Tag: Motley Fool

The EML Payments Ltd (ASX: EML) share price is having a stellar start to the week.

In early trade, the embattled payments company’s shares were up as much as 11% to 64 cents.

The EML share price has pulled back a touch since then but remains up by 7% currently.

Why is the EML share price rocketing higher?

Investors have been buying the company’s shares today after it announced a raft of changes. These include new leadership and operational priorities, as well as a strategic review.

According to the release, the company’s CEO, Emma Shand, has stepped down from her role after just nine months. She decided to resign in response to the change in operational priorities and will be replaced on a temporary basis by Kevin Murphy.

Murphy will be EML’s interim CEO while it undertakes a global search for a permanent CEO.

He is a former managing director of Bank of Ireland’s cards business and has a deep understanding of the global payments industry. The release also notes that Murphy has significant regulatory experience (including with the Central Bank of Ireland) and has been involved in several successful business turnaround scenarios for private equity funds.

What are its operational priorities?

EML revealed that its board has decided to transition away from the previous long-range strategy announced last year.

Instead, it will now focus on solving the challenges it believes the business is facing today. This includes four key priorities: remediation, cost optimisation, targeted growth in core businesses, and talent retention.

Strategic review

Finally, the company revealed that its strategic review will consider all options available to the board. This includes a potential sale of all or parts of the business in order to maximise shareholder value.

Its chair, Luke Bortoli, commented:

The renewed Board has spoken with internal and external stakeholders and formed a view on the urgent priorities for the business. We are focused on doing the right thing by our people, customers, regulators and shareholders and we are committed to taking actions that will help the business move through its immediate challenges, deliver sustainable growth in the medium to long term and maximise value for shareholders.

We are pleased to welcome Kevin Murphy as interim Group CEO and are excited to have an executive of Kevin’s calibre join EML. His understanding of the Irish and broader European regulatory environments, previous interactions with the Central Bank of Ireland and deep experience in the payments sector are perfectly aligned to addressing the needs of our business today.

The post EML share price rockets 11% after chief steps down appeared first on The Motley Fool Australia.

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More reading

• Here’s why the EML share price just rocketed 36%

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 positions in and has recommended EML Payments. The Motley Fool Australia has positions in and has recommended EML Payments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The share price of S&P/ASX 200 Index (ASX: XJO) toll road operator Transurban Group (ASX: TCL) is in the green on Monday. Its gains come as the company updates the market on its third-quarter traffic results – marking a new record for the period.

Right now, the Transurban share price is up 0.61%, trading at $14.83.

Transurban share price lifts on record third quarter

It’s a good day to be invested in Transurban shares after the company revealed its average daily traffic (ADT) jumped 12.9% year on year last quarter.

Its toll road assets saw around 2.4 million trips over the three-month period – marking a record third quarter.

Meanwhile, the ASX 200 company saw tolls on many of its assets lift – with the majority of increases linked to inflation.

Tolls on Sydney’s WestConnex and M5 West rose a respective 6.1% and 2.3% on 1 January, while those of Brisbane’s AirportLink M7 increased 7.9%. In Melbourne, the company’s tolls increase by 1.05% per quarter.

North America leads the company’s traffic growth

Transurban’s North American market led on average daily turnover (ADT) growth last quarter. Its North American assets saw 140,000 trips over the period – a 15.4% increase on the prior comparable quarter.

Back home, ADT on Transurban toll roads in Brisbane jumped 14.1%, while those in Melbourne and Sydney saw ADT lift 12.9% and 11.9%, respectively.

That was partly on the back of new assets and enhancements coming online in recent years.

On that note, Sydney’s WestConnex M4-M8 link opened in January, with traffic exceeding expectations so far.

Transurban also reached financial close on plans to widen the city’s M7 Motorway and connect the new M12 Motorway last quarter. Transport for NSW approved a binding proposal for the project in December.

The ASX 200 company also signed on a partnership for Canada’s A25 that will see global investment group CDPQ take on a 50% stake in the March quarter.

Transurban share price outperforms ASX 200

The Transurban share price has outperformed this year.

The stock has jumped 15% year to date. It’s also 7% higher than it was this time last year.

Comparatively, the ASX 200 has gained 6% so far this year and has fallen 3% over the last 12 months.

The post Guess which ASX 200 share is gaining on a record quarter appeared first on The Motley Fool Australia.

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More reading

• Creating a diversified income stream: Top ASX dividend shares to buy today according to analysts
• Analysts reckon you should add these ASX dividend shares to your retirement portfolio
• Top defensive ASX shares to buy in April 2023
• Buy Pilbara Minerals and this ASX dividend share: analysts
• Boost your passive income with these ASX dividend shares: analysts

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

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Last week I invested in two ASX dividend shares for passive income. I think these names can be good dividend payers for my portfolio.

I like investments that could provide a combination of dividends and capital growth. Some of my portfolio is focused on listed investment companies (LICs). I like the diversification each one can provide while having the control to provide more predictability with dividends than an exchange-traded fund (ETF) because of the company structure.

With LICs, there’s also a potential to buy at a discount to the net tangible assets (NTA). In other words, I can buy a $1 basket of shares for less than $1.

Hearts and Minds Investments Ltd (ASX: HM1)

Hearts and Minds is an LIC that owns between 25 to 35 Australian and globally listed shares based on the highest conviction ideas from fund managers. Some of the picks are from a permanent group of fund managers (core managers), while other picks are chosen at the annual investment conference by a group of fund managers. It results in a fairly eclectic, diversified portfolio.

The portfolio was quite tech-focused during 2022, so it suffered amid the inflation and rising interest rate environment. However, the portfolio construction method has been altered so there won’t be as much industry concentration from now on.

Some of the current names in the ASX dividend share’s portfolio include BHP Group Ltd (ASX: BHP), Champion Iron Ltd (ASX: CIA), ASML, Formula One Group, Mastercard, and Microsoft.

The LIC doesn’t charge any investment fees and instead donates to leading Australian medical research institutes like Black Dog Institute, Cerebral Palsy Alliance, and Charlie Teo Foundation.

It has a trailing grossed-up dividend yield of 8.1% and the current Hearts and Minds share price is at a 17% discount to the pre-tax NTA on 7 April 2023 (being the latest published weekly update at the time of writing). Those are appealing statistics to me.

L1 Long Short Fund Ltd (ASX: LSF)

This LIC is managed by L1, which looks to use a combination of short selling and ‘long’ investing in a mixture of ASX shares and international shares. At the end of March 2023, it had a total of 80 positions, with 56 of those being ‘long’ and 24 being ‘short’.

Past performance is definitely not a guarantee of future performance but I have been impressed that over the past two years, the portfolio’s net return has been an average of 16.4% per annum. This has enabled the ASX dividend share to pay growing dividends, while also achieving good NTA growth and share price growth. Just achieving 10% net returns per annum from here would be a good performance.

In the FY23 half-year result, it grew its interim dividend by 25% to 5 cents per share. The trailing grossed-up dividend yield is now 4.75%.

However, it wouldn’t surprise me if the next passive income payment is 5.5 cents per share because the last two dividends have been increased by 0.5 cents from the last dividend. If that happens, the grossed-up dividend yield would become 5.25%.

The last published NTA before tax was $3.04 for 11 April 2023, which implies the current L1 Long Short Fund share price is at a 6.25% discount to this.

The post 2 ASX dividend shares I just bought for passive income appeared first on The Motley Fool Australia.

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More reading

• Guess which ASX 200 share is gaining on a record quarter
• Why is the New Hope share price crashing 8% today?
• Sayona Mining share price higher on big lithium news
• Passive income seekers: Experts say these ASX dividend shares are buys
• Why this fund manager thinks these 2 outperforming ASX shares can keep beating the market

Motley Fool contributor Tristan Harrison has positions in Hearts And Minds Investments and L1 Long Short Fund. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended ASML and Mastercard. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2025 $370 calls on Mastercard and short January 2025 $380 calls on Mastercard. The Motley Fool Australia has recommended ASML and Mastercard. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The New Hope Corporation Limited (ASX: NHC) share price is taking a tumble on Monday morning.

At the time of writing, the coal miner’s shares are down over 8% to $5.30.

Why is the New Hope share price taking a tumble today?

Thankfully, the weakness in the New Hope share price today isn’t because of anything bad. Coal prices haven’t crashed, nor has a broker just downgraded its shares.

In fact, today is actually a good day for shareholders despite what its share price might indicate.

That’s because today is the day that New Hope shares trade ex-dividend for its upcoming interim dividend.

When a share trades ex-dividend, it means that the rights to its payout are now settled and any new buyers of its shares will not receive the dividend. They will instead stay with the seller.

In light of this, a share price will generally drop in line with the dividend to reflect this. After all, you wouldn’t want to pay for something you won’t receive.

The New Hope dividend

Last month, New Hope released its half-year results and reported a huge increase in its revenue and earnings thanks to higher coal prices.

For the six months ended 31 January, New Hope posted a 54% jump in revenue to $1.58 billion and a 102% increase in net profit after tax to $668.6 million.

This allowed the New Hope board to declare a fully franked 30 cents per share interim dividend, which was up 76% over the prior corresponding period.

But the coal miner didn’t stop there. It also declared a fully franked 10 cents per share special dividend for the period, bringing its total dividends to 40 cents per share.

Based on the New Hope share price at Friday’s close, this represents a 6.7% yield, which is almost in line with how much its shares have fallen today.

Eligible shareholders can now look forward to receiving this dividend at the start of next month on 3 May.

The post Why is the New Hope share price crashing 8% today? appeared first on The Motley Fool Australia.

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More reading

• Here’s how I’d aim for $50 a week in passive income from ASX 200 shares
• 24% yield! Should I buy New Hope shares before they go ex-dividend?
• Here are the top 10 ASX 200 shares today
• Directors have bought more than $1.6m of New Hope shares in a week. Should you buy?
• Passive income: Broker says buy this ASX 200 share for an 18% dividend yield

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

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The Sayona Mining Ltd (ASX: SYA) share price is on the move on Monday morning.

At the time of writing, the lithium miner’s shares are up 5% to 20.5 cents.

Why is the Sayona Mining share price pushing higher?

Investors have been bidding the Sayona Mining share price higher today after the company released an update on its Canadian operations.

According to the release, the company has significantly expanded its Canadian lithium resource base, with an initial JORC mineral resource estimate for its Moblan Lithium Project. This project is owned 60:40 with Soquem.

Sayona estimates that the project has a total JORC measured, indicated and inferred resource of 70.9 million tonnes @ 1.15% Li20, which represents one of North America’s single largest lithium resources.

Another positive is that this includes higher grade tonnage opportunities with measured, indicated and inferred resource of 51.4 million tonnes @ 1.31% Li20.

More to come

The company also aims to further enhance the size and grade of this resource through additional drilling, with 60,000m of extra drilling planned.

In addition, it highlights that opportunities exist to expand and build the mineral resources proximal to the known Moblan and Moleon deposits. In these areas exploration has indicated that lithium mineralisation may extend to the north, northeast and at depth.

Management believes further diamond drilling could potentially upgrade some of the inferred mineral resources to the indicated category and identify additional mineral resources down-plunge and in the vicinity of the currently identified mineralisation, including extra drilling between the Main/Inter and Moleon dyke groups.

Sayona’s Managing Director, Brett Lynch, commented:

Speed and tonnes are crucial and with our North American Lithium operation in production, we are now bringing significant added resources to the market. Moblan now represents one of the single largest lithium resources in North America, justifying our move to fast-track a major drilling program that has delivered a resource within just a year of acquisition.

Sayona already has the leading advanced lithium resource base in North America and this latest expansion further entrenches our competitive advantage, particularly given our projects’ favourable access to infrastructure, market proximity and availability of low-cost, sustainable hydropower.

Together with our established Abitibi lithium hub in the south, Sayona has quickly developed two emerging centres of lithium production amid surging demand from North America’s EV and battery revolution. As we progress these projects from spodumene concentrate production towards downstream processing, the significance of these assets will only increase as the market scrambles for supply.

The post Sayona Mining share price higher on big lithium news appeared first on The Motley Fool Australia.

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More reading

• These are the 10 most shorted ASX shares this week
• Here are the 3 most heavily traded ASX 200 shares on Friday
• Here are the 3 most heavily traded ASX 200 shares on Thursday
• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• These are the 10 most shorted ASX shares this week

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

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The leading investors from Wilson Asset Management (WAM) have shared thoughts on two ASX shares.

WAM operates several listed investment companies (LICs). Some, like WAM Leaders Ltd (ASX: WLE), focus on larger companies.

Meanwhile, WAM Capital Limited (ASX: WAM) targets “the most compelling undervalued growth opportunities in the Australian market”.

But does WAM have a claim of stock-picking pedigree? The WAM Capital portfolio has delivered an investment return of 14.9% per annum since its inception in August 1999. That’s before fees, expenses, and taxes. This gross return outperformed the All Ordinaries Accumulation Index (ASX: XAOA) return of 8.3% per annum over the same timeframe.

With that in mind, here are the two ASX shares WAM Capital has outlined in its recent monthly update.

Estia Health Ltd (ASX: EHE)

Estia Health was described as a leading residential aged care provider in Australia, which operates in NSW, Queensland, South Australia, and Victoria.

The aged care ASX share recently received a $775 million takeover offer from private equity outfit Bain Capital. The offer was that shareholders would get $3 per share, which was a premium of around 28% compared to the closing price of $2.34 on 23 March 2023.

WAM noted that the takeover proposal came before the industry is due to receive “crucial regulatory clarity” around the national aged care reforms that are expected later this year.

The fund manager noted:

We expect that quality aged care operators with scale, like Estia Health, will attract further interest from strategic and financial investors, given the prohibitive cost to build new centres and a more favourable government funding environment.

Neuren Pharmaceuticals Ltd (ASX: NEU)

WAM described Neuren Pharmaceuticals as a business that’s developing new therapies for highly debilitating neurodevelopment disorders that emerge in early childhood, which currently do not have approved treatment medicines.

The fund manager pointed out that in March, the ASX share announced that its North American partner Acadia Pharmaceuticals received the US Food and Drug Administration (FDA) approval for its compound trofinetide after it showed positive results for the treatment of Rett syndrome.

WAM explained that as it is the first and only approved treatment for this genetic condition, Neuren Pharmaceuticals is set to receive US$40 million from Acadia Pharmaceuticals after the first commercial sale of trofinetide in the US and ongoing royalties on annual sales.

The investment team concluded:

We believe the company’s deep expertise in new drug development and strong forecasted earnings growth will allow the business to maintain its positive momentum.

The post Why this fund manager thinks these 2 outperforming ASX shares can keep beating the market appeared first on The Motley Fool Australia.

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More reading

• ‘Attractive valuations’: 2 ASX shares to buy now before they explode
• Why Core Lithium, Estia Health, Kingsgate, and St Barbara shares are charging higher
• Estia Health share price jumps 21% on takeover approach
• Is it a trap? 3 ASX shares with ultra-high dividend yields

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

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The exchange-traded fund (ETF) Betashares Global Quality Leaders ETF (ASX: QLTY) could be one of the most effective ways to get more exposure to international shares.

Australian is a great country, but it only represents a small part of the global economy.

I think investors would do well by adding some international diversification to their portfolios. Certainly, there are some very good businesses listed outside of the ASX.

But we can still get exposure to those names through the ASX with good ETFs.

I like options such as the Vanguard MSCI Index International Shares ETF (ASX: VGS) and Vanguard All-World ex-US Shares Index ETF (ASX: VEU). Yet there are a lot of businesses in those portfolios that I’d be happy enough not to own.

If we just focused on the strong businesses, the Betashares Global Quality Leaders option could produce good returns.

Betashares Global Quality Leaders ETF

The idea with this ASX ETF is that it owns 150 global companies outside of Australia, ranked by the highest quality score.

There are four quality score rankings that are combined and used to select the businesses that go into the portfolio – return on equity (ROE), debt to capital, cash flow generation ability, and earnings stability.

In other words, the businesses make good profits for shareholders, have low debt, and see the profit come through in the form of good cash flow.

As examples of the types of businesses that it’s invested in, these were the biggest six positions at the time of writing: Novartis, Meta Platforms, L’Oreal, Alphabet, Novo Nordisk, and Microsoft.

One of the things that I like about this ETF is that it’s invested heavily in sectors that could have good growth potential, with small weightings to low-growth areas.

At the last disclosure, for March 2023, the IT weighting was 32.6%, the healthcare weighting was 21.4%, and the industrials weighting was 14.2%. Meanwhile, materials was only 4.5%, financials was 3.1%, and energy was 3.1%. Certainly, these sectors typically earn lower returns on their assets.  

Better returns

Past performance is not a guarantee of future returns, but the ASX ETF has outperformed the Vanguard MSCI Index International Shares ETF over the long term. I think this is a sign that the ‘quality’ way of investing can be very effective. But it’s unlikely to outperform every single year.

Betashares Global Quality Leaders ETF returned an average of 10.45% per annum over the three years to 31 March 2023. The Vanguard MSCI International Shares Index ETF returned an average of 8.34% over the same three-year period.

The index that the Betashares Global Quality Leaders ETF tracks has returned an average of 12.9% per annum over the prior five years. I’m using the index data because the ETF itself isn’t five years old yet. The Vanguard MSCI Index International Shares ETF returned an average of 10.15% per annum in the prior five years.

Time will tell which ASX ETF performs better over the next three or five years, but I believe the Betashares Global Quality Leaders ETF will be able to achieve good returns.

The post Why I think this ASX ETF is a top pick for global diversification appeared first on The Motley Fool Australia.

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More reading

• Expert names the ETFs to buy this month
• Analysts name 2 strong ASX shares to buy for a retirement portfolio
• Betashares names 6 ‘defensive’ ASX ETFs to consider for a possible recession

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Motley Fool contributor Tristan Harrison 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 Alphabet, Meta Platforms, and Microsoft. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Novo Nordisk. The Motley Fool Australia has recommended Alphabet and Meta Platforms. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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ASX shares paying good passive income could be exactly what income-seeking investors are looking for. If an investor has $5,000, targeting a dividend yield of at least 6% could unlock $25 of dividends every month.

There are very few investments on the ASX that pay a dividend every month. But, by combining a few different ASX shares, we can get a dividend paid every month.

Rural Funds Group (ASX: RFF)

Firstly, I’d start by investing $1,700 in Rural Funds shares. The business is expecting to pay a total distribution of 12.2 cents per unit in FY23, which is a distribution yield of 6.1%. That would pay $25.50 in January, April, July, and October if the next four payments are the same size.

This is a real estate investment trust (REIT) invested in a farm portfolio across cattle, vineyards, almonds, macadamias, sugar, and cotton.

Management tries to grow its distributions by 4% per annum, which is partly helped by the rental increases built into its contracts. It is also investing in improvements at its farms to grow their rental and capital value.

GQG Partners Inc (ASX: GQG)

Next, I’d invest $1,250 in fund manager GQG Partners, which has committed to pay out most of its profit each year. This means the business can offer a high dividend yield.

Commsec numbers suggest the ASX dividend share could pay a dividend of 12 cents per share in FY23. That would be a dividend yield of 8.33% in the current financial year.

For investors, this could lead to $26 in passive income in June, September, December, and March.

Its profit and dividend can grow over time if it’s able to continue growing its funds under management (FUM), thanks to investment performance and fund inflows. I think its investment style and track record of long-term outperformance will help it deliver on FUM growth.

Charter Hall Long Wale REIT (ASX: CLW)

Finally, I’d invest the rest of the money, $2,050, into this REIT which owns a diversified portfolio of properties across Australia. It owns service stations, Bunnings Warehouse properties, logistics properties, telecommunications buildings, and so on.

Commsec numbers suggest that the ASX dividend share could pay a total distribution per unit of 6.6%. This would unlock $33.80 of quarterly passive income in May, August, November, and February.

While interest rates are hurting in the short term, it has benefited from inflation with stronger rental income. It’s helpful that the business has long-term rental contracts locked in.

Foolish takeaway

Between these three names, every month is covered and investors will get at least $25 of monthly passive income. Of course, that’s not enough to retire on. But, we can easily multiply that $5,000 by larger numbers to see more dividends roll in. For example, investing $50,000 would result in at least $250 per month.

The post Need passive income? Turn $5,000 into $25 every month with these ASX shares appeared first on The Motley Fool Australia.

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More reading

• ‘Attractively priced’: 2 ASX shares perfect for bargain hunters
• ‘Meaningful growth’: 2 ASX shares to buy for cheap after a terrible month
• Buy NAB and this ASX dividend share now: analysts
• Analysts reckon you should add these ASX dividend shares to your retirement portfolio
• How much do you need to invest to give up work and live only off dividend income?

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

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When you shop for a car or a sofa, you logically don’t go around buying it at the highest possible price.

Most Australians would wait for a sale or at least negotiate for a discount.

So why are so many investors afraid of buying ASX shares that have fallen in recent times?

If the long-term business outlook remains positive, a short-term dip in the stock price merely presents a buying opportunity. Think of it as a Boxing Day sale for stocks.

To demonstrate, here are two ASX shares that were hammered in March that Glenmore Australian Equities Fund is happy to buy and hold:

‘Solid earnings outlook across its portfolio of brands’

Food retail franchisor Retail Food Group Ltd (ASX: RFG) is the business behind ubiquitous brands like Gloria Jean’s, Michel’s Patisserie and Donut King.

Glenmore portfolio manager Robert Gregory has been a fan of the stock for a while, and a hair-raising 25.3% drop in March isn’t about to put him off.

He attributed a $25 million capital raising and a new $20 million debt facility announced during the month as the cause of its stock price woes.

“There was no specific acquisition or initiative to increase earnings for the equity funds raised,” Gregory said in a memo to clients.

“[This] undoubtedly disappointed the market, with RFG stating the funds would be used to ‘reset and strengthen the company’s balance sheet and provide capital to pursue core business and inorganic growth opportunities’.”

The big drop in stock price just makes Retail Food Group shares even more of a bargain, as far as Gregory is concerned.

“Despite the 15% earnings per share dilution from the raising, with the stock having fallen materially in the month, RFG trades on an FY23 PE multiple of 9x, and has a solid earnings outlook across its portfolio of brands.”

Pick up this bargain before it explodes

US investment manager GQG Partners Inc (ASX: GQG) saw its share price fall 12.1% over March, due to a revelation that its fund-under-management dropped 1.3%.

This is just a short-term hiccup, according to Gregory.

“Whilst the investment performance of GQG’s funds underperformed in the first quarter of 2023, performance over longer time frames is still well ahead of benchmark,” he said.

“Positively, net inflows for the first two months of 2023 were US$3.0  billion, a very strong result.”

Similar to Retail Food Group, Gregory is convinced GQG shares are an absolute bargain, but with the bonus of a fat dividend.

“GQG continues to look attractively priced, trading on an FY23 PE multiple of ~11x and a dividend yield of 8.5%.”

Even with the March drop, the GQG share price is up 6.5% year to date.

The post ‘Attractively priced’: 2 ASX shares perfect for bargain hunters appeared first on The Motley Fool Australia.

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More reading

• Need passive income? Turn $5,000 into $25 every month with these ASX shares
• ‘Meaningful growth’: 2 ASX shares to buy for cheap after a terrible month
• 3 big dividend-paying ASX shares for 2023
• These are the best ASX sectors to invest your money into this quarter: Morgans
• I hope to retire rich. That’s why I’m buying cheap ASX dividend shares right now

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

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The Xero Limited (ASX: XRO) share price has been steadily rising this year, going up by around 30%. But can investors still make a big return if the share price is under $95?

One of the great things about looking at an ASX tech share in the current environment is that higher interest rates have pushed down the valuation of names like Xero.

In fact, since November 2021, the Xero share price has declined around 40%, despite its more recent recovery.

Is the Xero share price a buy?

If we simply looked at the company’s most recent financials and didn’t worry about what was happening with the economy and share price, it would seem like the business hasn’t seen any impacts on growth at all.

For the six months to 30 September 2022, it revealed operating revenue jumped 30% to NZ$658.5 million, with global subscribers rising 16% to around 3.5 million and average revenue per user (ARPU) growing by 13% to NZ$35.30.

This brought the annualised monthly recurring revenue (AMRR) to NZ$1.48 billion. That compares to the current market capitalisation of A$13.8 billion, according to the ASX. After adjusting for the exchange rate difference between those two numbers, the Xero share price valuation is very close to 10x annualised revenue, as at September 2022.

But I think the AMRR could have noticeably risen since then, making the revenue multiple look a bit more manageable.

The business expects to release its full-year announcement on 18 May 2023, which is when investors will get an insight into the full-year performance.

Xero shares have done wonderfully over the past decade, rising by more than 800%. I don’t think the next decade will be as good as that. But there is one element that could help generate a lot of share price growth for investors.

Rising profit margins

Xero has committed to streamlining its operations to “drive greater operating leverage, and better balance growth and profitability”.

It’s planning to reduce its organisational structure by between 700 to 800 roles across the business.

The operating expense to revenue ratio is expected to “reduce significantly” in FY24.

Xero also said that it will continue to improve its operating efficiency over the long term, and take a “disciplined approach to reinvestment of cash and generating long-term shareholder value”.

The business is targeting an operating expense-to-revenue ratio in FY24 of around 75% down from a range of between 80% to 85% in FY23.

This improvement in the profit margins in one year could signal that better times are to come in the longer term in terms of cash flow and net profit after tax (NPAT).

As Xero’s underlying profitability starts to show, I think this can impress investors and lead to the share price going higher, even if interest rates don’t fall in the short term.

With Xero’s ongoing wins of new subscribers, plus the high retention rate and regular subscription price increases, the ASX tech share could have all the ingredients for the Xero share price to double over the next three years.

The post Could buying Xero shares at under $95 make me rich? appeared first on The Motley Fool Australia.

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More reading

• The ASX 200 tech stock to buy now before a massive revival
• Why Goldman Sachs is raving about these ASX growth shares
• Morgans names the best ASX 200 growth shares to buy in April
• Top ASX growth shares to buy in April 2023
• ASX 200 rebounds after RBA hits pause on its rate hikes

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

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