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The S&P/ASX 200 Index (ASX: XJO) is enjoying a strong start to the week.

As we head into the lunch hour, the benchmark index is up 0.59%.

The ASX 200 will be worth watching tomorrow at 2.30pm AEDT. That’s when the Reserve Bank of Australia (RBA) announces its next interest rate decision.

As you’re likely aware, last month saw the central bank increase the official cash rate by another 0.25%, lifting it to 3.35%. That marked the ninth consecutive month of rate hikes in the RBA’s ongoing struggle to bring soaring inflation back within its target range.

The ASX 200 tumbled 0.6% in the minutes following last month’s rate hike announcement.

So, what can investors expect tomorrow?

What can ASX 200 investors expect from the RBA tomorrow?

Following February’s rate hike announcement, RBA governor Philip Lowe said:

The board expects that further increases in interest rates will be needed over the months ahead to ensure that inflation returns to target and that this period of high inflation is only temporary.

Indeed, polled economists almost unanimously say ASX 200 investors should be prepared to see the RBA follow through with yet another 0.25% interest rate boost. That would bring the official cash rate to 3.60%, up from the historic low of 0.10% last May.

“The RBA’s tightening bias is likely to remain in place until its next quarterly forecast review, in May,” Bloomberg economist James McIntyre said. “By then, we expect the data to show enough signs the economy is slowing to persuade the central bank that rates have gone high enough.”

The 0.25% increase is a number supported by 27 of the 28 economists in a recent Reuters poll.

That includes Catherine Birch, senior economist at ANZ.

“The RBA does seem more concerned about inflation. The fact demand is a key driver and not just the supply side, we think they have got more work to do to ensure inflation comes back to target,” she said.

Just how high should ASX 200 investors expect the official cash rate to go?

According to Moody’s Analytics economist Harry Murphy Cruise, likely no higher than 3.85%. But there are no guarantees.

“If global inflation resurges or domestic supply chains are disrupted by weather events, we may need to see interest rates move even higher to quell prices,” he said.

“Our baseline suggests interest rates won’t need to exceed 3.85% to bring down inflation. That said, several factors could knock Australia off this path,” Murphy Cruise added.

The post What can ASX 200 investors expect from the next RBA interest rate decision? appeared first on The Motley Fool Australia.

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More reading

• Hoping to bank the supersized Woodside dividend? You’d better hurry
• This ASX tech share is leaping 13% today as it readies for an entrance into the ASX 200
• Strong buy: Why Goldman Sachs just added Rio Tinto shares to its conviction list
• BHP share price stumbles amid super-profit tax fears
• Why is the Core Lithium share price soaring 11% today?

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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It’s been a great start to the week so far for the Woodside Energy Group Ltd (ASX: WDS) share price. At the time of writing, Woodside shares are up a healthy 0.45%, bringing this ASX 200 energy share to $37.96.

It’s not often we can guarantee that an ASX share will have a bad day. But we can say with certainty that it will take a lot to get Woodsde shares to rise tomorrow though. That’s because this ASX 200 oil share is about to trade ex-dividend.

Booming profits lead to record dividends

Last month, Woodside delivered what was a very well-received earnings report, covering the six months to 31 December 2022. As we brought to you at the time, Woodside reported a 142% spike in revenue to US$16.82 billion.

Earnings before interest, tax, depreciation and amortisation (EBITDA) rose by an even more impressive 172% to US$11.23 billion, while underlying net profit after tax (NPAT) was up 223% to a record US$5.23 billion.

Investors have been rewarded handsomely for these bumper profits, with Woodside also declaring that its final dividend would come in at US$1.44 per share, fully franked, up 37% over last year’s corresponding dividend payment.

The final amount has yet to be decided in our local currency (it will be on 14 March), but at today’s exchange rates, this would equate to a dividend payment worth approximately $2.13 per share.

Barring any crazy moves in exchange rates, this will be the largest-ever final dividend Woodside has paid. It won’t quite match last year’s interim dividend though, which saw Woodside dole out a whopping $3.20 per share.

Still, this interim dividend will take Woodside’s full-year payout to around $5.33 per share.

Investors have reacted very positively to Woodside’s announcements last month. The Woodside share price is now up by almost 10% since these earnings were revealed:

Woodside’s monster dividend is inbound, but you’d better be quick

But if investors wish to see this big payment hit their bank accounts on the nominated payday of 5 April, they had better be quick. That’s because Woodside shares are going ex-dividend tomorrow. When a share trades ex-dividend, it closes off the latest dividend payment from new investors.

So anyone who owns Woodside shares as of close of market this afternoon will get this latest dividend. But anyone who buys Woodside from tomorrow’s session onwards will miss out.

Since Woodside shares will become notionally less viable tomorrow, reflecting this loss of dividend potential, expect to see a big drop in the Woodside share price to compensate for this. This is normally what happens when an ASX dividend share goes ‘ex-div’.

Investors can then look forward to banking this payment on 5 April.

At the current Woodside share price, this ASX 200 energy share now has a dividend yield of 14.03% when factoring in this upcoming dividend payment.

The post Hoping to bank the supersized Woodside dividend? You’d better hurry appeared first on The Motley Fool Australia.

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More reading

• Passive income watch: Here are the ASX 200 shares that delivered some of the biggest dividend boosts this earnings season
• 5 things to watch on the ASX 200 on Friday
• Why did the Woodside share price outperform the ASX 200 in February?
• 5 things to watch on the ASX 200 on Wednesday
• Are Woodside shares a buy following the ASX 200 energy giant’s bumper results?

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 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 Life360 Inc (ASX: 360) share price is having a very strong start to the week.

At the time of writing, the location technology company’s shares are up 13% to $5.40.

Why is this ASX tech share rocketing higher?

Investors have been fighting to get hold of this ASX tech share on Monday in response to an announcement out of S&P Dow Jones Indices.

On Friday, the index solutions company released its latest quarterly rebalance of the S&P/ASX Indices and revealed four changes to the benchmark ASX 200 index.

S&P Dow Jones Indices advised that building materials company Adbri Ltd (ASX: ABC), battery technology company Novonix Ltd (ASX: NVX), gold miner Ramelius Resources Ltd (ASX: RMS), and fleet management company Smartgroup Corporation Ltd (ASX: SIQ) will all be kicked out of the index later this month on 20 March.

Life360 added to the ASX 200 index

One of the companies that will be added to the index in their place is Life360, which has evidently gone down well with investors.

And it isn’t hard to see why. When a company is added to the ASX 200 index, it has the potential to give its shares a big boost. That’s because index funds that track the index have to buy shares in order to reflect its inclusion.

In addition, many large fund managers have strict investment mandates that prevent them from buying ASX shares that are not included in the ASX 200 index.  So, if any of these fund managers have been wanting to buy this ASX tech share but have been unable to do to their mandates, they are now able to.

And judging by the Life360 share price performance today and the large volume of trades, it appears that some could be doing just that.

The post This ASX tech share is leaping 13% today as it readies for an entrance into the ASX 200 appeared first on The Motley Fool Australia.

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More reading

• These ASX shares are being dumped from the ASX 200 index this month
• These 4 ASX shares could rocket this month: Here’s why
• Buy these 3 ASX growth shares this month: experts
• Why did the ASX 200 leap higher on rising unemployment data?
• Looking for growth? 3 ASX shares experts rate as buys

Motley Fool contributor James Mickleboro has positions in Life360. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Life360. 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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Rio Tinto Ltd (ASX: RIO) shares are falling on Monday morning amid broad weakness in the mining sector.

At the time of writing, the mining giant’s shares are down 1.5% to $124.64.

Should you buy Rio Tinto shares?

The team at Goldman Sachs believes that investors should be snapping up Rio Tinto shares today.

In fact, the broker is so positive on the mining behemoth that it has just added its shares to its coveted conviction list with a buy rating and improved price target of $140.40.

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

In addition, the broker is forecasting a US$5.33 (A$8.19) per share fully franked dividend in FY 2023. This represents an attractive 5.8% dividend yield, which stretches the potential total return to almost 19%.

Why is Goldman bullish?

Goldman is bullish on Rio Tinto due to its production growth potential in the coming years thanks to the Guida-darri mine and the Rhodes Ridge development. It feels the latter could close the free cash flow per tonne gap with rival BHP Group Ltd (ASX: BHP).

The broker explained:

RIO (Buy add to CL): Iron ore is ~50% of our NAV and ~65% of FY23 EBITDA. In 2022, Rio’s Pilbara iron ore business assets produced 324Mt (100% basis) and Iron Ore Company of Canada (IOC) produced 10Mt.

RIO has guided Pilbara shipments at 320-335Mt which we think is conservative (GSe 335Mt) based on the ramp-up of the ~45Mtpa Guida-darri mine by mid year and the strong start to the year for shipments. Over the medium to long run, we think the development of Rhodes Ridge has the potential to be significant for RIO’s Pilbara business as it could lift mine system capacity by >10% to >360Mtpa, utilise spare rail and port infrastructure, and help close the >US$10 FCF/t gap with BHP by US$6-8/t or by >50% by the end of the decade.

All in all, the broker believes this makes the mining giant one for investors to consider buying right now.

The post Strong buy: Why Goldman Sachs just added Rio Tinto shares to its conviction list appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Monday
• Have BHP shares always paid better dividends than Rio Tinto?
• Buy Rio Tinto and this ASX dividend share: Goldman Sachs
• 5 things to watch on the ASX 200 on Friday
• Here are the top 10 ASX 200 shares today

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The BHP Group Ltd (ASX: BHP) share price is sliding on Monday.

Shares in the S&P/ASX 200 Index (ASX: XJO) mining giant closed on Friday trading for $48.32. At the time of writing, shares are swapping hands for $48.09, down 0.5%.

That’s right about in line with the 0.4% loss posted by the S&P/ASX 200 Resource Index (ASX: XJR).

So, what’s all this about super-profit tax fears?

Why is the ASX 200 miner concerned about taxes?

The BHP share price is sliding amid news out from the ASX 200 miner’s pre-budget submission to the federal government expressing concerns over the business outlook in Australia.

As The Australian reports, BHP’s management is worried the company could be in the crosshairs of treasurer Jim Chalmers as the government looks for additional revenue.

The miner believes the federal government may take a page out of Queensland’s book and legislate a super-profit tax.

As you likely recall, in 2022, Queensland’s state government passed a controversial outsized increase to coal royalties amid rocketing prices for the black gold.

That move was not well received by the big miners. BHP’s CEO Mike Henry went so far as to pause any new capex on mine expansions in Queensland.

And the Australian federal government is on notice it could face a similar cutback in new domestic project funding.

“Any attempt to address structural pressures on the budget by increasing the tax burden on business will result in a similar outcome: reduced investment, fewer jobs and, in the long term, lower living standards for Australians,” BHP stated in its pre-budget submission.

While there are no clear indications yet of Chalmers’ plans, BHP certainly has plenty of ‘super-profits’ the government might be interested in taking a slice of.

The ASX 200 miner’s half-year results were down from the previous year’s half and came in below some expectations, which saw the BHP share price close down 0.3% the day the company reported.

Yet revenue of US$25.7 billion and profit after tax of US$6.5 billion might be hard for the cash strapped Albanese government to ignore.

Stay tuned.

BHP share price snapshot

As you can see in the chart below, the BHP share price has rebounded strongly since early November and is currently up 6% in 2023.

The post BHP share price stumbles amid super-profit tax fears appeared first on The Motley Fool Australia.

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More reading

• Why I don’t own BHP shares (yet)
• Have BHP shares always paid better dividends than Rio Tinto?
• 5 things to watch on the ASX 200 on Friday
• Here are the top 10 ASX 200 shares today
• BHP share price on track for biggest daily gain in almost four months

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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The Core Lithium Ltd (ASX: CXO) share price is having a solid start to the week.

In early trade, the lithium miner’s shares were up as much as 11% to $1.07.

Core Lithium’s shares have pulled back a touch since then but remain up 6% to $1.02.

Why is the Core Lithium share price shooting higher?

Investors have been scrambling to buy the company’s shares on Monday after it released an update on the Finniss Lithium Operation mineral resource.

According to the release, drilling completed as part of the ongoing Finniss Lithium Operation exploration program has led to its mineral resource estimate more than doubling from 4.37Mt at 1.53% lithium oxide to 10.1Mt @ 1.48% lithium oxide.

But it may not stop there. The company notes that further significant growth opportunities exist beyond currently modelled resource domains at Carlton, Ah Hoy, Hang Gong, and Sandras. In light of this, plans are now in place to continue its exploration efforts in 2023 and another update to the global mineral resource and ore reserve estimate for Finniss is underway.

Core Lithium’s CEO, Gareth Manderson, was pleased with the news and remains very optimistic on the future. He said:

This upgrade is a credit to our exploration and technical teams, who are systematically exploring the Finniss tenements while the business moves into production. These results provide further confirmation of the prospectivity of Core Lithium’s ground holding.

Importantly, BP33 remains open at depth. Exploration to extend mine life at Finniss and identify growth opportunities is a priority for the business, with an expanded drilling program for CY23.

As you can see on the chart below, it has been a volatile but successful 12 months for the Core Lithium share price. It is now up over 12% since this time last year.

The post Why is the Core Lithium share price soaring 11% today? appeared first on The Motley Fool Australia.

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More reading

• Here are the 10 most shorted ASX shares this week
• What’s happening with ASX 200 lithium stocks this week?
• Investing in ASX 200 lithium stocks? Here’s why this 6% decline in China matters
• Why ASX 200 lithium shares are eyeing this surprising new Chinese move
• The Core Lithium share price has crashed 20% in February. What now?

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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Fund manager Matthew Haupt from Wilson Asset Management (WAM) has identified some of the most important factors that investors should consider in 2023 with their ASX share portfolio.

Last year saw a large change to the economic landscape as central banks in Australia, the United States and elsewhere ramped up interest rates to try to tame inflation.

In Haupt’s view, the economy is likely to slow this year and that could end up having a damaging impact on “bad management teams and poor strategies”, according to reporting by The Australian.

What’s going on with the economy?

A month ago, the Reserve Bank of Australia (RBA) increased the Australian cash rate target by 25 basis points to 3.35%. It’s expected to increase the interest rate again to 3.6% this week.

Households and ASX shares are now feeling the impact of those rate rises.

While the six months to 31 December 2022 saw “strong resilience” by many companies, the environment has “clearly turned”, according to The Australian’s reporting.

Inflation has helped the revenue side for some businesses, but costs are also going higher – wages, fixed costs, and borrowing costs are more expensive, Haupt noted.

Haupt said:

Best breed management will shine in this environment, whereas the weak will get shown up. If you’ve got the wrong management, wrong culture and wrong strategy, it all falls apart.

Now it is crunch time. Managers have two choices: cut jobs and increase productivity. Good ones will do a combination of both – bad managers will probably just cut jobs.

Time to be defensive?

The WAM Leaders portfolio is positioned defensively, with a strong allocation to infrastructure names like Atlas Arteria Group (ASX: ALX) and Transurban Group (ASX: TCL).

The idea is that infrastructure can, and tends to, perform well regardless of what’s happening in the economy. At the moment, there are a number of negative indicators, including slowing business and consumer confidence.

Another name that Haupt pointed out was high-quality office owner DEXUS Property Group (ASX: DXS) which trades at a 40% discount to its net tangible assets (NTA). That one looks “compelling” despite the economic outlook.

Other names included packaging business Orora Ltd (ASX ORA), and insurer QBE Insurance Group Ltd (ASX: QBE), which is benefiting from rising interest rates and hiking insurance premiums.

However, Haupt is becoming more cautious about ASX bank shares. Not necessarily because of bad debts but due to strong competition that could hurt their margins.

Haupt suggested that interest rates could stay higher for years. He said:

We could be in for a (Alan) Greenspan era where you’re cutting, raising and cutting rates as we navigate inflation. That’s why it’s prudent to have the slight defensive view.

Defensives do well when the economy goes bad, but defensives do well when interest rates fall too. The cash flows means you’re going to get revalued up. That makes them a safe bet right now.

The post Why you need defensive ASX shares in your portfolio right now: WAM appeared first on The Motley Fool Australia.

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More reading

• Give yourself a passive income boost with these ASX dividend shares: experts
• Passive income watch: Here are the ASX 200 shares that delivered some of the biggest dividend boosts this earnings season
• 5 high-profile ASX 200 shares that will trade ex-dividend on Monday
• 3 ‘quality’ ASX shares to buy now before they rocket: experts
• 6 ASX 200 directors buying up their company shares in the past week

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 Brainchip Holdings Ltd (ASX: BRN) share price is having a strong start to the week.

In morning trade, the struggling semiconductor company’s shares are up 10% to 56 cents.

Why is the Brainchip share price jumping?

Investors have been bidding the Brainchip share price higher on Monday after the company released an announcement.

According to the release, Brainchip has launched the second generation of its Akida platform that drives edge devices for the Artificial Intelligence of Things (AIoT) solutions and services market.

The release notes that the new platform adds efficient 8-bit processing to go with advanced capabilities such as time domain convolutions and vision transformer acceleration. It claims that this provides an unprecedented level of performance in sub-watt devices, taking them from perception towards cognition.

Brainchip’s CEO, Sean Hehir, advised that the new platform was influenced by customer feedback. He said:

Our customers wanted us to enable expanded predictive intelligence, target tracking, object detection, scene segmentation, and advanced vision capabilities. This new generation of Akida allows designers and developers to do things that were not possible before on an Edge device. By inferring and learning from raw sensor data, we take a substantial step toward a cloudless Edge AI experience. With this launch, we have significantly extended our competitive advantage in neuromorphic AI.

Hehir also appears hopeful that this will lead to “revenue growth” over the coming years. Which certainly is needed after the company recorded a pitiful US$250k of revenue during the second half of 2022. He added:

The development of the second generation of Akida was strongly influenced by our customers’ feedback and driven by our extensive market engagement. We have recently expanded our sales organisation to become truly global and we are focused on executing more IP licence agreements and generating revenue growth over coming years.

Time will tell if this is a turning point for the meme stock.

The post Brainchip share price jumps 10% on Akida platform news appeared first on The Motley Fool Australia.

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More reading

• Why has the BrainChip share price crashed 25% in a month?
• Why Brainchip, Coles, Karoon Energy, and Pilbara Minerals shares are tumbling
• Why Brainchip, Cooper Energy, Link, and Telstra shares are dropping today
• Brainchip share price higher despite US$22m loss
• BrainChip share price rebounds 9% following speeding ticket

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 Bendigo and Adelaide Bank Ltd (ASX: BEN) share price is down 3.1% in early trade on Monday.

Shares in the S&P/ASX 200 Index (ASX: XJO) bank stock closed on Friday trading for $9.60. In early morning trade on Monday, shares are trading for $9.30.

So, why is the Bendigo Bank share price sliding lower today?

What are ASX 200 investors considering?

With the S&P/ASX 200 Financials Index (ASX: XFJ) up 0.3%, most of the selling pressure on the Bendigo Bank share price appears to stem from the fact the stock is trading ex-dividend today.

The bank reported its half-year financial results on 20 February (1H FY23).

With statutory net profits increasing 49% from 1H FY22 to reach $249 million, the bank declared a fully franked interim dividend of 29 cents per share. The Bendigo Bank share price closed up 1.8% on the day.

Investors buying the bank stock today will no longer be eligible to receive that payout. Hence the lower opening price today, with the stock down 30 cents per share, almost equivalent to its dividend.

Commenting on the bank’s dividend payout, CEO Marnie Baker said:

The board has declared a fully franked dividend of 29.0 cents per share, an increase of 9.4% on the prior half. A DRP (dividend reinvestment plan) has also been announced.

With APRA’s approval the Board intends to neutralise the impact of the DRP by arranging for a third party to purchase the shares on market rather than issue additional shares.

Eligible investors can expect to receive that payment on 31 March.

At Friday’s closing share price, that represents a yield of 3.0%. Add in the 26.5 cents per share final dividend payout from September, and Bendigo Bank shares pay a fully franked trailing dividend yield of 5.8%.

“These decisions support our strong capital position and our business outlook,” Baker said.

That includes the bank’s “expectation of residential lending growth at or above system over the long term while balancing our commitment to support our shareholders with a reasonable return on their investment,” she added.

Bendigo Bank share price snapshot

As you can see in the chart below, the Bendigo Bank share price is up 2.3% over the past 12 months, despite this morning’s retrace. Including the 55.5 cps in dividends, the bank’s shares have returned 8.5% over the full year.

The post Why is the Bendigo Bank share price sliding lower today? appeared first on The Motley Fool Australia.

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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 positions in and has recommended Bendigo And Adelaide Bank. 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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Share prices are changing all the time, but value investors might be able to find standout opportunities in this uncertain time. I think there are some exciting, cheap ASX shares to consider.

I think that some of the smaller names on the ASX could be underrated by investors, particularly ones that aren’t highly followed.

Both of the below could deliver outperformance in the next year in my opinion.

Estia Health Ltd (ASX: EHE)

Estia is one of the largest aged care operators in Australia. It delivers services across 72 homes, with the company owning 66 of them. Those homes have 6,596 operational places.

The business recently reported its FY23 half-year result, which showed a 9% increase in revenue to $359.2 million. Its average occupancy increased from 90.6% to 91.9%.

The impacts of COVID-19 are easing and the business is seeing “positive momentum”. It continues to make bolt-on acquisitions, while the ASX share’s share buyback is expected to recommence in April.

The Estia Health CEO Sean Bilton said:

Opportunities for growth are expected to be available in keeping with our strategy to grow sustainably, including through the purchase of high quality homes with attractive upside.

We remain confident that the fundamental drivers of the sector will remain strong for those residential aged care providers who put residents at the centre of their operating model and perform in a financially sustainable manner.

According to Commsec numbers, Estia Health is valued at 17 times FY23’s estimated earnings with a potential forward grossed-up dividend yield of 6.7%. That valuation includes the business owning a large property portfolio worth hundreds of millions of dollars.

Metcash Limited (ASX: MTS)

Metcash is a diversified business that supplies IGA supermarkets around the country. It also supplies independent liquor businesses in Australia such as Cellarbrations, The Bottle-O, IGA Liquor, and Porters Liquor.

Finally, the business has a hardware division with brands in it like Mitre 10, Home Timbet & Hardware and Total Tools. Combined, its hardware network has more than 700 stores located in metro and regional areas.

I think of Metcash as a cheaper version of businesses like Wesfarmers Ltd (ASX: WES) and Coles Group Ltd (ASX: COL). According to Commsec, it’s only valued at 13 times FY23’s estimated earnings with a possible grossed-up dividend yield of 7.9%.

Metcash can benefit from ongoing store rollouts, improvements in its logistics and online offerings, and scale advantages.

I think that Metcash’s earnings (like food and liquor) can be resilient even in a downturn, so I think it could be a smart pick at today’s price.

The post I think value investors would love to buy these 2 cheap ASX shares appeared first on The Motley Fool Australia.

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More reading

• 3 ASX shares I’d buy for passive income instead of BHP’s declining dividend
• How I’d invest $20K in ASX shares to target $1,000 in annual passive income
• How much do you need in ASX shares to give up work and live only off dividend income?
• Here are the top 10 ASX 200 shares today

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 positions in and has recommended Coles Group and Wesfarmers. The Motley Fool Australia has recommended Metcash. 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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