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The EML Payments Ltd (ASX: EML) share price was out of form in May.

Over the month, the payments company’s shares shed a very disappointing 41.9% of their value.

This made the EML Payments share price the worst performer on the S&P/ASX 200 Index (ASX: XJO).

Why was the EML Payments share price sold off?

Investors were heading to the exits in their droves last month following the release of an update on its PFS Card Services Ireland business.

That update revealed that the Central Bank of Ireland has raised concerns over the business in relation to Anti-Money Laundering/Counter Terrorism Financing compliance.

While Ireland isn’t a big market and this decline might seem like a bit of an overreaction, there’s more to this than initially meets the eye.

This is because due to Brexit, EML Payments moved its European operations out of London and into Ireland. This means that this business is actually responsible for all its PFS Card Services’ European revenue.

And this certainly is a meaningful portion of its overall revenue. Management notes that 27% of EML Payments’ total revenue is generated by this business. And with the Central Bank of Ireland intending to take action, potentially even removing its financial service authorisation for the European market, the company could lose a big chunk of its revenue.

Is this a buying opportunity?

According to a note out of Macquarie, its analysts believe the weakness in the EML Payments share price could be a buying opportunity.

Late last month the broker retained its outperform rating but cut its price target by 35% to $4.00.

So, with the EML Payments share price currently fetching $3.32, this price target implies potential upside of over 20%.

Macquarie responded to the aforementioned news by removing the European operations out of its valuation in case they cease. Though, the broker notes that it doesn’t believe this will be the case.

This could mean additional upside potential should the Central Bank allow the business to continue its operations.

More reading

• These were the worst performing ASX 200 shares in May
• Fund managers ar buying EML Payments (ASX:EML) and this ASX share
• ASX 200 flat: Costa crashes & Fisher & Paykel Healthcare tumbles
• EML Payments (ASX:EML) share price on watch after responding to ASX query
• A2 Milk and EML were among the most traded ASX shares last week

The post Why the EML Payments (ASX:EML) share price sank 42% in May appeared first on The Motley Fool Australia.

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Its been an intense 12 months for the Treasury Wine Estates Ltd (ASX: TWE) share price. The back-and-forth between Treasury Wine and China’s Ministry of Commerce (MOFCOM) has brought an extreme level of volatility to the company’s share price.

The final decision by MOFCOM effectively shut the company out of China, with an anti-dumping and countervailing duty rate of 175.6% to its Australian wine in containers of two litres or less imported to China.

Compared to other China-dependent growth stories such as A2 Milk Company Ltd (ASX: A2M), Treasury Wine was quick to reallocate its Penfolds Bins and Icon range from China to other markets.

A ‘new’ Treasury Wine emerges in May

Treasury Wine’s investor day presentation was one of the catalysts for its almost 16% jump in May to $11.64.

The presentation provided much-needed financial forecasts for how the business would perform without China. In the update, the business revealed that expected FY21 earnings before interest, tax and SGARA (the difference between the fair value of harvested grapes and the cost of harvested grapes) was going to be in the range of $495 million to $515 million, compared to the $533.5 million delivered in FY20.

Treasury advised that this figure is ahead of current market consensus expectations and would represent growth of 33% in 2H21 compared to the prior corresponding period.

The update also provided visibility to Treasury Wine’s long-term financial and operational goals. These include delivering sustainable top-line growth, achieving high single-digit average earnings growth, continuing with the ‘premiumisation’ of its sales mix, and expanding EBITS margin to the target of 25%.

Rather than viewing the effective closure of the Chinese market as a glass-half-empty situation, the company’s presentation saw it as “exposing previously under-recoginsed opportunities”. Moving forward, Treasury Wine is aiming to drive growth through multi-regional and multi-channel sales models. The United States has been established as a premium wine growth business and the company is also targeting growth throughout Asia and Europe.

The Treasury Wine share price closed ~6% higher at $10.84 on the day of the investor day presentation. But the company’s shares would also continue chugging along in May, finishing the month at a near 4-month high of $11.64.

More reading

• These were the best performing ASX 200 shares in May
• How might Australia’s WTO battle with China affect this ASX share?
• Should ASX investors be fearful of greed in the face of inflation?
• Leading brokers name 3 ASX shares to sell today
• The latest ASX shares that top brokers have upgraded to “buy”

The post No China? No worries. The Treasury Wine (ASX:TWE) share price lifts 16% in May appeared first on The Motley Fool Australia.

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Ask a Fund Manager

The Motley Fool chats with fund managers so that you can get an insight into how the professionals think. In Part 2 of this edition, Kardinia Capital’s portfolio manager Kristiaan Rehder reveals 2 small-cap ASX shares with huge potential. And he explains why his fund remains bullish on CBA.

(You can find Part 1 of the interview here.)

The Bennelong Kardinia Absolute Return Fund employs a long/short strategy with the goal of making positive returns, whether the broader market is rising, falling, or flat. How did that strategy play out during the viral market meltdown and subsequent recovery in February and March 2020? 

During the meltdown last year, our stop losses came into play. Our short strategy really came into its own. We saw the strategy doing exactly what it’s designed to do during periods of extreme market dislocation. That’s to grow the invested capital when you come out of it, but first and foremost, to protect it in the first instance.

Our short book has never been so profitable. I’ve been running this strategy for 15 years. I’ve never seen the profits generated in such a short period of time. That really provided a huge amount of protection for our long book. That meant the Kardinia Fund only drew down 3.9% when the market fell over 36%.

It was certainly a difficult, stressful time.

The number of names on our long books collapsed. We were forced out of lots of positions through our stop losses. We were also actively selling our positions when we thought we were holding too much.

On the other side of the ledger, our short book became incredibly fat with profits.

Any observer looking in the depths of March 2020 would have seen the portfolio was unbalanced. We immediately responded to that by looking to replenish our long book.

The biggest risk was that if markets were to bounce, as we ultimately saw at the end of March, an unbalanced portfolio could cause a huge amount of damage to the underlying investors.

We were quickly moving to buy back into long positions in the quality end of the spectrum. And we moved quickly to lock in our profitable shorts so we could bring the portfolio back into equilibrium.

What was your best performing investment over the past 12 months?

Sorry to bore you, but it was actually CBA [Commonwealth Bank of Australia (ASX: CBA)].

What we recognised in March and April last year was that this was an earnings issue for the banks. It wasn’t a balance sheet issue, unlike what we saw during the GFC in 2008 and 2009.

We saw [in 2020] over 10% of borrowers switching off their interest and principal payments and deferring payments for 6 months. That put a huge amount of pressure on the banks. But the government came out with the JobKeeper initiative to allow a lot of businesses to stay afloat. And then you saw the quick response by central banks. So the banks weren’t going to go bankrupt.

That’s when we entered CBA.

What’s your outlook for CBA and bank shares more broadly now? 

We think asset growth is looking very favourable for the banks in this market. We’ve seen business in the large institutional lending side of things; strong credit growth; we’ve seen M&A [mergers and acquisitions] really starting to pick up. But we think that’s just the tip of the iceberg. There’s a lot more [M&A] coming.

The owner-occupied housing credit growth, based on the last data we saw, shows credit growth running at 6-7%. Owner-occupied is so important because 55% of all mortgages and 41% of all loans are written by owner-occupiers. It’s the real engine in the housing market and growing incredibly strongly. And we’re starting to see investor demand for credit starting to pick up as well.

The most exciting, I think, is the capitalisation of the banks.

CBA has a tier-one core capitalisation ratio of around 13%. We calculate that it translates to about $10 billion of surplus capital that’s going to be returned to shareholders in the way of dividends or buybacks. And I think that’s going to start this year.

A huge amount of capital return is going to find its way back into shareholders’ hands. So we have a very positive outlook towards CBA and the banks in general.

Atop the banks, can you offer a few ASX shares you think our readers should consider adding to their portfolios?

There are a lot of good companies out there with strong prospects.

One name at the smaller end of the spectrum to keep an eye on is Proteomics International Laboratories Ltd (ASX: PIQ). It’s very small, with a market cap of around $120 million.

They’ve developed a test to predict diabetic kidney disease. Approximately 40% of diabetics go on to develop diabetic kidney disease [DKD]. The issue with DKD is that most sufferers are asymptomatic when their kidneys start to fail. They often don’t present with any kidney issues until it’s largely irreversible, leading to dialysis or a full kidney transplant. DKD is costing the US Medicare system around $40 billion a year.

Proteomics’ test can predict whether a sufferer is actually going to contract DKD with an 84% predictive measure before it starts. So that’s a very interesting company that is looking to commercialise their product within the next 12 months.

One other, which most may not have heard of before, is Neometals Ltd (ASX: NMT).

The business is run by Chris Reed and his father. They’ve had a very successful mining career in WA, and they collectively own 10% of the company. They owned [a stake in] the Mt Marion Mine, a lithium mine, which was recently sold to Mineral Resources Limited (ASX: MIN) for over $100 million. They returned that capital back to shareholders.

And they’ve developed a process to recycle lithium batteries. This is going to be a big issue. In Europe, most of the discarded batteries are incinerated, where 90% of their mass is released into the atmosphere. Volkswagen alone is estimating they’ll have 1 million tonnes of discarded batteries by 2030.

Neometals has a solvent extraction process which can extract key commodities from the batteries — lithium and nickel being the 2 most valuable. Through their process, they are one of the lowest global cost producers of lithium and nickel.

They’ve developed a successful pilot plant and are in the process of building their demonstration plant, which is only 2 months from completion. Then they’ll move straight into commercialisation.

More reading

• Top ASX shares to buy in June 2021
• ASX 200 Weekly Wrap: ASX record highs tumble like… Costa shares
• Fund managers ar buying EML Payments (ASX:EML) and this ASX share
• Breaking! ASX 200 hits another record share market high
• 5 things to watch on the ASX 200 on Friday

The post 2 small-cap ASX shares with huge potential: fund manager appeared first on The Motley Fool Australia.

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The age-old saying “sell in May and go away” came home to haunt Afterpay Ltd (ASX: APT) shares last month.

The Afterpay share price began the month of May at $117.65. This was far from its February record highs of $160.05 but also a considerable improvement on the $100 it was fetching in late March. But things deteriorated quickly for Afterpay shares, which fell by as much as 30% over the month to an 8-month low of $81.85 on 13 May.

What’s been impacting the Afterpay share price?

ASX 200 tech shares under pressure

The S&P/ASX200 Info Tech Index (ASX: XIJ) index fell by as much as 18% in May. The index has since bounced off 8-month lows but is still down around 10% for the month.

This was consistent with the weakness experienced on Wall Street, where the tech-heavy Nasdaq Composite (NASDAQ: .IXIC) also slumped by as much as 7% before bouncing off lows.

Afterpay wasn’t alone in this selloff, with its tech heavyweight peers such as WiseTech Global Ltd (ASX: WTC) and Xero Limited (ASX: XRO) experiencing similar harsh selloffs at the beginning of the month.

There are a number of moving parts contributing to tech shares underperforming the market. On one hand, the prospect of higher inflation and interest rates could be weighing on the valuations of richly valued tech shares. As the economy emerges out of the coronavirus pandemic, pent-up demand and soaring commodity prices could prompt central banks to take the breaks off record-low interest rates.

Another recent theme to consider is the idea of pandemic winners turning into vaccine losers. One example of this can be seen among ASX e-commerce shares such as Kogan.com Ltd (ASX: KGN) and Redbubble Ltd (ASX: RBL) that appear to be cycling through a period of tough comparables and normalisation in consumer spending. We all know the last thing investors want to see in a growth story is a slowdown in momentum.

BNPL struggles

As mentioned, it wasn’t only the Afterpay share price that was struggling in May. The buy now, pay later (BNPL) sector appeared to amplify the weakness across the broader tech sector last month. Large-cap ASX-listed BNPL shares including Zip Co Ltd (ASX: Z1P) and Sezzle Inc (ASX: SZL) are now also far from their February record highs but have managed to stay in positive year-to-date territory.

The same can’t be said for some smaller BNPL shares.

Laybuy Holdings Ltd (ASX: LBY) shares hit a record all-time low in May of 51.5 cents after starting the year at $1.30. The company’s shares have made a small bounce off these lows, finishing the month at 72 cents.

The price action has been similar for peers including Openpay Group Ltd (ASX: OPY) and Splitit Ltd (ASX: SPT), which both slumped to, or very close to, 12-month lows during May.

Elsewhere, US-listed BNPL giant, Affirm Holdings Inc (NASDAQ: AFRM) also hit record all-time lows of US$46.50 in May, down from the US$70 it was fetching at the start of the month. But on a more positive note, after a few trading sessions around the US$50 level, its shares bounced off lows to close at US$60.81 last Friday.

More reading

• Don’t play the game you can’t win…
• Leading brokers name 3 ASX shares to buy today
• How are the ASX WAAAX shares performing in 2021?
• ASX 200 Weekly Wrap: ASX record highs tumble like… Costa shares
• 2 quality ASX growth shares with heaps of potential

The post Why the Afterpay (ASX:APT) share price hit an 8-month low in May appeared first on The Motley Fool Australia.

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The S&P/ASX 200 Index (ASX: XJO) was on form in May and charged notably higher. The benchmark index rose for the eighth consecutive month, recording a 1.9% gain over the period to end at 7,162.6 points.

While a good number of shares climbed higher with the index, some posted stronger gains than others. Here’s why these were the best performing ASX 200 shares in May:

Resolute Mining Limited (ASX: RSG)

The Resolute share price was the best performer on the ASX 200 in May with a 25.8% gain. This gain appears to have been driven largely by bargain hunters looking for undervalued options in the gold sector. After all, even after this strong gain, the Resolute share price down 23% year to date. Its shares were sold off earlier this year due to weak production and disappointing guidance. In addition to this, a solid rise in the gold price gave its shares a lift. Fellow gold miners Evolution Mining Ltd (ASX: EVN), Gold Road Resources Ltd (ASX: GOR), and Perseus Mining Limited (ASX: PRU) recorded gains of at least 17% in May thanks to the rising gold price.

Whitehaven Coal Ltd (ASX: WHC)

The Whitehaven Coal share price wasn’t far behind with a monthly gain of 23.4%. This gain appears to have been driven by the release of a couple of bullish broker notes during the month. Both Macquarie and Credit Suisse upgraded its shares to an outperform rating on valuation grounds. Macquarie has a $1.70 price target and Credit Suisse has a $1.55 price target.

ALS Ltd (ASX: ALQ)

The ALS share price was a strong performer and recorded a 17.5% gain. The catalyst for this was the release of the global testing, inspection, and certification company’s full year results. ALS reported a 5% decline in revenue to $1,761.4 million and a 1.5% reduction in underlying net profit after tax to $185.9 million. This was a significant improvement on its first half performance.

Treasury Wine Estates Ltd (ASX: TWE)

The Treasury Wine share price was on form and charged 16% higher in May. Investors were buying the wine company’s shares following the release of an investor update. According to the release, the company is expecting its earnings before interest, tax, and SGARA (EBITS) to be in the range of $495 million to $515 million in FY 2021. This was ahead of the market consensus estimate for EBITS. This went down well with analysts at Morgans. In response, the broker upgraded Treasury Wine’s shares to an add rating with a $13.00 price target.

More reading

• These were the worst performing ASX 200 shares in May
• 5 things to watch on the ASX 200 on Tuesday
• ASX 200 drops, Nuix sinks, Link declines
• How might Australia’s WTO battle with China affect this ASX share?
• How to avoid this costly ASX investor trap – it’s harder than you think

The post These were the best performing ASX 200 shares in May appeared first on The Motley Fool Australia.

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The A2 Milk Company Ltd (ASX: A2M) share price was a particularly poor performer in May.

During the month, the fresh milk and infant formula company’s shares lost a disappointing 23.5% of their value.

This means the a2 Milk share price is now down over 72% from its 52-week high.

Why did the a2 Milk share price crash lower in May?

The a2 Milk share price came under significant pressure last month following the release of yet another bitterly disappointing trading update.

That update revealed that trading conditions remain tough and that a collapse in demand had flooded the market with excess inventory. The latter led to a massive NZ$103 million to NZ$113 million inventory provision. That sure is a lot of infant formula tins being destroyed!

In light of this, management was forced to downgrade its FY 2021 guidance for a fourth time.

What is the company expecting?

Management revealed that it now expects to deliver revenue of NZ$1.2 billion to NZ$1.25 billion with EBITDA of NZ$132 million to NZ$150 million. This will mean a year on year reduction in EBITDA of 73% to 76%.

A2 Milk Company’s Managing Director and CEO, David Bortolussi commented: “While our third quarter trading was broadly in line with plan, it is clear that the actions taken to address challenges in the Daigou and CBEC channels will not result in sufficient improvement in pricing, sales and inventory levels to meet our previous guidance.”

“In the interest of the long-term health of our brand and the medium-term trading outlook of the business, more aggressive actions to address inventory will be taken which will impact FY21 revenue and EBITDA, and potentially 1Q22.”

And while Mr Bortolussi is positive on the future, the performance of the a2 Milk share price would indicate that the market isn’t as confident.

He said: “Despite these short-term setbacks, we are confident in the long-term potential for infant nutrition and other opportunities we have in China, and are determined to build on the strong position we have built in the market over the past five years.”

“We recognise that the China market and channel structure is changing rapidly and are commencing a comprehensive review of our growth strategy and executional plans to respond to this new environment.”

Shareholders will no doubt be hoping that this is the end of the downturn and that it is onwards and upwards for the a2 Milk share price from here. Time will tell whether that is the case.

More reading

• 3 reasons why the A2 Milk (ASX:A2M) share price could still be a buy
• ASX 200 down 0.15%: A2 Milk class action, Nuix crashes again
• a2 Milk (ASX:A2M) share price hit by class action news
• A2 Milk (ASX:A2M) shares are up 4% today. Has a bottom been found?
• Where to for the A2 Milk and Afterpay share price, and US economic growth? Motley Fool CIO Scott Phillips on Nine’s Late News

The post Why the a2 Milk (ASX:A2M) share price crashed 23% in May appeared first on The Motley Fool Australia.

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With winter upon us and the end of the financial year approaching, we asked our Foolish contributors to compile a list of some of the ASX shares experts are saying to Buy in June.

Here is what the team have come up with…

Bernd Struben: Commonwealth Bank of Australia (ASX: CBA)

My top ASX share pick for June is Commonwealth Bank for both its potential capital and dividend growth. The CBA share price has gained around 57% over the past 12 months. In fact, it breached the $100 mark for the first time ever just last week. And Kardinia Capital portfolio manager Kristiaan Rehder believes there’s more to come.

Rehder says that asset growth is looking very favourable for CBA in the current market. The bank has a tier-one core capitalisation ratio of around 13%. He calculates that works out to some $10 billion of surplus capital set to benefit shareholders either via dividends or buybacks.

Based on its share price of $99.72 at the time of writing, CBA has a market capitalisation of around $177 billion. It pays a trailing dividend yield of 2.5%, fully franked.

Motley Fool contributor Bernd Struben does not own shares of Commonwealth Bank of Australia.

Tristan Harrison: Pushpay Holdings Ltd (ASX: PPH)  

The electronic donation business continues to experience an upswing in profit margins. In FY21, its earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) margin increased from 22% to 34%.  

Pushpay is expecting further operating leverage as it grows revenue whilst expense growth is limited. The business is also expecting to grow the number of customers using its donor management system.  

It’s also looking to grow in the Catholic church segment over the next few years with an initial investment of between $6 million to $8 million in FY22. Pushpay is targeting a market share of over 25% of Catholic parishes.  

Motley Fool contributor Tristan Harrison does not own shares of Pushpay Holdings Ltd.

Mitchell Lawler: Catapult Group International Ltd (ASX: CAT)

The past year has been a challenging environment for sports organisations and companies to navigate. As borders closed, and health concerns mounted, sporting events all but ground to a halt.

Despite what has been described as the worst global sports industry conditions since World War 2, sports analytics company Catapult has managed to pull through.

Not only did the company stay afloat in FY21, but it also expanded. Catapult achieved 100% penetration of NFL teams and grew its multi-solution customers to include the Seattle Seahawks, Stanford University American Football, and the Arizona Coyotes, among others.

Further vaccine rollouts and a shift to more subscription-based sales have Catapult “increasingly confident” in its outlook.

Motley Fool contributor Mitchell Lawler does not own shares of Catapult Group International Ltd.

Sebastian Bowen: CSL Limited (ASX: CSL)

Brendon Lau: Costa Group Holdings Ltd (ASX: CGC)

According to one broker, the Costa Group share price could bounce next month from its devastating sell-off on the back of a disappointing trading update. Goldman Sachs believes shares in the fruit and vegetable grower were oversold when management warned of labour shortages and weak prices for tomatoes and avocados.

But Goldman sees the share price weakness as a buying opportunity as Costa has a number of medium-term growth opportunities in its favour. These include its expansion into China and Morocco. The broker is recommending the Costa share price as a ‘Buy’ with a 12-month price target of $4.85. At the time of writing, Costa shares are trading at $3.40.

Motley Fool contributor Brendon Lau does not own shares of Costa Group Holdings Ltd.

Rhys Brock: Bigtincan Holdings Ltd (ASX: BTH) 

Bigtincan develops sales enablement software. Its platform is designed to support businesses throughout their entire sales and marketing lifecycle, from onboarding and training new staff to managing customer relationships and automating manual processes. 

The Bigtincan share price has slid around 6% so far this year. It’s now also around 35% below its 52-week high of $1.60 reached in October. The sell-off has come despite the company recently reaffirming its guidance for full-year FY21 revenue at the upper end of between $41 million and $44 million (implying a year-on-year increase of as much as 42%!).   

Motley Fool contributor Rhys Brock owns shares of Bigtincan Holdings Ltd. 

James Mickleboro: Nitro Software Ltd (ASX: NTO)

Nitro Software is a company that aims to drive digital transformation in businesses around the world. It does this via its Nitro Productivity Suite, which provides integrated PDF productivity and electronic signature tools.

Demand for its offering has been growing strongly, leading to 68% of Fortune 500 companies and three of the Fortune 10 becoming customers. This helped underpin a 64% increase in annualised recurring revenue (ARR) to $27.7 million in FY20.

Pleasingly, management is expecting more of the same in FY21. It has provided ARR guidance of $39 million to $42 million. This will mean year-on-year growth of between 41% and 51.6%.

Morgan Stanley currently has an overweight rating and a $3.70 price target on Nitro shares. The company closed Monday’s session at $2.88 per share.

Motley Fool contributor James Mickleboro does not own shares of Nitro Software Ltd.

More reading

• These were the worst performing ASX 200 shares in May
• 4 ASX 200 blue chip shares analysts rate as buys
• Don’t play the game you can’t win…
• Why Bravura, Costa, Inghams, & Propel shares are pushing higher
• These ASX shares are the newest “buy” recommendations from leading brokers

The post Top ASX shares to buy in June 2021 appeared first on The Motley Fool Australia.

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It certainly was a great month for the S&P/ASX 200 Index (ASX: XJO). The benchmark index recorded its eighth successive monthly gain when it rose 1.9% during May to end at 7,162.6 points.

Unfortunately, not all ASX 200 shares were able to follow the market’s lead. Here’s why these were the worst performers on the index last month:

EML Payments Ltd (ASX: EML)

The EML Payments share price was the worst performer on the ASX 200 in May with a whopping 41.9% decline. The catalyst for this was the payments company revealing that the Central Bank of Ireland had raised concerns over its PFS Card Services Ireland business. The central bank’s concerns relate to Anti-Money Laundering/Counter Terrorism Financing compliance. Management notes that 27% of its total revenue goes through this business. There are fears that the business could lose its financial service authorisation in the European market.

Perenti Global Ltd (ASX: PRN)

The Perenti Global share price wasn’t far behind with a disappointing 38.5% decline. Investors were selling the mining services company’s shares after the release of an operational update. That update revealed that Perenti will no longer be delivering on its guidance for second half revenue and margins in line with what it reported in the first half. Due largely to COVID-19 headwinds and Australian labour market shortages, the company is expecting softer earnings in the second half. Looking ahead, it warned that these headwinds are likely to persist for the next 12 to 18 months.

Nuix Ltd (ASX: NXL)

The Nuix share price was out of form again in May and sank 33.1%. This means the investigative analytics and intelligence software provider’s shares are now down 66% since the start of the year. Investors were selling the company’s shares amid concerns over its poor performance, potential legal action, and another guidance downgrade at the end of the month.

Costa Group Holdings Ltd (ASX: CGC)

The Costa share price was out of form and tumbled 20.9% during the month. The catalyst for this was the horticulture company’s annual general meeting update. That update revealed that Costa is only expecting its first half performance to be marginally ahead of the prior corresponding period due to weakness in its domestic operations. Morgans was particularly disappointed with the update. Its analysts note that the deterioration in its produce business profitability raises questions around how much Costa benefited from the pandemic-driven surge in food consumption a year earlier.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• ASX 200 drops, Nuix sinks, Link declines
• How to avoid this costly ASX investor trap – it’s harder than you think
• Why BetMakers, Domain, Link, & Nuix shares are tumbling
• Tassal (ASX:TGR) share price slips on facility gas leak incident

The post These were the worst performing ASX 200 shares in May appeared first on The Motley Fool Australia.

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Interest rates may be at ultra-low levels, but all is not lost. The Australian share market is home to a large number of shares offering yields that are vastly superior to savings accounts and term deposits.

Two buy-rated ASX dividend shares to consider are listed below. Here’s what you need to know about them:

Carsales.Com Ltd (ASX: CAR)

The first ASX dividend share to look at is Carsales. This auto listings company has been growing at a consistently solid rate over the last decade.

Pleasingly, this has continued in FY 2021. Carsales recently provided guidance for revenue of $433 million to $437 million and adjusted net profit after tax of $149 million to $153 million. The latter represents an 8% to 11% year on year increase.

Looking ahead, the company appears well-placed for growth thanks to its domination of the ANZ market and its growing international operations. The latter will soon be bolstered with its expansion into the United States via an acquisition.

Morgans is a fan of the company. It recently put an add rating and $20.82 price target on its shares. The broker is also forecasting dividends of 56 cents per share in FY 2021 and 59 cents per share in FY 2022. Based on the current Carsales share price, this will mean fully franked yields of 2.9% and 3.1%, respectively.

Westpac Banking Corp (ASX: WBC)

Another option that is highly rated by analysts is Westpac. After a tough few years because of the Royal Commission and the pandemic, Australia’s oldest bank is bouncing back very strongly.

For example, during the six months ended 31 March, Westpac reported cash earnings of $3,537 million. This was a massive 256% increase over the prior corresponding period and a 119% lift over the second half of FY 2020.

Thanks to this strong form and the removal of dividend restrictions, the Westpac board was able to increase its fully franked interim dividend to 58 cents per share.

Morgan Stanley is expecting more of the same from the bank in the second half and FY 2022. The broker is forecasting fully franked dividends of $1.18 per share and $1.25 per share over the next two years. Based on the latest Westpac share price, this will mean yields of 4.5% and 4.7%.

It has an overweight rating and $29.20 price target on the bank’s shares.

More reading

• ASX 200 Weekly Wrap: ASX record highs tumble like… Costa shares
• 2 ASX dividend shares for income investors to consider
• 2 growing ASX dividend shares analysts are tipping as buys
• Expert says buy these ASX expensive defensives as market momentum is peaking
• ASX 200 Weekly Wrap: ASX whipsaws in volatile week

The post 2 buy-rated ASX dividend shares for income investors in June appeared first on The Motley Fool Australia.

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On Monday the S&P/ASX 200 Index (ASX: XJO) started the week on an underwhelming note. The benchmark index fell 0.25% to 7,161.6 points.

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

ASX 200 expected to tumble

The Australian share market looks set to tumble on Tuesday. According to the latest SPI futures, the ASX 200 is expected to open the day 43 points or 0.6% lower. This is despite the US and UK markets being closed for public holidays. On mainland Europe, the DAX fell 0.6% and the CAC dropped 0.6% following the release of strong inflation data.

Oil prices push higher

Energy producers such as Beach Energy Ltd (ASX: BPT) and Woodside Petroleum Limited (ASX: WPL) could be on the rise today after oil prices pushed higher. According to Bloomberg, the WTI crude oil price is up 0.9% to US$66.91 a barrel and the Brent crude oil price has risen 1.1% to US$69.46 a barrel. Oil prices rose amid expectations that demand will outstrip supply.

Link given neutral rating

The Link Administration Holdings Ltd (ASX: LNK) share price could be fully valued according to one leading broker. In response to news that the company is undertaking an IPO of its PEXA business, Goldman Sachs has retained its neutral rating and $5.06 price target. Goldman commented: “LNK is not crystalizing much value through the process, and 2) shareholders will bear market risk whilst LNK determines when / how this might occur.”

Gold price rises

Gold miners Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) could have a decent day after the gold price pushed higher overnight. According to CNBC, the spot gold price is up 0.25% to US$1,909.5 an ounce. The precious metal was given a boost from strong inflation data.

Iron ore price rebounds

It could be a good day for mining giants BHP Group Ltd (ASX: BHP), Fortescue Metals Group Limited (ASX: FMG), and Rio Tinto Limited (ASX: RIO) after the iron ore price rebounded. According to Metal Bulletin, the spot iron ore price jumped 4.4% to US$198.83 a tonne following a rise in Chinese steel prices.

More reading

• ASX 200 drops, Nuix sinks, Link declines
• How to avoid this costly ASX investor trap – it’s harder than you think
• Why BetMakers, Domain, Link, & Nuix shares are tumbling
• Tassal (ASX:TGR) share price slips on facility gas leak incident
• ASX gold miners are going gangbusters on the ASX 200 today

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

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