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The BHP Group Ltd (ASX: BHP) share price is down almost 4% in early trading on Thursday.

The S&P/ASX 200 Index (ASX: XJO) mining giant closed yesterday at $45.56 per share. Shares are currently swapping hands for $43.83 apiece, a drop of 3.8%.

The ASX 200 is also down 1.97% in morning trade.

But the BHP share price looks to be facing additional headwinds from two fronts.

What’s pressuring the BHP share price today?

The first headwinds dragging on the BHP share price are tumbling commodity prices.

Atop a big fall in the oil price, iron ore – BHP’s top revenue earner – is down 1.2% to US$130.20 per tonne. And copper, the ASX 200 miner’s second biggest revenue earner, dropped 1.1% to US$8,833.50 per tonne.

Much of that looks to be due to increasing global jitters as contagion from the SVB collapse is spreading to Europe, with Credit Suisse shares closing down 24% on the SIX Swiss Exchange.

The BHP share price on the ASX is also heavily influenced by price moves of its US-listed stock. And BHP shares slipped a precipitous 4.7% on the NYSE overnight.

What else are ASX 200 investors considering

Other news that could be dragging on the BHP share price is the expansion of the United Kingdom-based class action lawsuit related to the 2015 Samarco Fundao iron ore tailings dam collapse in Brazil.

The Fundao Dam was owned and operated by Samarco Mineracao. BHP Brasil and Vale each hold a 50% interest in Samarco. The dam’s collapse killed 19 people and caused massive environmental damage.

According to an announcement released by BHP this morning, on 25 February, a further claim was filed to add some 500,000 new claimants to the English proceedings, bringing the total number to around 700,000.

Potential compensation was reported as £36 billion (AU$66 billion). Full details of the claims have not yet been received and damages remain unspecified.

BHP said it will defend the UK court action, stating that the class action “duplicate[s] matters already covered by the existing and ongoing work of the Renova Foundation and legal proceedings in Brazil. All claimants have avenues in Brazil to resolve any potential claims…”

BHP and Vale have spent R$28.1 billion (US$5.9 billion) on remediation and compensation programs through the Renova Foundation. As at 31 December, BHP’s provision related to the Samarco dam failure was US$3.1 billion.

And the BHP share price could get buffeted by further developments in the English proceedings down the road.

According to the miner:

Given the status of the English Proceedings, it is not possible to provide a range of possible outcomes or a reliable estimate of potential future exposures to BHP in connection with these proceedings.

RBC analysts noted the class action will cause ongoing issues.

“The situation is a tricky one for BHP and is likely to provide a stream of negative headlines over the coming years, or until this is denied by the courts or settled,” RBC analysts said (courtesy of The Australian).

However, RBC believes the UK case will likely eventually prove unsuccessful.

“But in our opinion there is a limited prospect of this case succeeding, considering that the liabilities would cover the same reparations and compensation that has (and will) be remediated by the Renova Foundation,” the analysts added.

BHP share price snapshot

As you can see in the chart below, the BHP share price has now dipped into the red for 2023, down 5%.

Still, investors who bought six months ago will be sitting on gains of 15%.

The post Why is the BHP share price tumbling 4% today? appeared first on The Motley Fool Australia.

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More reading

• ‘Not sure if that’s the way we should go’: Why BHP shares are making news today
• How to make $50,000 of retirement income with ASX shares
• How to generate $20k of passive income from BHP shares
• Here’s how I would secure monthly dividends in the 2024 financial year with these ASX stocks
• Why is the BHP share price taking a flogging on Friday?

Motley Fool contributor Bernd Struben 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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S&P/ASX 200 (ASX: XJO) shares are 154 points lower this morning following tumultuous trading sessions overnight across Europe and in the United States.

Central to the stock market falls are fears that Switzerland’s second-biggest bank is in trouble and a contagion in the global banking system is underway following the collapse of two US banks over the past week.

Here are the share price movements of the big four ASX bank shares in early trading today:

• The National Australia Bank Ltd (ASX: NAB) share price is down 2.33%
• The ANZ Group Holdings Ltd (ASX: ANZ) share price is down 2.36%
• The Commonwealth Bank of Australia (ASX: CBA) share price is down 1.8%
• The Westpac Banking Corp (ASX: WBC) share price is down 2.15%.

What’s happening with Credit Suisse?

Credit Suisse Group AG (SWX: CSGN) plummeted 24% overnight after its major shareholder refused to increase its stake in the Swiss bank following a 30% fall in the stock price over the past six weeks.

Last night’s rout prompted an automatic pause in the trading of Credit Suisse shares. The stock has now lost more than 50% of its value since 2 February and has lost half its market capitalisation since 2021.

The Credit Suisse stock plunge dragged down other European banking stocks and US banking shares overnight as fear spreads that the worldwide banking system may be on shaky ground.

This follows the collapse of Silicon Valley Bank and Signature Bank in the US over the past week.

What’s the impact on global markets?

French banking stocks Societe Generale SA fell 12.2% and BNP Paribas SA fell 10.1% overnight. Stock in German bank Commerzbank AG fell 8.7%. European government bond yields also fell.

In the US, the Dow Jones Industrial Average fell by as much as 325 points (1.03%) before rallying. The Dow is currently down 0.87% while the S&P 500 is down 0.7%.

The United Kingdom’s FTSE 100 Index fell by 3.8%, which is its biggest single day loss since the war in Ukraine began in late February 2022, according to The Australian.

The Australian quoted City Index and FOREX market analyst Fawad Razaqzada:

You get the picture: investors were panicking. Bloodbath, if you will.

Concerns over another 2008-style financial crises have intensified.

The problems with Credit Suisse

Two days ago, Credit Suisse published its 2022 annual report revealing significant customer deposit outflows.

In a letter to shareholders, Credit Suisse chair Axel P. Lehmann and CEO Ulrich Körner said:

Our financial results for 2022 were significantly affected by the challenging macro and geopolitical environment with market uncertainty and client risk aversion, significant deposit and net asset outflows in the fourth quarter as well as the strategic actions we are taking to build the new Credit Suisse.

Net revenues for 2022 decreased by 34% year on year, driven by declines across all of our divisions.

Credit Suisse has been beset with problems for some time now.

Saudi National Bank (SNB) confirmed overnight that it would not top up its 9.88% holding in Credit Suisse due to regulatory restrictions preventing it from owning more than 10%.

The Swiss central bank has pledged to provide Credit Suisse with extra liquidity if required.

What is the Swiss central bank doing?

Swiss National Bank (SNB) and the Swiss Financial Market Supervisory Authority (FINMA) issued a joint statement assuring markets that Credit Suisse met their capital and liquidity requirements.

They said:

The Swiss Financial Market Supervisory Authority FINMA and the Swiss National Bank SNB assert that the problems of certain banks in the USA do not pose a direct risk of contagion for the Swiss financial markets.

The strict capital and liquidity requirements applicable to Swiss financial institutions ensure their stability. Credit Suisse meets the capital and liquidity requirements imposed on systemically important banks.

If necessary, the SNB will provide CS with liquidity.

Reuters reports that European Central Bank (ECB) officials have contacted lenders it supervises to ask about their financial exposures to Credit Suisse.

The post What’s going on with Credit Suisse and why is it impacting ASX 200 shares? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Thursday
• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• Investing in ASX 200 shares? Here’s what to expect from the US Fed next week
• Guess which ASX lithium share just rebounded 15%
• Warren Buffett’s $35 billion warning to investors

Motley Fool contributor Bronwyn Allen 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 Rio Tinto Limited (ASX: RIO) share price is having a tough run this morning.

Rio Tinto shares are down 4.63% and currently fetching $114.01. For perspective, the S&P/ASX 200 Index (ASX: XJO) is 1.93% in the red today.

Let’s take a look at what is going on with the Rio Tinto share price.

Iron ore price falls

Rio Tinto is not the only ASX iron ore share descending today. BHP Group Ltd (ASX: BHP) shares are sliding 3.95%, while Fortescue Metals Group Limited (ASX: FMG) shares are down 3.59%.

A fall in the iron ore price and global market fears appear to be weighing on the Rio Tinto share price today.

The iron ore price dropped amid news out of China that it would be cutting steel output. Iron ore is the major ingredient used to make steel.

China, the largest producer in the world of steel, will slash annual crude steel production in 2023, according to a report in Bloomberg.

An unnamed source told the publication China’s government will also “ban new steelmaking capacity”.

The iron ore price fell nearly 2% to US$129.90 overnight.

Rio Tinto’s listing on the New York Stock Exchange also fell 5% overnight to $65.87. Global markets struggled amid worrying news on Swiss bank Credit Suisse.

The bank’s largest investor revealed it would not raise its stake beyond 10% due to regulatory issues, Reuters reported. Commenting on the market turmoil in global markets overnight, Commonwealth Financial Network chief investment officer Brad McMillan told the publication:

The question that is in everyone’s mind is: are we headed for another financial crisis?

The S&P 500 Index (SP: .INX) dropped 0.7% in the US overnight, while the Dow Jones Industrial Average (DJX: .DJI) slid 0.87%.

Rio Tinto share price snapshot

The Rio Tinto share price has climbed 7% in the past year. In the last month, Rio Tinto shares have lost more than 7%.

Rio Tinto has a market capitalisation of about $44 billion based on the current share price.

The post Why is the Rio Tinto share price diving 5% on Thursday? appeared first on The Motley Fool Australia.

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More reading

• Brokers name 2 high yield ASX 200 dividend shares to buy now
• Fortescue share price marching higher as green hydrogen plans heat up
• Rio Tinto share price dips despite copper mega-mine milestone
• ‘Not sure if that’s the way we should go’: Why BHP shares are making news today
• Are Fortescue shares back on the menu amid job cuts?

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

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There are only a certain number of ASX passive income stocks that could be good dividend payers for the ultra-long term.

There are some services that seem almost certain to be around a decade from now, such as telecommunications. However, while I like Telstra Group Ltd (ASX: TLS) shares, I’m not sure what the technological outlook will be like for Telstra in 2030 and beyond.

It’s also hard to say where bank lending margins are going to go in the longer term. And I’m also not sure what commodity prices are going to do from here.

Of course, some names are highly likely to stay in the industry that they currently operate in, such as Commonwealth Bank of Australia (ASX: CBA) and Woolworths Group Ltd (ASX: WOW).

However, I think a couple of names are compelling investment ideas because of their ability to change their underlying businesses.

As well, the following two ASX passive income stocks could have the longevity that some investors are looking for.

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

Soul Pattinson is one of the oldest businesses on the ASX. It has been listed since 1903 and has paid a dividend every year since then.

The business operates as an investment house with investments in both listed ASX shares and unlisted assets. Some of its ASX investments include TPG Telecom Ltd (ASX: TPG), Brickworks Limited (ASX: BKW), New Hope Corporation Limited (ASX: NHC), Tuas Ltd (ASX: TUA), and Macquarie Group Ltd (ASX: MQG).

Unlisted investments include farming, financial services, swimming schools, luxury retirement living, and electrical parts.

Soul Pattinson regularly invests in new opportunities with some of its annual investment cash flow, enabling the business to re-focus its portfolio towards future opportunities. It also isn’t afraid of selling assets, including its holding in Australian Pharmaceutical Industries (API) and the building that was its headquarters.

The ASX passive income stock has grown its dividend every year since 2000, which is the longest dividend growth record on the ASX.

Its trailing ordinary grossed-up dividend yield is 3.7%.

Wesfarmers Ltd (ASX: WES)

Wesfarmers is another of the oldest businesses on the ASX.

It has changed significantly over the last few decades. The business acquired Bunnings and helped develop it into the retail juggernaut it is today.

Wesfarmers owns a number of other retailers including Kmart, Target, Officeworks, and Priceline. The company also has a few underrated, growing businesses, including chemicals, energy, and fertilisers (WesCEF) as well as industrial businesses.

Wesfarmers management isn’t afraid to make big moves. It has made divestments, including Coles Group Ltd (ASX: COL) and its coal exposure. Wesfarmers recently acquired API, which included the Priceline business.

It aims to grow its dividend for investors over the longer term, and its diverse business portfolio could enable that growth. The ASX passive income stock is looking to expand in the sectors of healthcare and beauty.

According to Commsec, Wesfarmers could pay an annual dividend per share of $1.87 in FY23. This would amount to a grossed-up dividend yield of 5.5%.

The post 2 ASX passive income stocks for the next 10 years and beyond appeared first on The Motley Fool Australia.

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More reading

• 2 ASX 200 shares where the dividends don’t stop
• Is right now the time to buy Wesfarmers shares for passive income?
• How can I hope to retire rich when the share market is falling?
• Experts name 2 ASX 200 dividend shares for a passive income boost
• I’d aim for $1 million, thanks to just a few ASX shares

Motley Fool contributor Tristan Harrison has positions in Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Brickworks, Coles Group, Macquarie Group, Telstra Group, Washington H. Soul Pattinson and Company Limited, and Wesfarmers. The Motley Fool Australia has recommended Tpg Telecom. 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 Pilbara Minerals Ltd (ASX: PLS) share price is trading lower again on Thursday.

At the time of writing, the lithium miner’s shares are down 7.5% to $3.40.

This means the Pilbara Minerals share price is now down 20% since this time last week.

Is the Pilbara Minerals share price weakness a buying opportunity?

A number of leading brokers see a lot of value in the company’s shares at current levels.

For example, Macquarie has an outperform rating and huge $7.70 price target on its shares. This implies more than 100% upside for its shares over the next 12 months.

Elsewhere, Citi has a buy rating and $4.80 price target and Morgans has an add rating and $5.30 price target. Even Goldman Sachs, which has a neutral rating, sees plenty of upside potential with its $4.90 price target.

In respect to Citi’s recommendation, its analysts note that the “sky is not falling in” when it comes to lithium prices. It said:

On lithium pricing, PLS says the sky is not falling in. Many options to get its uncontracted tonnes to market. PLS elected to do tolling, which was unequivocally driven by value. And it was clearly the focus of the call Q&A. Domestic pricing is a function of the slowdown in China market but would remind everyone of the structural shift that’s underway: more EVS, more investment. Long game remains positive. PLS says customers are asking for more tonnes and enquiries for spodumene volumes continue.

All in all, this appears to demonstrate that the recent Pilbara Minerals share price weakness could be a great opportunity for investors.

However, it is worth remembering that higher risk shares, such as lithium miners, are likely to underperform at times of heightened market volatility. So, it is definitely worth bearing that in mind before taking the plunge on an investment.

The post The Pilbara Minerals share price has crashed another 20% in a week. Time to buy? appeared first on The Motley Fool Australia.

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More reading

• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• Pilbara Minerals or Core Lithium shares: Which would I buy?
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• Down 24% in a month, is the Pilbara Minerals share price now a bargain buy?
• Why Bank of Queensland, Brainchip, Pilbara Minerals, and Yancoal shares are sinking today

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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Everyone who owns or is looking to buy property in 2023 for passive income knows that the markets are in a bit of turmoil right now. While that might be great news for some, for many others, buying a property might still be out of reach.

But even if you can’t stump up the princely sum it takes to buy a house these days, you can still invest in property for as little as $500 (or even less). How, you might ask? By using ASX shares.

Most ASX shares don’t represent investments in property. But some do. And completely so.

The ASX is home to many investments known as real estate investment trusts (REITs). REITs are listed on the share market, but rather than representing investments in a company, they function as a trust, pooling together investors’ money to invest in property assets.

These can range from residential housing to commercial real estate to industrial land assets. Think of any commercial property, whether it be high-rise offices, shopping centres or warehouses, chances are there’s a REIT that fits the bill.

And just like a landlord receives rent, the owners of the trust receive rental income from these assets. Rental income that can turn into your passive income from the dividend distributions the REIT can pay.

So it might be a great time to think about investing in property this way if you’re desperate to get some returns from this corner of the investing world.

Rising interest rates dent ASX real estate valuations

As we touched on earlier, interest rates have been climbing sharply over the past year or so. In fact, last week saw the tenth consecutive month in a row that the Reserve Bank of Australia (RBA) lifted rates.

Rising interest rates are bad news for most assets, but especially property. Higher rates reduce borrowing capacity for everyone, not just households. And if REITs can borrow less, but have to pay higher interest rates, it can really put a dent in the valuations of the properties they own.

A case in point, the value of the Vanguard Australian Property Securities Index ETF (ASX: VAP), which is an exchange-traded fund (ETF) that tracks the value of most of the REITs on the ASX, has fallen by more than 13% over the past 12 months. Compare that to the broader S&P/ASX 200 Index (ASX: XJO), which is down by only 1.48% over the same period.

But this could be a buying opportunity for any investor wishing to get a slice of property in their share portfolios – and the passive income that can come along with it.

Passive rental income from the share market?

Even though rates are rising, property assets are still popular. The era of lockdowns is over. Shops are back open, and immigration is returning to normal. Thus, cash flow from property assets is strong, and will probably get stronger over a longer-term horizon if our population continues to grow and the economy prospers.

This is good news for the likes of Scentre Group (ASX: SCG), the owner of the Westfield-branded shopping centres in Australia. Or Goodman Group (ASX: GMG) with its network of industrial warehouses. Or Stockland Corporation Ltd (ASX: SGP), which owns a range of housing communities and retirement villages.

Lower prices mean higher yields. And right now, the Vanguard Australian Property ETF has a trailing dividend distribution yield of 4.89%. That’s a yield that is on the upper end of what you can get from ASX shares right now. It’s a lot higher than the dividend yield available on Commonwealth Bank of Australia (ASX: CBA) shares today, for example.

So we could well be in a golden opportunity for ASX-listed property investments. This corner of the market is certainly well worth a look today, in my view. Especially for those seeking passive income from their shares.

The post Why now is a golden opportunity to earn passive income from Aussie real estate appeared first on The Motley Fool Australia.

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More reading

• Experts say these fantastic blue chip ASX 200 shares are buys
• Guess which ASX 200 director just bought 50,000 of their company’s shares
• Dividend dessert: Which ASX ETFs are the sweetest for a passive income?
• Boost your portfolio with these blue chip ASX 200 shares in March: experts
• 3 ASX dividend stocks to try and turn $10,000 into $1 million!

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Goodman 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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The Woodside Energy Group Ltd (ASX: WDS) share price is taking a tumble on Thursday.

In morning trade, the energy giant’s shares are down 4% to $31.56.

Why is the Woodside share price falling?

Investors have been hitting the sell button today after oil prices sank for a second day in a row.

According to CNBC, WTI crude oil futures fell more than 5% to settle at US$67.61 per barrel and Brent crude oil fell 4% to settle at US$74.36 per barrel. The former was its lowest level since back in December 2021.

This has led to fellow energy shares falling along with Woodside on Thursday. Here’s a summary of how energy shares are performing:

• The Beach Energy Ltd (ASX: BPT) share price is down 3%.
• The Karoon Energy Ltd (ASX: KAR) share price is down 2%.
• The Santos Ltd (ASX: STO) share price is down 3%.

What’s going on?

The catalyst for the weakness in oil prices was news that the banking crisis has spread to Europe.

Overnight, Credit Suisse’s biggest investor, the Saudi National Bank, revealed that it would not provide any further assistance for the struggling Swiss bank. This sparked fears that Credit Suisse could collapse and raised concerns over the state of the global banking system.

And while the Swiss National Bank advised that it will provide additional liquidity if necessary, this hasn’t been enough to ease investor concerns about the global economy and ultimately demand for oil.

Ed Moya, a senior market analyst at Oanda, told CNBC that he expects oil to be stuck in a surplus for the near term. He said:

The oil market is going to be stuck in a surplus for most of the first half of the year, but that should change as long as we don’t see a major policy mistake by the Fed that triggers a severe recession. Now near the mid-$60s, WTI crude’s plunge is at the mercy of how much worse the macro picture gets.

The Woodside share price is now 11% in 2023.

The post Why is the Woodside share price sinking today? appeared first on The Motley Fool Australia.

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More reading

• Why 29Metals, Eagers Automotive, Northern Star, and Woodside shares are dropping today
• Woodside share price sinks as oil remains under pressure
• What’s the forecast for the oil price in 2023?
• 5 things to watch on the ASX 200 on Wednesday
• Down 12% in a week, has the Woodside share price got further to fall?

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 Temple & Webster Group Ltd (ASX: TPW) share price is defying the market weakness and pushing higher on Thursday.

In morning trade, the online furniture retailer’s shares are up 1.5% to $3.52.

However, despite this, the Temple & Webster share price remains down 40% over the last 12 months.

Why is the Temple & Webster share price rising?

Investors have been buying the company’s shares after it announced a major share buyback.

According to the release, Temple & Webster is planning to return up to $30 million to shareholders via an on-market share buyback. This will commence on 3 April for a period of 12 months.

The board appears to believe recent weakness in the Temple & Webster share price means it is undervalued and that buying back shares will create value for shareholders. It explained:

The board considers the acquisition of shares at prevailing prices to be effective capital management while retaining financial flexibility to fund accretive organic and inorganic opportunities as part of its growth strategy.

The release also notes that, in accordance with listing rules, the prices paid for shares purchased under the buy-back will be no more than 5% above the volume-weighted average price of its shares over the five trading days prior to purchase.

Its buy back will also be limited to 10% of issued capital over the 12-month period, which therefore does not require shareholder approval.

Finally, management will continue to assess market conditions, its prevailing share price, available investment opportunities, and all other relevant considerations throughout the buy-back period. It reserves the right to suspend or terminate the buy-back program without notice at any time.

The post Temple & Webster share price higher on $30 million share buyback appeared first on The Motley Fool Australia.

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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 Temple & Webster Group. The Motley Fool Australia has recommended Temple & Webster 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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This week, I have been chatting with Zip Co Ltd (ASX: ZIP) co-founder and chief operating officer Peter Gray about the buy now, pay later (BNPL) provider’s performance and its profit goal progress.

The first part, covering Zip’s performance in the face of higher interest rates and the cost of living crisis, can be found here.

In this final part, we’re going to be looking at the versatility of the Zip platform and those all-important profit goals.

Pulling all the right levers

When Zip released its first-half results last month, it surprised many in the market by delivering credit loss improvements despite the tough economic environment. Gray was very happy with the half and believes Zip remains well-placed even if the economy worsens. He explained:

Despite a rising interest environment, higher revenue margins and improved credit losses drove a 20 basis points lift to NTM to 2.5%, a great result, and now in line with our target range. With US credit losses on a cohort basis improving by around 150 basis points year on year, we are very well-placed in an economic downturn.

One of the keys to the company’s success has been the levers it can pull to control its losses. I asked how easy it is for Zip to respond to changes in the economy. The COO advised:

Zip’s product construct and short capital recycling profile mean that we are able to drive changes in response to the external environment very quickly. The improvement to NTM we have delivered over the last nine months confirms the levers we have at our disposal and the control we have over our unit economics.

Profit goals

Based on the performance of the Zip share price, it seems the market has doubts over the company’s ability to achieve its profit goals despite its strong first-half performance.

I asked Gray how these targets are progressing, and the co-founder revealed that he believes the company is on track to achieve its targets. He also highlights the company’s sufficient liquidity and funding to see it through to this point and then expects to deliver profitable growth in 12 months’ time. Gray commented:

We are very pleased with the improvement in Core Cash EBTDA, which was better by $27m year on year and is expected to improve again by up to 50% in the second half. With this trajectory and additional cash inflows from RoW business sales and closures expected during 2H FY23, we remain confident that we have sufficient liquidity and funding to see us through to group positive cash EBTDA during H1 FY24. This outcome will provide a very strong platform for the business to then accelerate, delivering profitable growth for the second half of FY24 and beyond.

Should you invest?

As I mentioned yesterday, one leading broker that believes the market has got it wrong with the Zip share price is Shaw and Partners.

It recently reaffirmed its buy rating with a $2.02 price target, which implies huge upside over the next 12 months.

The first part of Peter Gray’s exclusive chat with The Motley Fool Australia can be found here.

The post ‘Very strong platform to accelerate’: Has the Zip share price been oversold? appeared first on The Motley Fool Australia.

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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 Zip Co. 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 investment team at Wilson Asset Management (WAM) have shared two undervalued All Ordinaries Index (ASX: XAO) shares in one of their fund portfolios.

WAM operates several listed investment companies (LICs). While one targets larger companies, WAM Capital Limited (ASX: WAM) targets “the most compelling undervalued growth opportunities in the Australian market”.

How much of a claim of stock-picking pedigree does WAM have? 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 Total Accumulation Index (ASX: XAOA) return of 8.3% per annum over the same timeframe.

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

oOh!Media Ltd (ASX: OML)

This ASX share is described as one of Australia’s largest out-of-home media companies with a network of over 37,000 digital and static asset locations.

WAM noted that last month, the company announced its financial result for the year to 31 December 2022, which showed an adjusted net profit after tax (NPAT) of $56.2 million, an increase of 343%.

The fund manager also noted that oOh!Media’s earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 64% to $127.1 million year over year.

In other words, the All Ords ASX share is currently achieving a lot of profit growth. WAM’s concluding thoughts on the business were:

We believe that out-of-home media continues to have a strong runway of structural growth, and we remain positive on oOh!Media.

NRW Holdings Limited (ASX: NWH)

The fund manager described NRW Holdings as a civil and structural engineering company that is focused on the mining and government infrastructure sectors.

It was reporting month in February 2023 for NRW as well. This result was the FY23 half-year report, which showed earnings before interest, taxes and amortisation (EBITA) of $80.1 million.

The All Ords ASX share’s result was “below market expectations” and was “largely due to poor weather” surrounding its East Coast operations and “increased tendering costs.”

WAM called this first-half result “disappointing” but pointed out that NRW Holdings maintained its full-year earnings guidance of $162 million to $172 million of EBITA.

The fund manager explained its investment in the business:

We believe that the business is well-placed to win new contracts over the coming months which will boost earnings into the next financial year.

The post 2 compelling All Ords ASX shares to buy in March 2023: expert appeared first on The Motley Fool Australia.

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• Golden buying opportunity for 2 ASX shares slashed last month: Celeste
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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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