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The Novonix Ltd (ASX: NVX) share price is edging higher on Wednesday morning.

At the time of writing, the battery technology company’s shares are up 0.5% to $1.27.

Though, this isn’t going to make any difference to the longer term picture, which looks very ugly.

As you can see on the chart below, Novonix shares are down over 80% since this time last year.

Will the Novonix share price recover?

The company is holding its annual general meeting today and management has taken time to comment on the underperforming Novonix share price.

Novonix chair, Admiral Robert Natter, commented that he believes the performance of the company’s shares fails to reflect the huge progress being made over the period.

Admiral Natter said:

Clearly, the performance of stock has not reflected the considerable work that is being done with customers and in progressing our graphitization technology and related materials and process technologies. Our share price has gyrated along with the rest of the market and, in particular, the technology sector which has seen even greater volatility. As a battery technology emerging growth company, we have been part of that and felt it to a greater degree than many in our sector.

However, the Novonix chair appears confident that this will change in the future when the company executes on its strategy to deliver its long term goals. He adds:

As we have noted previously, as the Board and management team, we cannot control the share price. What we can control are the decisions we take to ensure we have a sound strategy, and that management is executing that strategy to deliver on our long-term goals. Chris and his team continue to educate the market as to the opportunity that stands before NOVONIX and their progress. Importantly, if we continue to deliver against our key operating milestones, the share price will respond appropriately over time.

Patience may be key here if you’re a believer in the Novonix story.

The post Chair says Novonix share price ‘will respond appropriately over time’ appeared first on The Motley Fool Australia.

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More reading

• Why Block, Novonix, Piedmont Lithium, and Syrah shares are racing higher
• ‘Very excited’: Why the Novonix share price is leaping 14% on Friday
• Novonix shares will soon be booted out of the ASX 200. What might this mean for investors?
• These ASX shares are being dumped from the ASX 200 index this month
• 5 things to watch on the ASX 200 on Monday

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 Viva Energy Group Ltd (ASX: VEA) share price has climbed to a new multi-year high on Wednesday morning.

At the time of writing, the ASX 200 fuel retailer’s shares are up 5% to $3.24.

Why is the Viva Energy share price scaling new heights?

Investors have been bidding the Viva Energy share price higher today after the company announced a major acquisition.

According to the release, the company has entered into a binding agreement to acquire the OTR Group from Peregrine Corporation for a total consideration of $1.15 billion. Based on estimated earnings and synergies, this represents a 7x EBITDA multiple.

The release notes that the $1.15 billion consideration will be funded through $1 billion of debt and working capital, and an equity component of $150 million to be issued to the sellers.

The deal is expected to deliver earnings per share accretion of 6% on a pro forma FY 2022 basis and 11% on a normalised FY 2022 basis.

What is OTR?

OTR, also known as On the Run, is a leading independent convenience retailer in Australia, generating more than $3 billion of revenue annually and employing approximately 6,500 people.

It comprises OTR Convenience Retail, Smokemart and Giftbox (SMGB), and Mogas Regional and Reliable Petroleum.

The OTR Convenience Retail business is a network of 205 company owned and controlled leasehold stores operating under the OTR brand, comprising 174 integrated fuel and convenience stores and 31 stand-alone stores. It also includes 92 stores which incorporate quick service restaurants (QSRs) operated by OTR.

SMGB provides tobacco and cigarette wholesale arrangements to OTR and other retail third-party networks. Its retail network consists of 257 company owned and controlled leasehold stores across Australia, together with an online retail website.

Finally, the Mogas Regional and Reliable Petroleum wholesale fuel and lubricant businesses service customers in regional South Australia.

Acquisition rationale

Management highlights that this acquisition supports its “vision to be Australia’s leading convenience retailer, with a pathway to establish more than 1,000 stores.”

It also secures cutting edge convenience capabilities. It highlights that OTR generates over 70% of its earnings from non-fuel retail, which would otherwise have taken the company years to develop. This diversifies its earnings exposure, lifting the share of earnings from non-fuel sources from ~30% (post Coles Express) to an expected ~50%.

In addition, with electric vehicle usage growing, the company believes the deal leaves it well-placed to benefit from the change.

Viva Energy’s CEO and Managing Director, Scott Wyatt, commented:

The introduction of OTR’s superior convenience offering, including quick serve restaurants, will help revolutionise the diversity and attraction of our retail offering. As our stores increasingly become retail destinations, we expect convenience earnings will grow and reduce our dependency on traditional fuels.

OTR outlets offer an attractive and welcoming store environment, supporting increased dwell time, which is likely to be a key factor in successfully introducing electric vehicle recharging facilities over time.

The deal remains subject to customary regulatory approvals including FIRB and ACCC.

The post ASX 200 stock Viva Energy hit multi-year high on $1.2 billion acquisition appeared first on The Motley Fool Australia.

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More reading

• 5 ASX 200 shares trading ex-dividend today
• 5 things to watch on the ASX 200 on Tuesday

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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If you are looking for some exchange traded funds (ETFs) to buy this month, then it could be worth checking out the ones listed below.

These ETFs have recently been recommended by Betashares’ chief economist, David Bassanese, as great options in the current uncertain economic environment. They are as follows:

Global Healthcare ETF – Currency Hedged (ASX: DRUG)

The first ETF that has been tipped as a buy is the Global Healthcare ETF.

This ETF provides investors with easy access to the largest global healthcare companies, hedged into Australian dollars.

Bassanese highlights that the largest global healthcare companies are predominantly pharmaceutical companies, which are often considered defensive. Especially considering how they can typically pass rising costs on to consumers. This provides investors with some level of inflation protection.

Among its holdings are healthcare giants such as Astra Zeneca, Johnson & Johnson, Merck & Co, and Pfizer.

Betashares Global Quality Leaders ETF (ASX: QLTY)

Another ETF to look at is the Betashares Global Quality Leaders ETF. It offers investors exposure to a portfolio of approximately 150 global companies (excluding Australia).

To be included in the ETF, a company needs to rank highly on four key metrics. These are return on equity, debt-to-capital, cash flow generation ability, and earnings stability. The ETF includes companies such as Alphabet, L’Oreal, Microsoft, Nvidia, and Visa.

Alternatively, there’s an option you can consider if you would prefer to invest in high-quality ASX shares instead. Bassanesse has suggested investors look at the Betashares Australian Quality ETF (ASX: AQLT). It is currently home to 40 high-quality ASX shares, which includes companies such as biotherapeutics behemoth CSL Limited (ASX: CSL) and telco giant Telstra Group Ltd (ASX: TLS).

The post Expert names the ETFs to buy this month appeared first on The Motley Fool Australia.

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More reading

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

Motley Fool contributor James Mickleboro has positions in CSL. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL. The Motley Fool Australia has positions in and has recommended Telstra 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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Are you looking for ASX 200 dividend shares to buy? If you are, then you may want to check out the two listed below that have recently been named as buys.

Here’s why brokers rate these dividend shares highly right now:

National Australia Bank Ltd (ASX: NAB)

The first ASX 200 dividend share that has been named as a buy is big four bank NAB.

The team at Goldman Sachs is positive on NAB and has named it among its top two picks.

Goldman likes NAB in the current environment due to its exposure to commercial lending. Its analysts highlight that they “see volume momentum over the next 12 months as favouring commercial volumes over housing volumes” and note that “NAB provides the best exposure to this thematic.”

The broker currently has a buy rating and $35.42 price target on its shares.

In respect to dividends, Goldman is forecasting fully franked dividends of $1.73 per share in FY 2023 and $1.76 per share in FY 2024. Based on the current NAB share price of $28.07, this implies yields of 6.15% and 6.3%, respectively.

Wesfarmers Ltd (ASX: WES)

Another ASX 200 dividend share that has been named as a buy is Wesfarmers.

It is the conglomerate behind a range of businesses such as Bunnings, Kmart, Officeworks, and Priceline.

The team at Morgans are positive on Wesfarmers in the current environment. This is due to its value offering. The broker highlights that “Kmart is well-placed to benefit with the average price of an item at around $6-7.”

As for dividends, its analysts are forecasting fully franked dividends per share of $1.79 in FY 2023 and $1.92 in FY 2023. Based on the current Wesfarmers share price of $51.50, this will mean yields of 3.5% and 3.7%, respectively.

Morgans has an add rating and $55.60 price target on Wesfarmers’ shares.

The post Buy NAB and this excellent ASX 200 dividend share for passive income: brokers appeared first on The Motley Fool Australia.

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More reading

• Passive income: How much to invest to get $800 per month
• 3 Warren Buffett tips on how to invest in ASX 200 banks
• Why did the NAB share price tank more than 7% in March?
• Top ASX shares to buy in April 2023
• Why did the Wesfarmers share price outperform the ASX 200 in March?

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

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The NIB Holdings Limited (ASX: NHF) share price has only risen by 15% in the last five years. Could the next five years be a lot better for the private health provider?

One of the main things that have happened in the past five years is that NIB has diversified its sources of earnings.

The business has managed to grow its Australian resident policyholders at a much stronger rate than the wider industry over the long term. It also has other segments including ‘international inbound health insurance’, a New Zealand business and travel insurance.

There’s one area in particular where the business thinks there is strong growth potential for the company to pounce on – the NDIS. NIB has a division called Thrive which it thinks has lots of potential.

Significant marketplace

According to NIB and the NDIS quarterly report for June 2022, the NDIS ‘marketplace’ was worth $29 billion in FY22, with plan management and support co-ordination worth over $1 billion.

The company noted that it has long and deep experience in connecting buyers and sellers of healthcare, it’s a well-known and trusted brand, and it has technology advantages.

NIB suggests that it has the capacity to lead orderly consolidation, improve efficiencies and integrity.

In the first half of FY23, it raised $158 million to make acquisitions in the NDIS space.

It has made four acquisitions. The first three came at a cost of $108 million with around 22,000 participants and annualised earnings before interest, tax, depreciation and amortisation (EBITDA) of $13.3 million.

It has also entered into an agreement to acquire plan manager All Disability Plan Management, based in Port Macquarie, which has about 3,000 participants.

The company said that it’s considering further acquisitions.

NIB Thrive is expecting to manage plans for 50,000 NDIS participants by FY25. The ASX share said that the NDIS is expected to double in size by 2030, which may be a very positive sign for the NIB share price in the next five years and beyond.

Other aspects of the business are promising

With borders now open after COVID, the business is benefiting from the increased availability of travel. As more international travel occurs, I think this business will see improved earnings from higher volumes.

The international student volumes are strongly rebounding, while international workers are also adding to NIB’s growth.

NIB is hoping to keep growing its policyholder numbers. Hospital claims are expected to remain subdued in the second half of FY23, though conditions (including margins) are expected to normalise as time goes on.

Is the NIB share price good value?

According to estimates on Commsec, NIB could generate 43.2 cents of EPS in FY25. This would put NIB shares at under 17 times FY25’s estimated earnings. I think that’s a reasonable valuation considering the business is expected to grow both its EPS and dividend in each of the next few years.

I think it can keep growing its policyholders and profit, making it an attractive option for the next five years and perhaps beyond.

The post Where will NIB shares be in five years? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Monday
• 5 ASX shares I’d buy if there is panic selling
• Turbulence insurance: Fund names 2 ASX 200 shares for long-term riches

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended NIB Holdings. 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 Qantas Airways Limited (ASX: QAN) share price has put on a rollercoaster performance over the last five years. Meanwhile, the airline operator battled through the onset of, and its recovery from, the COVID-19 pandemic.

If one were to have invested $8,000 in Qantas in early April 2018, they likely would have walked away with 1,322 shares, paying $6.05 apiece.

Today, that parcel would be worth $8,976.38. The Qantas share price has gained 12% over the last five years to trade at $6.79 as of Tuesday’s close.

For comparison, the S&P/ASX 200 Index (ASX: XJO) has risen 25% in that time.

But what about the dividends on offer from the ASX 200 travel giant? Let’s factor them into the stock’s returns.

All dividends paid to those holding Qantas shares since 2018

Find all the dividends that have been paid to those holding Qantas shares over the last five years below:

Qantas dividends’ pay date	Type	Dividend amount
September 2019	Final	13 cents
March 2019	Interim	12 cents
October 2018	Final	10 cents
April 2018	Interim	7 cents
Total:		42 cents

As the above chart shows, each Qantas share has yielded just 42 cents in dividends since this time five years ago.

That means our figurative investment has likely brought in $555.24 of passive income over its life – bringing its total return on investment (ROI) to 19%.

Though, that’s before considering the tax benefits that may have been born from accompanying franking credits.

The airline hasn’t declared a dividend since the pandemic threw the travel industry into turmoil in early 2020.

While Qantas has since returned to profit, it hasn’t yet posted a dividend. But investors haven’t been left high and dry.

The ASX 200 giant has been returning capital to shareholders via on-market share buybacks.

It completed a $400 million buyback in December and announced another $500 million buyback in February.

The post Snapped up $8,000 of Qantas shares in 2018? Here’s how much passive income you’ve received appeared first on The Motley Fool Australia.

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More reading

• Why did the Qantas share price soar higher than the ASX 200 in March?
• Qantas shares in the green amid sweet $2m investment
• Why I think the Qantas share price can keep soaring higher
• Beach and bling: 2 ASX 200 shares Firetrail is loving right now
• Refuelled with profits, how ASX 200 favourite Qantas plans to stick the landing on growth

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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Although the JB Hi-Fi Limited (ASX: JBH) share price is having a decent start to 2023, things aren’t quite as positive on a longer term basis.

For example, over the last 12 months, the ASX 200 retail giant’s shares are down over 17%, as you can see on the chart below.

This has been driven by concerns that the cost of living crisis could weigh on its sales and earnings in the near term.

There is one positive with this decline, though. That positive is that it has made the potential dividend yield on offer with this ASX 200 stock very attractive.

Should you buy this dirt cheap ASX 200 stock for its big dividend yield?

According to a recent note out of Citi, its analysts believe this is an ASX 200 stock to buy right now.

It has put a buy rating and $55.00 price target on its shares, which implies potential upside of 25% for investors based on the current JB Hi-Fi share price.

In addition, the broker is forecasting a fully franked $3.26 per share dividend in FY 2023, which represents a yield of approximately 7.5%.

What is the broker saying?

Citi acknowledges that JB Hi-Fi’s earnings are likely to peak this year. This is due to its “view that household goods will be among the weaker retail categories given falling house prices and a rotation into travel spending.”

However, it still believes this ASX 200 stock is dirt cheap at the current level. Particularly given its belief that consensus estimates may be too low.

Citi’s analysts “continue to see upside risk to consensus expectations given the degree of decline expected in sales (~4%) and margins (~32%) in 2H23e appears inconsistent with the current trajectory of the business.”

The broker is forecasting earnings per share of $4.95 in FY 2023, $3.66 in FY 2024, and then $3.49 in FY 2025. This implies below average price to earnings ratios of 8.9x, 12x, and 12.6x, respectively.

And while this is expected to lead to dividend cuts, the yields on offer are expected to remain very attractive. Citi is forecasting fully franked dividends per share of $2.41 in FY 2024 and then $2.30 in FY 2025. This will mean yields of 5.5% and 5.2%, respectively, for owners of this ASX 200 stock.

The post 7.5% dividend yield! Should I buy this dirt-cheap ASX 200 stock? appeared first on The Motley Fool Australia.

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More reading

• These are the 10 most shorted ASX shares this week
• How much do I need to invest in ASX shares for $100 in weekly passive income?
• Here are the 10 most shorted ASX shares this week
• I think retirees will love these 2 ASX 200 dividend shares for passive income
• Buy these 3 ASX retail shares: Morgans

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

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Well, the big piece of news on the ASX yesterday was undoubtedly the Reserve Bank of Australia’s (RBA) decision to halt the ten-month streak of interest rate rises it has gifted Australians over the past 11 months.

Yes, April will be the first month in almost a year when interest rates won’t be going up. Investors seemed to rejoice this move, with the S&P/ASX 200 Index (ASX: XJO) rebounding back into positive territory when the news became public at 2:30 pm yesterday:

In its customary commentary, the RBA had some interesting comments to make on inflation:

A range of information, including the monthly CPI indicator, suggests that inflation has peaked in Australia. Goods price inflation is expected to moderate over the months ahead due to global developments and softer demand in Australia.

Reserve banks like the RBA usually raise interest rates with almost the sole intention of combating inflation. So it will come as a relief to many to hear that inflation may have already peaked in Australia.

But how does this decision impact investing in ASX shares?

Well, let’s turn to the legendary investor Warren Buffett for an explanation.

How does Buffett invest in a high-rate environment?

Buffett is one of the world’s greatest investors of all time. He is now in his 90s and has been investing for most of his life. So this is a man with a lot of experience with inflation, and profiting despite it.

Buffett once described interest rates as “like gravity” for shares and other assets. The higher they rise, the more ‘pull’ they have on share markets. This explains why both the US and Australia have seen such volatility in their share markets over the past 12 months or so.

But Buffett also teaches that most investors shouldn’t worry too much about interest rates. He once said that worrying about what rates will do next is “the same way as predicting what business is going to do, what the stock market’s going to do… I can’t do any of those things. But that doesn’t mean I can’t do well investing over time”.

In this investing, Buffett’s stock picks tend to be companies that can thrive in all economic climates. Two prominent names in his portfolio are Apple and Coca-Cola. Just think of how these companies fare in times of high rates, and times of low rates, high inflation and low inflation.

These companies possess intrinsic competitive advantages (Buffett likes to call them ‘moats’) through the sheer power of their brands. This helps consumers to keep coming back, regardless of the economic weather.

Buffett has long preached the wisdom of finding companies that have these kinds of protections built in. So even though inflation might have peaked here in Australia, I’m sticking with Buffett’s tried and true methods of investing. If you find a top-tier company, and you are able to pay a good price for it, there is little else you need to worry about.

The post With inflation peaking, I’m using the Warren Buffett method to buy shares appeared first on The Motley Fool Australia.

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More reading

• How I would retire rich with ASX shares
• 5 things to watch on the ASX 200 on Wednesday
• Why are ASX 200 lithium shares having such a miserable week?
• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Tuesday

Motley Fool contributor Sebastian Bowen has positions in Apple, Berkshire Hathaway, and Coca-Cola. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Apple and Berkshire Hathaway. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2024 $47.50 calls on Coca-Cola. The Motley Fool Australia has recommended 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.

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In a recent memo to investors, Wilsons equity strategist Rob Crookston pointed out how there are many similarities between 2023 and 2019.

In both those years the economy was slowing. In 2019, the Reserve Bank of Australia and US Federal reserve responded with interest rate cuts.

“While the motives for cuts this year will be different, the market is now pricing cuts to the Fed and RBA after a fall in confidence in the global banking system,” Crookston said in a memo to clients.

“We believe some easing later in 2023 for the Fed, and late 2023 or early 2024 for the RBA is plausible.”

‘Our biggest overweight in the portfolio’

But the reality is no one really knows how it will all turn out.

As Crookston noted, this time around rates will remain much higher than 2019 even after central bank cuts.

That’s if the rate reductions eventuate at all.

“Persistent inflation is still a risk to the rate cut scenario,” he said.

“Tail risk event probabilities are heightened in 2023 vs 2019 due to the fast pace of monetary tightening.”

So what should investors do in such an uncertain environment?

According to Crookston, one particular sector is best placed to cope with whatever economic circumstances come up this year and next.

“We think healthcare gives us protection in many different scenarios, hence it is our biggest overweight in the portfolio.”

‘Earnings should hold up’ even if economy tanks

The three “key” healthcare stocks that the Wilsons team holds are CSL Limited (ASX: CSL), Resmed CDI (ASX: RMD) and Telix Pharmaceuticals Ltd (ASX: TLX).

Crookston said that ASX shares such as these can still outperform if bond yields continue to drop, which will happen if the rate rises really bite and the economy suffers.

Health businesses will certainly see “fewer downgrades than cyclicals”.

“[If the] economy slows or goes into a recession, earnings should hold up in this scenario,” he said.

“Pricing power protects against inflation, if more persistent than expected.”

The ResMed share price has already risen a chunky 7.85% year to date, while CSL has pushed up 3.25%. Telix has remained flat.

The post The ASX sector set to boom no matter what happens this year appeared first on The Motley Fool Australia.

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Motley Fool contributor Tony Yoo has positions in CSL, ResMed, and Telix Pharmaceuticals. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL and ResMed. The Motley Fool Australia has positions in and has recommended ResMed. 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 team at NovaPort Capital knows what they want out of the ASX shares they buy.

According to NovaPort senior analyst Tim Binsted, his team looks for 50% upside in share price over the coming three years.

And right now there is one stock that fits the bill.

“This was a stock that was trading at a discount to its earnings and valuation where we could see earnings growth over the forward period,” he said in a NovaPort video.

“And we could see, relative to market, the possibility for multiple expansion, which brings the other leg to your investment upside — and that should get you 50% over the three years.”

Industry now structured to benefit the main ASX-listed player

The stock that Binsted is bullish on is fertility assistance provider Monash IVF Group Ltd (ASX: MVF).

Believe it or not, the business was a COVID beneficiary.

“We saw a boom in babies over that period with about a 30% growth in IVF cycles from 2021 over 2020,” said Binsted.

“And while levels have moderated a bit from the peak, they’re still strong and Monash’s forward patient pipeline is very good.”

A big tailwind for Monash is that the industry structure has changed in recent years.

Two private equity investors swooped on some of Monash’s biggest rivals. One bought out ASX-listed rival Virtus and the other grabbed low-cost competitor Adora from its parent company Healius Ltd (ASX: HLS).

According to Binsted, Monash can flourish now that there’s “a stable industry structure”. 

“The high pressure from low cost, which was pushing in and really damaging some margins around the edges from the low-cost full-service providers has now waned,” he said.

“It’s a much more stable market, better for pricing, and it’s an environment where Monash has a chance to win market share.”

Monash has about 20% market share, but this can increase with doctors who don’t want to work under private equity that switch over.

Government support and overseas expansion

Out-of-pocket costs for IVF clients can be notoriously expensive, but Binsted notes that multiple governments are offering to subsidise some of the bills.

“You’ve got $2,000 of new funding from the good state of NSW, and we’ve also got the Vic liberals with that on their policy platform,” he said.

“We’ve seen some additional funding for genetic testing coming through from the federal government for Medicare, which should flow into the pool of profits from the end of this year.”

On the side, Monash also has overseas expansion that could be a source of future growth.

“We’ve got a growing Asia business, which is a secondary part of the story for Monash with a couple of clinics… the main one in Kuala Lumpur, which has got a couple of million dollars of earnings recovery that should come from COVID interruptions not repeating in the forward period.”

The ultrasound arm is also seeing a tidy post-pandemic recovery.

“If you add that with the positive industry dynamics, the strong competitive background for Monash and the chance to win doctors, it’s a really positive story for the small cap IVF sector for the next year and years afterwards.”

The Monash share price is down more than 12% over the past year but is up 14.2% so far in 2023. The stock pays out a dividend yield of 4.15%.

The post 50% upside: The small-cap ASX share that has everything going for it appeared first on The Motley Fool Australia.

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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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