was down, and he went hard too — putting $1 billion into the stock. That’s a big number today, let alone back in 1988!

There’s also a lesson in moving with the times and adapting your investments in accordance with general business and societal trends, such as the rise of technology.

Buffett first bought Apple in 2016 and Activation Blizzard in 2021. Apple is the biggest US tech stock and Activation Blizzard is in the top 30.

The biggest ASX 200 information technology stocks are WiseTech Global Ltd (ASX: WTC) and Xero Limited (ASX: XRO). But they’re babies in size compared to the big US tech stocks.

Keep cash on hand for opportunities

As we covered last month, Buffett moved US$23.3 billion (A$35 billion) from the market into cash between 30 June and 31 December 2022.

Berkshire Hathaway went into 2023 with cash, cash equivalents, and treasury securities (bonds) worth US$128.7 billion.

In his annual newsletter released in February, Buffett explained:

As for the future, Berkshire will always hold a boatload of cash and U.S. Treasury bills along with a wide array of businesses.

We will also avoid behavior that could result in any uncomfortable cash needs at inconvenient times, including financial panics and unprecedented insurance losses.

Spare cash means you can enjoy some satisfying dollar-cost averaging on ASX 200 stocks when the market is down.

Let’s talk about diversification

In total, Buffett has 49 stocks in his portfolio, which sounds like a lot. But it’s not when you look at the enormity of the whole pie (about US$340 billion).

In short, he’s got huge sums invested in each of those 49 stocks. Using the top 10 as an example, if one of those companies goes bust, he’ll lose billions. That’s probably why they’re all large caps. The likelihood of a large cap going under is incredibly small, so perhaps that’s why Buffett feels safe to invest big.

Things look a little different when you’re an ordinary investor with, say, $50,000 in ASX 200 stocks. You can’t really afford to make mistakes and not having a diversified portfolio is a huge one for us.

We should point out that Buffett has good diversification across different industries.

Diversification is important because it gives you safety. The more ASX 200 stocks you hold and the more industries you are exposed to, the lesser your risk.

We don’t know what is around the corner. Imagine holding a portfolio full of travel stocks in early 2020.

A quick way of ensuring you have great diversification is not to bother trying to pick ASX 200 stocks at all. Instead, take Buffett’s advice and buy a low-cost S&P 500 index fund instead.

That’s his key recommendation for ordinary investors looking to set themselves up for retirement.

The S&P/ASX 200 Index (ASX: XJO) closed the session yesterday at 7,362.2 points, down 0.05%.

The post Which stocks does Warren Buffett own (and what can ASX 200 investors learn from this)? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• 5 things to watch on the ASX 200 on Friday
• ASX 200 mining shares sink as iron ore price nears 2023 low
• Here are the top 10 ASX 200 shares today
• Are Star Casino shares finally cheap enough to buy?
• Here are the 3 most heavily traded ASX 200 shares on Thursday

Bank of America is an advertising partner of The Ascent, a Motley Fool company. American Express is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Bronwyn Allen has positions in BHP Group, CSL, and Commonwealth Bank Of Australia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Activision Blizzard, Apple, Bank of America, Berkshire Hathaway, CSL, Moody’s, WiseTech Global, and Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Kraft Heinz and has recommended the following options: long January 2024 $47.50 calls on Coca-Cola. The Motley Fool Australia has positions in and has recommended WiseTech Global and Xero. The Motley Fool Australia has recommended Activision Blizzard, Apple, and Berkshire Hathaway. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/NHdbiIM

The Macquarie Telecom Group Ltd (ASX: MAQ) share price was a strong performer on Thursday.

The cloud computing, cybersecurity, and data centre company’s shares rose 2.5% to end the session at $61.52.

Why is this ASX All Ords tech share charge higher?

Investors were buying this All Ords tech share after analysts at Goldman Sachs added the company to its coveted conviction list.

According to the note, the broker has retained its buy rating with an improved price target of $75.30.

Even after today’s gain, this suggests the ASX All Ords tech share could rise over 22% from current levels over the next 12 months.

What did the broker say?

Goldman highlights that a recent update from NextDC Ltd (ASX: NXT) appears to demonstrate that trading conditions are strong in the data centre market. This bodes well for Macquarie Telecom and its Macquarie Park operation. It commented:

Recent NXT S3 contract win (36MW in Artarmon, Sydney) is a clear indication of ongoing strength in hyperscale demand and the privileged position of MAQ’s capacity in Macquarie Park (~9km from S3), where MAQ plans to build its IC3 Super West data centre (32MW) on its existing campus once it receives DA approval (next 6 months). We believe MAQ is well-placed to secure hyperscale pre-commitments once construction is underway, helping to de-risk the returns outlook and support balance sheet funding.

The broker also believes that the ASX All Ords tech share is well-placed to benefit from favourable trading conditions in managed services and cybersecurity. It adds:

Industry trends and channel checks suggest that high-value managed services (particularly for the Azure stack), public sector spending and cybersecurity are driving strong growth for ANZ IT services – underpinning our positive view on the growth outlook for MAQ’s Cloud Services & Government business (+22% FY22-25E CAGR). FY23 guidance appears conservative in this context as MAQ assumes flat sequential 2H23 EBITDA (vs typical 47/53 1H/2H skew), and we see upside risk to the full-year result in August.

Overall, Goldman believes the market is “yet to appreciate the underlying quality of MAQ’s services business” and that this tech share deserves to trade on higher multiples.

The post Goldman Sachs just added this ASX All Ords tech share to its conviction list appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• These are the 10 most shorted ASX shares this week
• Top brokers name 3 ASX shares to buy next week
• Brokers are raving about this ASX 200 tech share benefiting from ChatGPT’s rise
• Brokers name 3 ASX shares to buy now
• Here are the top 10 ASX 200 shares today

Motley Fool contributor James Mickleboro has positions in Nextdc. 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.

from The Motley Fool Australia https://ift.tt/jOTGd1p

ASX 200 mining shares, including the major iron ore miners, closed lower on the market on Thursday.

The S&P/ASX 200 Materials Index (ASX: XMJ) finished the day 2.03% in the red.

BHP Group Ltd (ASX: BHP), Rio Tinto Ltd (ASX: RIO), and Fortescue Metals Group Ltd (ASX: FMG) were among the shares to slide.

Let’s take a look at what weighed on these ASX 200 mining stocks today.

What happened?

BHP, Rio Tinto, and Fortescue are all major iron ore producers. BHP shares dropped 2.56% today, while Fortescue shares slid 0.88%. Rio Tinto shares also shed 2.32%.

Iron ore futures for a June 2023 contract (China 62% Fe Fines) are down 1.48% to US$113.15 a tonne on the Singapore Exchange at the time of writing. This is the lowest level since 5 January.

News has also emerged out of China that the country will “speed up” iron ore projects to secure domestic supply, according to Reuters, citing reports by mining.com.

China is the world’s largest importer of iron ore, so any increase in domestic production could mean it is less dependent on iron ore from overseas.

The copper price is also down 0.16% to US$4,0652 a pound, Trading Economics data shows.

Commenting on the fall in commodities, in a research note today, ANZ economist Adelaide Timbrell said:

Base metals fell sharply in early trading as the weak economic data hurt market sentiment. This was exacerbated by hawkish comments from the Fed following data showing wage gains in the US are outpacing inflation. This could see central banks continuing to raise interest rates.

However, the sector recovered late in the session as the focus returned to supply side issues.

Meanwhile, Rio Tinto provided a first-quarter update to the market this morning. Pilbara iron ore shipments lifted 16% compared to the first quarter of 2022, marking a new first-quarter record. However, shipments were still down 6% compared to the fourth quarter of 2022.

Share price snapshot

The BHP share price has lost 1% in the last year. Rio Tinto shares have lifted 1.7% in the past 12 months year, while Fortescue shares have returned 3%.

The post ASX 200 mining shares sink as iron ore price nears 2023 low appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Why 29Metals, Allkem, Alliance, and Rio Tinto shares are falling today
• Rio Tinto share price falls despite record iron ore exports
• 2 ASX 200 dividend shares to buy now: brokers
• BHP shares: Bull vs. Bear
• The latest Rio Tinto dividend is being paid today. Here’s what you need to know

Motley Fool contributor Monica O’Shea 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.

from The Motley Fool Australia https://ift.tt/aKtM6uo

The S&P/ASX 200 Index (ASX: XJO) traded relatively flat for most of Thursday, finishing the session 0.04% lower at 7,362.2 points.

It came on a dismal performance by the S&P/ASX 200 Materials Index (ASX: XMJ). The mining sector tumbled 2%, weighed down by lithium and iron ore producers.

The S&P/ASX 200 Energy Index (ASX: XEJ) also suffered today, slipping 0.4%.

The S&P/ASX 200 Financials Index (ASX: XFJ), on the other hand, posted a 1.25% gain amid first-half earnings from Bank of Queensland Ltd (ASX: BOQ). The bank posted a 98% fall in statutory profit, driven lower by $260 million of provisions and impairments.

Retailers also posted a strong performance, with the S&P/ASX 200 Consumer Discretionary Index (ASX: XDJ) rising 1%.

So, with all that in mind, let’s take a look at which stocks took out the top spots on the index on Thursday.

Top 10 ASX 200 shares countdown

Today’s top-performing ASX 200 share was Virgin Money UK CDI (ASX: VUK). It gained 5% to close at $2.98 despite no news having been released by the company.

These shares made today’s biggest gains:

ASX-listed company	Share price	Price change
Virgin Money UK CDI (ASX: VUK)	$2.98	5.3%
Telix Pharmaceuticals Ltd (ASX: TLX)	$9.79	4.48%
Lovisa Holdings Ltd (ASX: LOV)	$26.12	3.65%
Collins Foods Ltd (ASX: CKF)	$8.69	3.58%
Idp Education Ltd (ASX: IEL)	$28.19	3.53%
Magellan Financial Group Ltd (ASX: MFG)	$8.04	3.21%
Pinnacle Investment Management Group Ltd (ASX: PNI)	$8.10	2.53%
Perpetual Limited (ASX: PPT)	$24.14	2.51%
Coronado Global Resources Inc (ASX: CRN)	$1.675	2.45%
Link Administration Holdings Ltd (ASX: LNK)	$2.14	2.39%

Our top 10 shares countdown is a recurring end-of-day summary to let you know which companies were making big moves on the day. Check in at Fool.com.au after the weekday market closes to see which stocks make the countdown.

The post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Are Star Casino shares finally cheap enough to buy?
• Here are the 3 most heavily traded ASX 200 shares on Thursday
• Why Bank of Queensland, Link, Silk Laser, and Zip shares are pushing higher
• How might the latest RBA changes impact ASX 200 investors?
• 3 ASX 200 shares making big moves following quarterly updates

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 positions in and has recommended Collins Foods, Idp Education, Link Administration, Lovisa, and Pinnacle Investment Management Group. The Motley Fool Australia has positions in and has recommended Pinnacle Investment Management Group. The Motley Fool Australia has recommended Collins Foods, Idp Education, and Lovisa. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/lLwJt89

I’m a big believer in regularly buying ASX shares, regardless of what is currently going on in the world — through the good and bad times. For me, that means adding to the portfolio at least every month. For April, it is PWR Holdings Ltd (ASX: PWH) that has caught my attention.

At the time of writing, the maker of cooling solutions for high-performance vehicles is currently trading at $10.09 per share. This corresponds with an 8.1% fall in the company’s share price since the beginning of the year.

PWR Holdings is a high-quality ASX share with a price-to-earnings (P/E) ratio of 49 times. While this might deter some investors, I believe there are compelling reasons to consider adding it at its current valuation.

In this article, I’ll be sharing five compelling reasons why I personally find PWR shares an attractive investment opportunity in April.

5 reasons to buy PWR shares this month

1. PWR Holdings’ revenue has grown at an 18.9% compound rate

At face value, the high-performance parts manufacturer might look extremely expensive. While it trades at a P/E multiple of nearly 50 times, the global auto components industry average hovers around 20.

However, unlike most of its peers, PWR Holdings is growing at a phenomenal rate. As pictured below, the company’s revenue has grown at a compound annual growth rate (CAGR) of 18.9% over the past five years.

Since 2014, the top line has increased each and every financial year. That level of consistent growth deserves an above-average earnings multiple, in my opinion. If PWR can maintain a 15% per annum growth rate moving forward, its full-year revenue could double to $217 million in five years.

2. Diversified revenue streams — ready to weather a weak economy

A weaker economy is possibly on the cards as interest rates chew up their fair share of consumer spending. Although the short-term pinch will become less significant with time, it sure helps to ride the wild wave by being diversified.

Fortunately, PWR Holdings doesn’t rely upon one source for its revenue. As the diagram below shows, income is spread across several segments including motorsports, automotive OEM, automotive aftermarket, and aerospace and defense.

In my opinion, the aerospace and defense segment could achieve considerable growth even under tough economic conditions. The potential financial padding this avenue offers is another reason why PWR shares are appealing to me at the moment.

3. Competes on quality and performance, not price — hello pricing power!

Inflation is expected to remain above 3% out to mid-2025. If companies don’t have some form of pricing power, this will crimp earnings margins.

One form of pricing power that I believe PWR Holdings has is superior quality and performance. That means the company’s products don’t necessarily need to compete on price, making it easier to pass on higher costs.

This is evident when browsing an automotive store, such as Repco, for radiators (pictured above). PWR’s products are prominently featured in the highest-priced radiators and are noticeably absent from the cheapest options.

4. Tapping into a growth industry

P/E ratios can be a poor means of valuing a company if future earnings accelerate rapidly. This could be the case for PWR shares, in my opinion, as the company latches onto a fast-growing market.

Forecasts shared by Goldman Sachs suggest electric vehicles (EVs) could make up a substantial share of total vehicle sales by 2040. For example, Europe EV sales are expected to grow from 11% in 2022 to 100% by 2040, as shown in the chart below.

Every EV needs some form of battery cooling technology — something that PWR Holdings management has said they’re ‘well placed’ to deliver on.

The increased adoption of EVs is a market for PWR’s expertise that I think is being undervalued.

5. PWR share price might not be factoring in greater growth for longer

This point echoes the underlying reasoning of the last, but the market might be underestimating PWR’s future earnings ability.

As I previously mentioned, if PWR were to double its revenue in five years — while maintaining its profit margins — the P/E ratio would halve to 25. But what if the company’s earnings were to double again over the next five years? Suddenly the earnings multiple is closer to 12.

Given the growing market potential across multiple decades, I believe the current 50 times multiple could end up looking like an opportunity in hindsight.

This is the main reason why I’m seriously considering buying PWR shares this month.

Is it enough to buy PWR shares over other ASX shares?

The hardest part of being an investor is deciding which mouths to feed. There are usually several options vying for investment, but limited capital makes it important to fuel the best at the time.

This month, the top companies on my list for deploying my spare funds include Apple Inc (NASDAQ: AAPL) and Macquarie Group Ltd (ASX: MQG) — both of which are existing holdings. However, the exceptional growth potential offered by PWR shares positions it as my top April buy on the ASX.

The post 5 reasons why I think PWR shares are an unmissable ASX buy in April appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Are short sellers wrong about Sayona Mining shares?
• What investors can learn from the RBA’s mistakes
• Is the Flight Centre share price handing ASX 200 investors a buying opportunity?
• Are Star Casino shares finally cheap enough to buy?
• What does this ‘key next step’ mean for Origin shares?

Motley Fool contributor Mitchell Lawler has positions in Apple and Macquarie Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Apple, Goldman Sachs Group, and PWR Holdings. The Motley Fool Australia has positions in and has recommended Macquarie Group and PWR Holdings. The Motley Fool Australia has recommended Apple. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/EyVNUKt

Sayona Mining Ltd (ASX: SYA) shares have a rather awkward feather in their cap this week. No, it’s not today’s share price performance, which has seen Sayona gain a healthy 1.03% to 19.7 cents a share at market close.

Rather, it’s Sayona’s presence on the list of the most short-sold ASX shares on the market. Every week, my Fool colleague James takes stock of the ASX’s most shorted shares. This week, Sayona was number four on the list, with a significant 9.3% of its shares short-sold.

Only Zip Co Ltd (ASX: ZIP), Megaport Ltd (ASX: MP1), and Flight Centre Travel Group Ltd (ASX: FLT) have more of their shares shorted.

What is short selling?

When a company’s shares are short-sold, it means that investors are betting against the company’s future performance. A short seller borrows shares from another investor and immediately sells them, with the promise of returning them at a later date.

If, after the agreed length of time has passed, the company’s shares have fallen in value, then the shorter buys them back at the lower price, returns them to their owner, and pockets the difference. As such, they prosper as the company’s shares fall in price.

This practice is a little controversial and is usually only conducted by institutional investors. But it legally occurs nonetheless and gives us valuable insight into what big players in the market are thinking.

So the presence of Sayona shares on this week’s most shorted shares list tells us that a significant amount of capital is being wagered on the belief the Sayona share price is in for a rough time going forward.

So those who are ‘long’ Sayona (have shares that aren’t short-sold) might be wondering if, and indeed hoping, these short sellers are wrong.

Let’s have a quick look to see if the short case stacks up.

A short seller usually believes a share is overvalued, which is why they bet that its share price will fall.

So let’s look at Sayona’s most recent full-year results to assess its current valuation.

Are Sayona shares overvalued?

For the 2022 financial year, Sayona reported a total of $108.87 million in revenue and other income.

On the bottom line, that translated into a net profit before tax of $83.69 million. When it comes to an earnings per share (EPS) basis, that works out to be 1.23 cents per share. At the current Sayona share price of 19.7 cents, this gives the company a price-to-earnings (P/E) ratio of 16.01

This valuation might be why short sellers are so keen to have a crack at Sayona.

Most ASX resources shares trade on a P/E ratio far lower than that. For instance, BHP Group Ltd (ASX: BHP), one of the most tightly run resources companies in the world, currently has a P/E ratio of 8.7.

Fortescue Metals Group Limited (ASX: FMG) is trading on 8.04. Rio Tinto Limited (ASX: RIO) is looking a little more expensive but is still on 10.67 right now.

So investors are paying almost twice as much for $1 of earnings with Sayona as they are with BHP. Yet BHP is vastly more mature and established.

Sayona shareholders might point to the company’s exposure to forward-facing lithium, rather than ‘boring’ industrial metals like iron ore. But for Sayona to grow to a point that might justify its current P/E ratio, lithium prices will arguably have to rise and stay high for a very long period of time.

It’s likely that the short-sellers believe this won’t happen and are thus happy to place bets against its future success.

They might be right. They might be wrong. There’s no way of telling just yet though.

The post Are short sellers wrong about Sayona Mining shares? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• Why Ramelius, Sayona Mining, St Barbara, and Woodside shares are dropping today
• Here are the top 10 ASX 200 shares today
• Why EML, Lake Resources, Lindsay, and Sayona Mining shares are racing higher
• Here are the 3 most heavily traded ASX 200 shares 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 positions in and has recommended Megaport and Zip Co. The Motley Fool Australia has recommended Flight Centre Travel Group and Megaport. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/SziG0nU