Tag: Motley Fool

On Friday, the S&P/ASX 200 Index (ASX: XJO) finished the week on a positive note. The benchmark index rose 0.4% to 7,283.6 points.

Will the market be able to build on this on Monday? Here are five things to watch:

ASX 200 expected to storm higher

The Australian share market looks set to start the week with a bang on Monday following a stellar finish to the week on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 96 points or 1.3% higher this morning. On Wall Street, the Dow Jones was up 1.2%, the S&P 500 rose 1.6%, and the NASDAQ jumped 2%.

Oil prices strengthen

ASX 200 energy shares including Santos Ltd (ASX: STO) and Beach Energy Ltd (ASX: BPT) could have a great start to the week after oil prices strengthened on Friday. According to Bloomberg, the WTI crude oil price was up 1.9% to US$79.68 a barrel and the Brent crude oil price rose 1.3% to US$85.83 a barrel. Oil prices rose after reports claimed that the UAE would not leave OPEC.

Quarterly rebalance

A number of ASX 200 shares will be worth watching closely today amid news that they will be dumped from the benchmark index at the next rebalance. 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 exit the index on 20 March.

Gold price rises

Gold miners Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) could have a solid start to the week after the gold price rose on Friday night. According to CNBC, the spot gold price climbed 1.2% to $1,862.80 per ounce. A softer US dollar led to the precious metal having its strongest week since mid-January.

Goldman says buy Rio Tinto shares

The Rio Tinto Ltd (ASX: RIO) share price could be great value according to analysts at Goldman Sachs. This morning, the broker has added the mining giant to its coveted conviction list with a buy rating and $140.40 price target. Goldman highlights Rio Tinto’s “compelling relative valuation vs. peers.”

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

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More reading

• I’d invest $20 a week the Warren Buffett way as I aim to build wealth
• For $750 in monthly passive income, buy 8,572 shares of this ASX 200 stock
• How to become a millionaire with ASX shares
• Here are the top 10 ASX 200 shares today
• Why is the Liontown share price roaring 12% higher 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 positions in and has recommended Smartgroup. 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 plenty of ASX shares that are growing. However, few are growing their earnings as rapidly as the ASX shares listed below.

Here’s why these could be ASX 200 growth shares to buy in March:

Lovisa Holdings Limited (ASX: LOV)

The first ASX 200 share to look at is fast-fashion jewellery retailer Lovisa. It could be a top long term option due to the popularity of its affordable offering and its significant global expansion plans.

The latter is a key reason why Morgans is so bullish on the company. It recently wrote:

LOV commented today that it sees ‘lots of white space’ around the world for future network expansion. This, in our opinion, is the reason to own LOV. The business has a product that can be deployed around the world; an efficient fit-out process; a strong position in a niche segment; and the ambition to turn Lovisa into a truly global brand.

Morgans has an add rating and $29.00 price target on its shares.

WiseTech Global Ltd (ASX: WTC)

Another ASX 200 growth share that could be a buy is this logistics solutions company.

WiseTech is the company behind the popular CargoWise One solution, which allows users to execute complex logistics transactions and manage freight operations from a single, easy to use platform.

Demand has been strong for its platform over the last few years and underpinned strong sales and profit growth.

Pleasingly, this strong form has continued in FY 2023, with the company reporting stellar growth during the first half. And with management expecting more of the same in the second half, WiseTech is guiding to revenue growth of 26% to 30% and EBITDA growth of 19% to 29% for the full year.

Morgan Stanley is positive on the company’s outlook. It has an overweight rating and $70.00 price target on its shares.

The post 2 explosive ASX growth shares to buy this month: analysts appeared first on The Motley Fool Australia.

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More reading

• We still hold this ASX 8-bagger because there’s more to come: QVG
• Top ASX shares to buy in March 2023
• These are my top ASX 200 growth shares to buy today
• Here are the top 10 ASX 200 shares today
• 7 more ideas for buying ASX shares this reporting season: expert

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

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When starting out on what is hopefully a lifelong investing journey of building wealth, there are two paths one can go down. The first is to become an active share investor. This path involves researching individual businesses listed on the ASX, finding the best ones, and paying the right price for a piece of them.

This is typically what most people think of when ‘investing in shares‘ is mentioned.

The second path is passively investing into index funds. An index fund is a managed fund or exchange-traded fund (ETF) that invests in an index. This index represents a broad swathe of the most successful companies listed on a share market.

For example, the flagship index that covers the Australian share market is the S&P/ASX 200 Index (ASX: XJO). The ASX 200 represents the largest 200 shares on the ASX, weighted by the companies’ size (or market capitalisation).

The most popular index in the world is the United States’ S&P 500 Index. This does a similar thing but covers the 500 largest shares listed on America’s stock exchanges.

An index fund is designed to give investors the market return’, no more, no less. The whole reason why many investors choose to shun passive investing and go down the active route is to try and beat the returns of the broader market.

But history shows this is easier said than done. That’s why many other investors try a hybrid approach, investing in individual shares as well as in index funds.

Warren Buffett’s favourite index fund

So time now to glean some advice from the great Warren Buffett — one of the best investors to have ever walked the earth. Buffett has made a career out of successfully beating the market.

As our chief investment officer Scott Phillips went through earlier this week, Buffett has vastly overachieved when it comes to this goal, delivering an average return of almost twice what the S&P 500 has given over a 58-year period.

Yet Buffett has some interesting advice on which path the average investor should go down. This is an excerpt from Buffett’s 2013 letter to the shareholders of his company Berkshire Hathaway:

Most investors, of course, have not made the study of business prospects a priority in their lives. If wise, they will conclude that they do not know enough about specific businesses to predict their future earning power.

I have good news for these non-professionals: The typical investor doesn’t need this skill. In aggregate, American business has done wonderfully over time and will continue to do so (though, most assuredly, in unpredictable fits and starts)….

The goal of the non-professional should not be to pick winners… but should rather be to own a cross-section of businesses that in aggregate are bound to do well. A low-cost S&P 500 index fund will achieve this goal…

Indeed, the unsophisticated investor who is realistic about his shortcomings is likely to obtain better long-term results than the knowledgeable professional who is blind to even a single weakness.

So if I was just starting out on my wealth-building journey, this is the path I would follow for my first few years. Luckily the ASX has an ETF that tracks Buffett’s index of choice, the S&P 500. The iShares S&P 500 ETF (ASX: IVV) has given ASX investors an average return of 16.82% per annum over the past 10 years.

The magic of compound interest

If an investor starts by putting $20 a week into this index fund, they will have $1,040 after a year. Say our investor keeps this up, and the S&P 500 ETF retains this historical rate of return (which is by no means guaranteed), then they will have a total investment portfolio worth just under $30,000 within 10 years.

If left for another ten years (provided the $20 a week continues), this could grow to more than $165,000, and to almost $810,000 over the ten years after that. Such is the power of compounding.

As our investor grows in confidence, then they can perhaps try and beat the market by investing in individual shares like Buffett and boost these returns even more. But if I were just starting out today, this is certainly the Buffett wisdom I would follow.

The post I’d invest $20 a week the Warren Buffett way as I aim to build wealth appeared first on The Motley Fool Australia.

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More reading

• For $750 in monthly passive income, buy 8,572 shares of this ASX 200 stock
• How to become a millionaire with ASX shares
• Here are the top 10 ASX 200 shares today
• Why is the Liontown share price roaring 12% higher today?
• Passive income watch: Here are the ASX 200 shares that delivered some of the biggest dividend boosts this earnings season

Motley Fool contributor Sebastian Bowen has positions in Berkshire Hathaway. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Berkshire Hathaway. The Motley Fool Australia has recommended Berkshire Hathaway and iShares S&p 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Last week saw a number of broker notes hitting the wires once again. Three buy ratings that investors might want to be aware of are summarised below.

Here’s why brokers think investors ought to buy them next week:

Allkem Ltd (ASX: AKE)

According to a note out of Goldman Sachs, its analysts have reiterated their buy rating on this lithium miner’s shares with a slightly trimmed price target of $15.40. This follows the release of Allkem’s first-half results, which came in slightly ahead of expectations. Allkem remains Goldman’s preferred lithium exposure due to its discount to peers and its optionality across the Americas and Australia on the largest lithium resource under its coverage. The Allkem share price ended the week at $12.36.

Harvey Norman Holdings Limited (ASX: HVN)

Another note out of Goldman Sachs reveals that it analysts have retained their buy rating on this retail giant’s shares with a trimmed price target of $4.70. Although Harvey Norman’s first-half results fell short of expectations, Goldman remains positive for a number of reasons. This includes its dirt cheap valuation compared to peers and its belief that the peak cash drag on franchisee support is behind it. The Harvey Norman share price was fetching $3.71 at Friday’s close.

Pointsbet Holdings Ltd (ASX: PBH)

Analysts at Bell Potter have retained their speculative buy rating on this sports betting company’s shares with a reduced price target of $2.75. This follows a mixed half-year result with Pointsbet’s revenue beating expectations but its loss coming in greater than forecast. Nevertheless, the broker remains positive given its very large opportunity in the North American sports betting market. The Pointsbet share price ended the week at $1.43.

The post Top brokers name 3 ASX shares to buy next week 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
• Here are the top 10 ASX 200 shares today
• Why is the Liontown share price roaring 12% higher today?
• What’s happening with ASX 200 lithium stocks this week?
• Buy these ASX 200 mining shares before they boom: experts

Motley Fool contributor James Mickleboro has positions in Allkem. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Harvey Norman and PointsBet. The Motley Fool Australia has positions in and has recommended Harvey Norman. The Motley Fool Australia has recommended PointsBet. 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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Some S&P/ASX 200 Index (ASX: XJO) stocks could be very effective Investment choices for passive income. I’m going to talk about Premier Investments Limited (ASX: PMV) shares.

I think this ASX retail share has done a very good job of growing its earnings and dividend over the past decade. Its underlying businesses, like Smiggle and Peter Alexander, have performed well.

The higher earnings and profitability have helped the Premier Investments share price increase by almost 100% over the last five years.

How to make $750 monthly passive income from Premier Investments shares

While hardly any ASX stocks pay dividend income monthly, we can easily divide an annual amount equally into 12 to work out the monthly figure.

To make $750 a month, we need to generate $9,000 of annual passive dividend income.

In FY23, according to Commsec, Premier Investments is expected to pay an annual dividend per share of $1.05, not including the effect of franking credits. That’s a cash dividend yield of 3.85%.

If we owned 8,572 Premier Investments shares, then we’d receive $9,000 of annual passive income of dividends in cash. The franking credits would be a bonus on top of that.

The current Commsec forecast for Premier Investments suggests that the dividend could be increased to $1.06 per share in FY25. At the current Premier Investments share price, that suggests the ASX 200 stock could pay a FY25 cash dividend yield of 3.9%.

If we use the FY25 payout, investors would need to own 8,491 Premier Investments shares to receive $9,000 of annual dividends.

How is the ASX 200 stock performing?

We haven’t heard the company’s FY23 half-year result yet – its reporting period ends in January rather than December, like many other ASX shares. We should see the company’s results later this month.

The latest news we heard was the company’s update announced in early December 2022.

It advised that global sales for the first 17 weeks of the first half of FY23 were up 24.9% compared to the pre-COVID FY20 first-half sales. The company also said that it achieved “record sales” during the year’s Black Friday trading week, including its highest-ever global online sales for a trading week.

The company noted that in weeks 13 to 17 of the first half of FY23, it saw 0.1% growth on the prior corresponding period, this was despite cycling “very strong” sales in the FY22 first half, which benefited from store re-openings and pent-up demand surging after months of lockdowns.

Premier Investments added that it had managed its logistics program effectively and was “fully prepared” for the trading ahead. It also said that it was “well positioned to take full advantage of the current  momentum through the remaining critical first half trading periods of Christmas, Boxing Day and ‘back to school’,

Going back to school is an important time because of Premier Investments’ global school accessories business called Smiggle, which is driving a lot of the overall growth that the company is experiencing.

Premier Investments share price snapshot

According to Commsec, the ASX 200 stock is valued at 17x FY23’s estimated earnings.

The post For $750 in monthly passive income, buy 8,572 shares of this ASX 200 stock appeared first on The Motley Fool Australia.

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More reading

• How to become a millionaire with ASX shares
• Here are the top 10 ASX 200 shares today
• Why is the Liontown share price roaring 12% higher today?
• Passive income watch: Here are the ASX 200 shares that delivered some of the biggest dividend boosts this earnings season
• Here are the 3 most heavily traded ASX 200 shares on Friday

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 Premier Investments. 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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Do you want a passive income boost? If you do, then the ASX dividend shares listed below that experts have named as buys could help you.

Here’s why these could be passive income shares to buy now:

Harvey Norman Holdings Limited (ASX: HVN)

Goldman Sachs thinks investors should seize on recent weakness in the Harvey Norman share price. Especially if you want some big dividends!

The broker believes the market is undervaluing Harvey Norman and notes that its shares are trading at just 6x FY 2024 estimated earnings ex-property. This compares to 14.5x earnings for its rival JB Hi-Fi Limited (ASX: JBH).

Goldman currently has a buy rating and $4.70 price target on the retailer’s shares.

As for dividends, the broker is expecting fully franked dividends per share of 36 cents in FY 2023 and then 30 cents in FY 2024. Based on the current Harvey Norman share price of $3.71, this will mean yields of 9.7% and 8.1%, respectively.

Transurban Group (ASX: TCL)

Another ASX dividend share for investors to consider buying next week is toll road operator Transurban.

The team at Citi is positive on the company. It was pleased with its half-year results last month and expects the company to build on this in the second half and FY 2024. Particularly given its positive exposure to inflation. It commented:

We believe TCls’ 7.5% FY23 DPS guidance beat was driven by a range of one-off factors, along with improved traffic recovery. While this is positive for near term, longer term estimates remain largely unchanged. However, CPI-linked increases come through with a delay indicating a strong growth path ahead and we forecast c.6% p.a. DPS CAGR from FY23-FY26.

Citi has a buy rating and $16.00 price target on its shares.

In respect to dividends, the broker is forecasting dividends per share of 58 cents in FY 2023 and then 60 cents in FY 2024. Based on the current Transurban share price of $13.94, this will mean yields of 4.2% and 4.3%, respectively.

The post Give yourself a passive income boost with these ASX dividend shares: experts appeared first on The Motley Fool Australia.

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More reading

• 3 ‘quality’ ASX shares to buy now before they rocket: experts
• Top brokers name 3 ASX shares to buy today
• Buying opportunity? Harvey Norman boss says share slump is a ‘total overreaction’
• 5 things to watch on the ASX 200 on Wednesday
• Why Accent, Adbri, Harvey Norman, and Pointsbet shares are sinking

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 Harvey Norman. The Motley Fool Australia has positions in and has recommended Harvey Norman. 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 a growing number of exchange traded funds (ETFs) for investors to choose from on the Australian share market.

If you’re paralysed with choice, don’t worry. To help you narrow things down, I have picked out three popular ETFs that could be worth researching further. Here’s what you need to know about them:

BetaShares Asia Technology Tigers ETF (ASX: ASIA)

The first ETF is the BetaShares Asia Technology Tigers ETF. It provides investors exposure to many of the best tech stocks in the Asian region. This means you’ll be buying tigers such as ecommerce giant Alibaba, search engine company Baidu, and WeChat owner Tencent.

It has been a tough period for Asian stocks, but with China now reopening and its economy showing signs of rebounding strongly, things could be much better in 2023 and 2024. This could potentially make it an opportune time to invest in this ETF.

BetaShares NASDAQ 100 ETF (ASX: NDQ)

The BetaShares NASDAQ 100 ETF could be another ETF for investors to buy. This popular ETF gives investors exposure to 100 of the largest (non-financial) stocks on Wall Street’s NASDAQ index.

Among its 100 stocks are many of the largest and highest quality companies in the world such as Amazon, Alphabet, Apple, Meta, Microsoft, Netflix, Nvidia, and Tesla. And despite a recent recovery, the ETF is still down meaningfully over the last 12 months. This could make it a good time to consider an investment.

VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT)

If you a Warren Buffett fan, then the VanEck Vectors Morningstar Wide Moat ETF could be for you. When the Oracle of Omaha looks for an investment, he has a preference for companies with sustainable competitive advantages (aka moats) and fair valuations. And given how Buffett has generated an average return of almost 20% per annum since 1965, it’s hard to argue against this strategy.

The ETF currently contains approximately 50 companies with these qualities. These include the likes of Alphabet, Boeing, Kellogg Co, Meta, and Walt Disney.

The post 3 excellent ETFs for ASX investors to sink their money into this month appeared first on The Motley Fool Australia.

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More reading

• Is the BetaShares NASDAQ 100 ETF (NDQ) worth buying for dividend income?
• 3 ETFs for smart ASX investors in March
• Here’s how I’d invest in ASX shares today to achieve financial freedom
• Why I’m not investing in ASX index ETFs (yet)
• 3 excellent ETFs for ASX investors to buy in March

Motley Fool contributor James Mickleboro has positions in BetaShares Nasdaq 100 ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended BetaShares Nasdaq 100 ETF. The Motley Fool Australia has positions in and has recommended BetaShares Nasdaq 100 ETF. The Motley Fool Australia has recommended Betashares Capital – Asia Technology Tigers Etf and VanEck Morningstar Wide Moat ETF. 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 Australian share market was weak in February, taking back a lot of the gains investors enjoyed in January.

However, the QVG Capital Long Short Fund managed to remain flat.

In fact, the reporting season served as confirmation of its investment beliefs for many of its ASX shares.

Here are three with the best prospects:

‘Market is running out of reasons not to back these guys’

Johns Lyng Group Ltd (ASX: JLG) is the fund’s top holding currently, for good reason.

“Johns Lyng Group reported 88% earnings per share growth and upgraded their full year guidance,” QVG analysts said in a memo to clients.

The share price had been down year-to-date before reporting season and 21% in the red over the past 12 months.

“The stock had been weak leading into the result due to insider selling and a lack of disclosure of performance of their large acquisition, RE,” read the memo.

“This result puts these fears to rest.”

Now with those results and outlook delivered, it’s only upwards and onwards for the insurance repair business.

“The market is running out of reasons not to back these guys!” read the QVG memo.

“The combination of more organic growth and intelligent acquisitions means future earnings per share growth will eventually force the stock higher.”

‘A long runway of growth ahead’

For the QVG fund managers, its investment in Hub24 Ltd (ASX: HUB) has been the perfect demonstration of the power of long-term investing.

“Our first investment in this stock was in 2015 — well before the inception of QVG Capital — at $3.50 with the view that the stock’s earnings would one day justify the expensive valuation,” read the memo.

“The stock now trades at $29 and still has a long runway of growth ahead of it.”

Reporting season continued the investment platform provider’s record of growth.

“The highlight of Hub24’s results was earnings per share growth of 59% despite rising costs,” the QVG memo stated.

“‘Patience’ and ‘the power of compounding free cash flow‘ are the lessons here.”

‘A bull market in sneakers, jeans and accessories’

During a time when most non-mining ASX shares have suffered, Lovisa Holdings Ltd (ASX: LOV) has been a true darling of the market.

Since June, the retail stock has rocketed an incredible 86%.

Reporting season, for the QVG team, indicated Lovisa’s momentum would continue.

“Lovisa delivered a very strong result, beating consensus at revenue and, if you back out the generous incentive package for the CEO, it was a very large beat to operating earnings too.”

The analysts admitted there are worries about consumer spending slowing down for discretionary goods, with nine consecutive months of interest rate rises starting to bite hard.

But perhaps the clientele for budget jewellery doesn’t overlap much with those servicing home loans.

“Housing-related retail is slowing noticeably but those without mortgages are having a great time,” read the memo.

“There still appears to be a bull market in sneakers, jeans and accessories. As shareholders of Lovisa we’re happy The Kids Are Alright.”

The post We still hold this ASX 8-bagger because there’s more to come: QVG 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
• 3 small-cap ASX shares flying high after reporting season: Elvest
• Top ASX shares to buy in March 2023
• These are my top ASX 200 growth shares to buy today
• 7 more ideas for buying ASX shares this reporting season: expert

Motley Fool contributor Tony Yoo has positions in Johns Lyng Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Hub24, Johns Lyng Group, and Lovisa. The Motley Fool Australia has positions in and has recommended Hub24. The Motley Fool Australia has recommended Johns Lyng Group and Lovisa. 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 many ways to measure the performance of a business to analyse whether its ASX shares are worth investing in.

On the “positive” side there are metrics like earnings, revenue, and profit. Then you have to balance those with the negative measures like expenses and liabilities.

But what are the most important numbers to look at?

To answer this, US financial expert and buy-and-hold advocate Brian Feroldi presented two stocks and asked his newsletter readers to choose one to buy.

Would you choose to buy A or B?

Feroldi said that stock A represents a business that has seen its:

• Expenses rise 260% since 2019
• Gross margins contract since 2019
• Price-to-earnings (P/E) ratio is more than 200

The company behind stock B is performing like this:

• Revenue rise 320% since 2019
• Operating margins expanded 14 percentage points since 2019
• Price-to-free-cash-flow ratio is 35

Which of these shares would you invest in?

“We hope the answer is obvious. Stock B would definitely win our money,” said Feroldi.

“Torrid revenue growth means people love what’s offered. Expanding operating margins suggests there’s a moat present and operating leverage is kicking in. And the valuation — while not cheap — looks reasonable given the top-line growth.”

He then revealed that stock B is actually a real company. It’s e-commerce giant MercadoLibre Inc (NASDAQ: MELI).

With the share price rocketing more than 1,200% over the past 10 years, MercadoLibre is a top portfolio holding for Feroldi and his newsletter colleagues Brian Stoffel and Brian Withers.

Context matters when analysing metrics

But there’s a catch to the choice between the two stocks.

It’s that stock A is also MercadoLibre.

Feroldi explained that expenses are up because the MercadoEnvios fulfilment business “costs a lot to build out”. Gross margin is down because the payment arm MarcadoPago is a business driven on volumes rather than fat margins.

“The PE ratio currently looks ‘insane’ mostly because of the accounting differences between earnings and free cash flow.”

This is why choosing metrics to pay attention to when selecting ASX shares to buy is so tricky.

Feroldi suggested investors remember one critical thing when evaluating numbers measuring business performance: context.

“Context matters. We know this to be true in our non-investing lives, but often forget it when it comes to investing,” he said.

“Valuation is part art and part science. If you choose to invest in individual stocks, you need to understand which valuation metrics matter, when they matter, and when they should be ignored.”

The post Which valuation metrics matter most when picking ASX shares? appeared first on The Motley Fool Australia.

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More reading

• How to become a millionaire with ASX shares
• Big yields and even bigger gains lie ahead for these ASX 200 shares: analysts
• 2 ASX growth shares to buy: Goldman Sachs
• Down 17% in 2 days, has the dream run for Weebit Nano shares finally ended?
• Zip share price gains amid global asset sale

Motley Fool contributor Tony Yoo has positions in MercadoLibre. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended MercadoLibre. 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 want to become a millionaire, you have a few options. You can save for it, you can invest, or you can win the lottery.

If winning the lottery were easy, I would suggest you take that route. But with the odds stacked firmly against you, it might be more fruitful to take action yourself by saving or investing.

I believe the latter is the better option given the historically stronger returns you generate ahead of savings accounts.

And while there are plenty of things you can invest in, ASX shares lead the way over the long term.

According to Fidelity, Australian shares generated an average total return of 9.55% per annum between December 1991 and December 2022.

This would have turned a single $10,000 investment into approximately $155,000 over the period.

As a comparison, according to Aussie, between December 1991 to December 2021, the housing market had generated 30-year annualised growth for houses and units of 5.6% and 4.7%, respectively. Not shabby, but also not comparable to ASX shares.

But which ASX shares should you buy?

Investors might want to take a leaf out of Warren Buffett’s book when it comes to choosing which ASX shares to buy.

After all, this week the Oracle of Omaha revealed that his Berkshire Hathaway business has delivered a staggering average return of 19.8% per annum since 1965.

Buffett is well-known for taking a long-term approach when making his investments, allowing him to benefit from compounding. He also looks for wonderful companies that are trading at fair prices. These are companies that have strong and enduring competitive advantages and are run by talented management.

How to become a millionaire?

As you saw above, the Australian share market has returned an average of 9.6% per annum over the last 30 years.

While there’s no guarantee that it will do the same over the next 30 years, if it were to do so and you matched the market return, you could grow your portfolio to $1 million by making consistent monthly investments of $500 (or $6,000 a year).

Investors could speed up the process if they can afford to put more into the market each month.

For example, ceteris paribus, an investment of $1,000 per month into ASX shares would grow to $1 million after 23 years. Or go all in with $2,000 per month and you could be a millionaire after 17 years.

Overall, anything is possible if you have a plan and the discipline to stick to it over the long term, just like Buffett has done.

The post How to become a millionaire with ASX shares appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Why is the Liontown share price roaring 12% higher today?
• Passive income watch: Here are the ASX 200 shares that delivered some of the biggest dividend boosts this earnings season
• Here are the 3 most heavily traded ASX 200 shares on Friday
• 5 high-profile ASX 200 shares that will trade ex-dividend 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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