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The Temple & Webster Group Ltd (ASX: TPW) share price is under pressure on Tuesday morning.

At the time of writing, the online furniture and homewares retailer’s shares are down 13% to $4.32.

This follows the release of Temple & Webster’s half year results, which appears to have disappointed the market.

Temple & Webster share price on major profit decline

• Revenue down 12% to $207.1 million
• EBITDA margin of 3.5%
• Net profit after tax down 46.7% to $3.9 million
• Cash balance of $102.4 million

What happened during the first half?

For the six months ended 31 December, Temple & Webster reported a 12% decline in revenue to $207.1 million. This reflects a decline in active customers to 840,000, offset partially by an increase in revenue per active customer.

In addition, management highlights that this half was going to be the toughest period for year over year comparisons due to the timings of lockdowns in FY 2022.

Positively, things improved in the second quarter. Revenue was down 18% in the first quarter, 6% in the second quarter, and marginally higher during the month of December.

In respect to earnings, Temple & Webster reported an EBITDA margin of 3.5%. This was towards the low end of its full year target range of 3% to 5%. Excluding its investment in The Build, its EBITDA margin would have been 4.7%. This reflects its focus on accelerating cost base initiatives and margin improvement programs.

How does this compare to expectations?

A note out of Goldman Sachs reveals that Temple & Webster’s revenue was in line and its earnings were notably ahead of its expectations.

The broker also remains confident that the revenue environment has stabilised and the company is well positioned to deliver strong medium term growth through increasing population penetration and growing market share of online.

Management commentary

Temple & Webster’s CEO, Mark Coulter, was pleased with the half. He said:

We’re pleased with the progress made during the half, with a return to year-on-year profit growth in Q2 as we benefited from our focus on margin optimisation and cost management, despite revenue being down year-on-year, which highlights the flexibility of the business model.

While we dialed back spend in the half, we continued investing in our digital capabilities, product range and target verticals, with our Trade and Commercial and Home Improvement businesses growing 17% and 12% respectively.

Pricing remains a key differentiator for the business, growing our gross margin through strategic pricing initiatives and better sourcing. Similarly, with 72% drop ship that carries no inventory risk and 28% private label inventory, through our supply chain model we further improved flexibility and our product range, placing us in a strong position to continue growing market share.

Outlook

Also potentially weighing on the Temple & Webster share price today was its trading update.

Management revealed that for the first five weeks of the second half, its sales were down 7% over the prior corresponding period. Though, this has once again been blamed on strong sales a year earlier due to the omicron outbreak.

The company remains positive on its outlook and revealed that it could look to accelerate its growth by putting its $100 million cash balance to work with acquisitions. Mr Coulter commented:

We remain committed to our profitable growth strategy and will continue our focus on margin optimisation and cost management to ensure we end the year within our 3-5% EBITDA range. We believe our business model, customer metrics, brand and new growth horizons position us well to navigate any trading conditions and return to a high growth business.

Furthermore, we have over $100m of cash to expand our roadmap of sales initiatives and pursue inorganic opportunities to support sustainable growth. Longer-term, ecommerce in the Australian furniture & homewares category remains highly under-penetrated, and we have a much larger addressable market to go after in our new target verticals.

The post Temple & Webster share price sinks 13% on half year results 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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The All Ordinaries (ASX: XAO), or All Ords ASX shares, I’m about to write about are ones that look very interesting to me in the current conditions.

I’m always on the lookout to buy ASX shares when it looks like it’s the right time to invest.

The market declines seen in June and October last year seemed like excellent times to invest in names that had fallen heavily such as retail and technology. There has been a rebound for a number of names involved since.

However, with what’s happening, I think these two All Ords ASX shares are looking like compelling ideas to boost my existing holdings.

Duxton Water Ltd (ASX: D2O)

Duxton Water is a business that owns water entitlements in Australia. It uses this portfolio to provide “flexible water solutions” to Australian farmers, such as long-term entitlement leases, forward allocation contracts and spot allocation supply.

La Nina has led to significant rainfall in recent times, with floods affecting several areas. However, La Nina is expected to end by the end of summer, according to Duxton. The company points to the Bureau of Meteorology forecasting a possible shift to El Nino conditions by June 2023, which usually brings drier than average conditions to the east of Australia.

This prospect of drier conditions is reportedly leading to increased demand for leases and forward contracts for Duxton.

Duxton Water can benefit from both the water lease income, as well as capital gains of the value of its water portfolio over time.

At the end of December 2022, excluding tax provisions for unrealised capital gains, it had a net asset value (NAV) of $2.22. Compare that to the Duxton Water share price, which is currently at a discount of around 25% to that NAV value.

It has also guided its final 2023 dividend and interim 2024 dividend to be a total of 7.3 cents, suggesting a future grossed-up dividend yield of 6.3%.

Rural Funds Group (ASX: RFF)

Rural Funds is also a potential ASX All Ords share investment in the agricultural space. It’s a real estate investment trust (REIT) that owns a variety of farms across Australia. Some of the categories include cattle, vineyards, almonds, macadamias and cropping (sugar and cotton).

The Rural Funds share price has fallen by 25% since the end of 2021 and it’s down 7% since 3 February 2023.

It’s understandable that the REIT has fallen. Higher interest rates are theoretically meant to hurt asset values, like farms. The higher interest rates could also mean a larger interest expense cost.

But, the REIT’s growing rental income can offset some of this pain, with some rent being linked to CPI inflation, which is currently elevated.

I like the defensive nature of high-quality REITs, with regular rental income. Rural Funds has some of the biggest agricultural names as tenants such as Australian Agricultural Company Ltd (ASX: AAC), Treasury Wine Estates Ltd (ASX: TWE), Select Harvests Ltd (ASX: SHV) and Olam.

The All Ords ASX share aims to grow its distribution to investors by 4% per annum. Aside from the natural rental growth each year, it aims to boost income by changing land to a ‘higher and better use’ (such as converting to tree nuts) and also improving the productivity of land for tenants, such as increased water access.

Based on the guided total distribution per unit of 12.2 cents in FY23, that amounts to a distribution yield of 5.1%.

The post 2 ASX All Ords shares I’m poised to pounce on appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Duxton Water and Rural Funds Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Rural Funds Group. The Motley Fool Australia has recommended Treasury Wine Estates. 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 AGL Energy Limited (ASX: AGL) share price has plummeted 13% over the last seven days, with most of that tumble attributed to the company’s $1.1 billion first half loss.  

But there might be a silver lining to the downturn. AGL directors appear to have taken advantage of the dip, bolstering their stakes in the stock. Are they onto something?

Shares in the S&P/ASX 200 Index (ASX: XJO) energy retailer last traded for $6.89.

Let’s take a closer look at the recent insider buying at AGL and what brokers are tipping for the future.

AGL insiders on a share buying spree

AGL insiders went on a buying spree yesterday, snapping up a combined 61,900 securities for a total of around $433,300.

The largest parcel was acquired by CEO and managing director Damien Nicks, who bought 27,000 shares in AGL for $189,000.

Non-executive director Christine Holman also snapped up a sizeable handful of shares, buying 13,000 shares for $91,000.

Chair Patricia McKenzie was in on the action too, forking out $49,000 for 7,000 shares in the company.

Finally, non-executive directors Vanessa Sullivan and Miles George bought 5,000 and 9,900 AGL shares respectively, paying $35,000 and around $69,370 for their individual parcels.

The approximate $7 price tag on each stock purchased by the insiders was notably higher than the $6.83 low inked by the AGL share price in recent sessions.

Though, it’s 17% lower than the stock’s January high of $8.215.

Are the directors onto something? Morgans thinks not

Broker Morgans is sceptical of AGL shares. It reiterated its hold rating and slashed its price target to $6.89 following the release of the company’s earnings, my Fool colleague James reports.

The broker noted the results represented a significant disappointment, and while it expects the future to be brighter, it warns the path ahead could be fraught, saying:

We anticipate increasing dividends as earnings begin to recover in the next 12 months however we think the market will want to see clear evidence of this before it regains confidence in the company and the sector.

The post Company directors are buying the dip on AGL shares. Should you? appeared first on The Motley Fool Australia.

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Brokers have picked out some leading S&P/ASX 200 Index (ASX: XJO) shares that they have rated as buys.

These analysts are looking at the share market every day, so they typically have expertise on the businesses they’re following and hopefully have chosen a good time to call that business a buy.

The Australian has reported on some of the latest calls.

Blackmores Ltd (ASX: BKL)

The broker Citi raised its target on the vitamins business to a buy. Citi’s price target on the business is $84. A price target is where the broker sees the Blackmores share price trading in 12 months time.

With a price target of $84, that suggests that Blackmores doesn’t have any upside from here.

The company is due to hand in its FY23 half-year result on 23 February 2023. The latest update we heard was in October 2022 when the company held its annual general meeting (AGM).

It said that it had seen a solid start to FY23, with supply chain stabilising, and service levels to customers improving to the best in the previous three years.

In Australia and New Zealand, it implemented price increases in the FY23 first quarter of between 5% to 6% to absorb cost inflation pressures. Blackmores’ total market share value growth in ANZ is in line with the category.

In the international market, the ASX 200 share confirmed it’s expecting revenue in the FY23 first half to be lower than the first half of FY22. It implemented price increases of 7% to 8% in the FY23 first quarter.

In the China region, Blackmores said it’s seeing good momentum in premium fish oil and eye care segments, with the performance of new product launches being “encouraging”. Blackmores implemented price increases across e-commerce platforms of between 6% to 8% in the FY23 first quarter.

Sims Ltd (ASX: SGM)

The broker UBS has significantly raised its price target on Sims to $16. That suggests a possible rise of close to 9% over the next year.

Sims describes itself as a global leader in metal recycling and providing “circular solutions for technology, and an emerging leader in renewable energy.” The business has operations in a number of places including the UK, Europe, North America, Africa and the Asia Pacific region.

The latest update from Sims was at its annual general meeting (AGM). It said that soft market conditions have persisted through the first quarter of FY23, driven by lower volumes, tighter margins and “resiliently high” inflation.

The ASX 200 share said that lower scrap volumes resulting from significantly reduced economic activity, combined with increased competition for available infeed, has tightened trading margins in both percentage and dollar per tonne terms.

Sims’ underlying earnings before interest and tax (EBIT) for the FY23 first half is forecast to be in the range of between $65 million to $75 million.

Johns Lyng Group Ltd (ASX: JLG)

The newspaper also reported that Citi has rated Johns Lyng as a buy, with a price target of $8.77. That suggests a possible rise of over 50% in the next 12 months.

This ASX 200 share is a building services business that provides building and restoration services across Australia and the US. The key role that it performs is that it rebuilds and restores properties and contents after damage from insured events such as impact, weather and fire events.

The Johns Lyng share price has dropped close to 40% since April 2022, giving it a lot of room to rebound.

While weather events are terrible for the communities it impacts, it gives the business more opportunity to provide its services. For example, at the AGM in November 2022, it said that Hurricane Ian in the US alone was an event that could cost more than US$60 billion.

The ASX 200 share has forecast that FY23 group revenue will be $1.03 billion with business as usual (BaU) work accounting for $930.4 million – a rise of 27.4% compared to FY22.

The earnings before interest, tax, depreciation and amortisation (EBITDA) forecast is $105.3 million, representing a growth of 26% compared to FY22. The BaU EBITDA forecast is $93 million, a 43.3% increase over FY22.

The post 3 ASX 200 shares just upgraded by brokers, one with 50% upside appeared first on The Motley Fool Australia.

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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 positions in and has recommended Johns Lyng Group. The Motley Fool Australia has recommended Blackmores and Johns Lyng 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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After nine consecutive months of interest rate rises, evidence is showing that consumer spending is only just starting to wane.

So as we stare down the barrel of a major economic slowdown in 2023, which might be the ASX shares best placed to survive — or even thrive?

Some experts this week named two stocks to buy that might just fit the bill:

‘Well managed’ business to recover earnings

Seneca investment advisor Tony Langford likes what Credit Corp Group Limited (ASX: CCP) brings to the table in a faltering economy.

“The company buys debt ledgers and operates in Australia, New Zealand and the United States,” Langford told The Bull.

“It collects outstanding debts from consumers.”

The Credit Corp share price is down 36.3% over the past 12 months.

Langford acknowledged that the last financial results were a mixed bag.

“The company’s consumer loan book grew by 32% to $331 million in the first half of fiscal year 2023,” he said.

“However, first half net profit after tax of $31.8 million was down 30% on the prior corresponding period.”

Credit Corp, however, is a “well managed” business, and Langford has faith in its upwards trajectory.

“The company expects earnings to recover in the second half and full year net profit after tax guidance remains intact.”

Cheers to a ‘strong’ business with ‘defensive qualities’

Sequoia Wealth Management senior investment manager Peter Day favours the idea of a drink as the economy stumbles.

“Endeavour Group Ltd (ASX: EDV) operates liquor outlets, hotels and gaming facilities,” he said.

“Endeavour offers strong businesses with defensive qualities.”

The share price is now more than 15% lower than the last reporting season in August.

The Endeavour business, especially the hospitality side, was suppressed over the 2021/22 financial year, as various states endured anti-pandemic lockdowns.

But that makes it a strong growth contender for the current period.

“We expect a strong recovery in the hotels division in the first half of fiscal year 2023,” said Day.

“Expect investment opportunities to emerge going forward. We retain our positive recommendation.”

Day’s peers are somewhat split on Endeavour shares.

According to CMC Markets, six out of 11 analysts rate it as a buy, while three recommend a strong sell.

The post Credit and drinks: Experts name 2 ASX shares to buy for a 2023 economic slowdown appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
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• Endeavour share price jumps as sales reach $6.5b
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Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The CSL Limited (ASX: CSL) share price will be one to watch on Tuesday.

This follows the release of the biotherapeutics giant’s eagerly anticipated half year results.

CSL share price on watch following results release

• Total revenue up 19% to US$7,183.5 million
• Net profit after tax down 8% to US$1,623.2 million
• Net profit after tax before amortisation (NPATA) in constant currency up 10% to US$1,957 million
• Interim dividend up 2.9% to US$1.07 per share

What happened during the half?

For the six months ended 31 December, CSL reported a 19% increase in total revenue to US$7,183.5 million.

This was driven by the acquisition of Vifor Pharma, strong growth in immunoglobulin and albumin sales, record levels of plasma collections, strong growth in market leading haemophilia B product Idelvion and key specialty product Kcentra, and a strong performance by influenza vaccines business, CSL Seqirus.

And while CSL’s profits were down 8% to US$1,623.2 million, this was in line with consensus estimates and due to currency headwinds and acquisition costs. This was largely.

NPATA on a constant currency basis provides a better reflection of the company’s performance. That was up 10% year over year to US$1,957 million.

Management commentary

CSL’s outgoing CEO, Paul Perreault, commented:

CSL delivered a solid performance in the first half of the financial year demonstrating the strong fundamentals of the company and the disciplined execution of our patient focused strategy. Our focused investment across our business units underpinned our resilience throughout the pandemic, and as we emerge from it we are starting to deliver positive momentum behind our sustainable growth agenda.

Outlook

Management is expecting more of the same in the second half. As a result, it has reaffirmed its guidance for FY 2023 NPATA in the range of approximately US$2.7 billion to US$2.8 billion at constant currency. Perreault added:

The strong growth we have seen in plasma collections and our immunoglobulins franchise is expected to continue. We are looking forward to launching Hemgenix in the US, an exciting, ground breaking, new therapy that will change people’s lives. The rest of our R&D pipeline is in great shape and we look forward to bringing more innovative therapies to patients in the future.

Seqirus continues to perform strongly and will deliver another profitable year. Consistent with the seasonal nature of the business we anticipate, however, a loss in the second half of the year. The integration of CSL Vifor is well advanced and we will focus on driving organic growth and efficiencies across the product portfolio and deliver on our synergy objectives

The post CSL share price on watch amid US$1.6b profit appeared first on The Motley Fool Australia.

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Lithium has been a hot theme among ASX investors for at least a couple of years now, and there are few signs of waning demand.

The simple fact is that the element is a major ingredient for high-powered batteries, like the ones used in electric cars. And such batteries are crucial for the world to transition to a zero-emissions era.

However, with so many investors piling onto mature lithium producers, they are already pretty expensive.

For a better risk-reward balance, one may need to look at miners that haven’t yet reached their full extraction potential.

Fortunately, this week some professionals named two such ASX shares as buys:

Check out these ‘big lithium deposits’

BW Equities equities salesperson Tom Bleakley is a fan of Canadian company Patriot Battery Metals Inc CDI (ASX: PMT), which has its shares trading in Australia.

“The explorer is focusing on acquiring and developing mineral properties containing battery, base and precious metals.,” Bleakley told The Bull.

The Patriot share price has risen a handsome 35% over the past 12 months.

Bleakley noted that the company already has “big lithium deposits” in North America. 

“Lithium is a critical mineral to produce batteries for electric vehicles. A key advantage [for Patriot] is its close proximity to North American battery manufacturers.”

It seems Bleakley’s peers overwhelmingly agree with his recommendation.

According to CMC Markets, all six analysts that cover Patriot are calling it a strong buy at the moment.

Open pit mining just started in WA

Meanwhile, Sequoia Wealth Management senior investment manager Peter Day’s buy recommendation is Liontown Resources Ltd (ASX: LTR).

“Liontown is an emerging tier-1 battery minerals producer,” he said.

“Open pit mining has started at the Kathleen Valley Lithium Project in Western Australia.”

While the Liontown share price is flat from where it was 12 months ago, it has rocketed an eye-popping 3,400% over the last five years.

This makes it a 35-bagger for those who followed the journey from the start.

According to Day, its current prospects are also exciting.

“The company plans to supply about 500,000 tonnes of 6% lithium oxide concentrate a year. First production is expected in 2024,” he said.

“We believe sustaining the development timeline is a key catalyst for Liontown.”

Five of the eight analysts covering Liontown shares on CMC Markets are currently rating it as a strong buy. The remaining three consider it a hold.

The post 2 ASX lithium shares to pounce on before they explode: experts appeared first on The Motley Fool Australia.

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More reading

• Here are the 10 most shorted ASX shares
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Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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ASX growth shares could be an underrated way to unlock important cash flow. Certainly, ASX dividend shares that offer high starting dividend yields aren’t the only way to achieve real cash returns.

It’s simple enough to envisage a $100,000 portfolio of income stocks that would pay thousands of dollars in dividends.

Names like BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX: CBA), and Woodside Energy Group Ltd (ASX: WDS) may pay a decent yield today but they may not achieve a strong capital compound annual growth rate (CAGR) from here.

However, I think there are a couple of ways that ASX growth shares can achieve good cash flow for investors.

Strong dividend growth

There are plenty of businesses on the ASX that don’t have dividend yields of more than 3%. That could be because of a combination of lower dividend payout ratios as well as higher price/earnings (P/E) ratios.

This could reflect the fact the business is retaining more of its profit to reinvest (therefore, it has a lower payout ratio) and the market is pricing the business for a higher earnings growth rate.

Some ASX growth shares have achieved enormous dividend growth because their payouts are growing along with their earnings growth.

For example, Lovisa Holdings Ltd (ASX: LOV) shares paid an annual dividend per share of 17.6 cents in FY17, which had grown to 74 cents per share in FY22.

Hub24 Ltd (ASX: HUB) has grown its annual dividend per share from 4.6 cents in FY19, up to 20 cents per share in FY22.

Johns Lyng Group Ltd (ASX: JLG) shares paid an annual dividend of 3 cents per share in FY19 and this has grown to 5.7 cents per share in FY22.

Netwealth Group Ltd (ASX: NWL) shares paid an annual dividend per share of 10.6 cents in FY18 and this had grown to 20 cents per share in FY22.

TechnologyOne Ltd (ASX: TNE) shares paid a dividend per share of 5.6 cents in FY13, which had grown to 17 cents in FY22.

What I’m trying to show here is that even if a dividend yield is 1.5% or 2% today, if the dividend quickly doubles or triples then the yield has become decent and that dividend could keep growing strongly.

Sell-down ASX growth shares

If an investor had a $100,000 portfolio of ASX growth shares, investors will hopefully see a certain level of capital growth over time.

Instead of receiving dividends, investors could decide to sell a portion of their investment and use the cash from that sale.

For example, if a $100,000 growth portfolio increased by 10% in a year then it would gain $10,000. An investor could sell $5,000, access that money, and be left with a portfolio worth $105,000.

If the growth portfolio worth $105,000 grew by 10% again, an investor would have $115,500. An investor could then sell $5,000 or $5,500 of those shares and be left with around $110,000.

One benefit of this strategy is that if an Australian taxpayer holds an investment for more than 12 months by the time of the sale, the gain can be eligible for a capital gains tax discount which can halve the taxable gain.

Of course, growth isn’t guaranteed every year. In some years, the growth could be less than 10% but, of course, in other years, it could be stronger.

The post How to create a second income from ASX growth shares appeared first on The Motley Fool Australia.

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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 positions in and has recommended Hub24, Johns Lyng Group, Lovisa, and Netwealth Group. The Motley Fool Australia has positions in and has recommended Hub24 and Netwealth Group. The Motley Fool Australia has recommended Johns Lyng Group, Lovisa, and Technology One. 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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Sure, lithium has been all the rage among stock investors in recent times.

But batteries will tell you they contain many more ingredients than just one element.

Titanium and copper are two minerals that aren’t mentioned as much as lithium, but are just as critical for the production of many batteries.

And of course, batteries are critical for many countries’ move towards zero-carbon emissions, as they allow clean electricity to be stored and used only when necessary.

This week a pair of experts named two ASX shares to buy that represent businesses producing those metals:

Reducing the cost and carbon footprint of producing titanium

Iperionx Ltd (ASX: IPX) is not a household name among investors, but BW Equities equities salesperson Tom Bleakley rates it as a buy at the moment.

The company is different from the typical resources extraction business.

“IperionX recycles titanium from scrap material,” Bleakley told The Bull.

“This reduces the cost and carbon footprint compared to traditional manufacturing processes.”

The share price is down about 34% since April last year.

IperionX has its headquarters in Charlotte, North Carolina and does its manufacturing in the US, according to Bleakley.

“Titanium is a critical metal used in numerous military and consumer applications,” he said.

“IperionX recently announced it would be producing parts for the US Navy.”

$12 million to bring project to fruition

Caravel Minerals Ltd (ASX: CVV) is another business not seen often on investment memos.

Its shares are a buy though, according to Seneca investment advisor Tony Langford.

“Caravel is a Western Australian-based copper explorer and development company,” he said.

“The company has recently appointed an experienced chief executive and has raised $12 million to progress a definitive feasibility study.”

The Caravel share price is down about 28% over the past 12 months.

But Langford is upbeat about the project’s prospects after the feasibility study.

“Construction is expected to start in 2024, with first production planned for 2026,” he said.

“Caravel offers exposure to patient investors who are confident about the outlook for this essential metal.”

The post 2 obscure ASX battery mineral shares to buy right now: experts appeared first on The Motley Fool Australia.

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

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The ASX iron ore share segment of the market has some of the world’s leading businesses. In this article, I’m going to look at Fortescue Metals Group Limited (ASX: FMG) shares and BHP Group Ltd (ASX: BHP) shares.

It has been a fruitful time to own iron ore miners in the last few months as their share prices shot higher with the iron ore price fetching above US$120 per tonne. The last few years have seen strong dividends from both companies as Chinese demand had been strong enough for long enough to drive large profits in FY20, FY21, and FY22.

While both of these businesses have enormous Australian iron ore operations, it’s the new things they’re doing outside of Australian iron ore that make them particularly interesting to me. Knowing what the future businesses will look like could be what influences the market’s perception of the ASX iron ore shares in the future.

Expansion into Africa?

Australia and Brazil are the two iron ore powerhouses of the world. But the continent of Africa could soon be a third player in the global iron sector.

Fortescue is planning to get involved in that region with the Belinga iron ore project in Gabon. It will be a venture with African partners, including the Gabonese government which will own a minority of the business.

Fortescue shares got a boost after the company announced it had signed the mining convention which governs all legal, fiscal, and regulatory regimes. This includes early development for the production of up to two million tonnes per annum, while studies advance potential designs of a large-scale development in Gabon.

The ASX mining share said that the early-stage exploration of Belinga shows similar grade and scale characteristics to Simandou at a comparable stage. Simandou is a major planned iron project in Guinea, Africa in which Rio Tinto Limited (ASX: RIO) is also involved.

This could be a major boost for the Fortescue share price if it becomes a large, operational mine.

BHP shares are gaining exposure to decarbonisation commodities

While iron ore accounts for the largest portion of BHP’s profit, the mining giant also has exposure to copper and nickel. It has copper exposure in South America and Australia, and nickel operations in Australia.

The company is also expanding through the acquisition of OZ Minerals Limited (ASX: OZL), a major copper miner. Despite paying a sizeable premium to pre-bid OZ Minerals’ share price, BHP thinks it can extract a lot of synergies from the combination. Plus, it wants to grow its production of green commodities as the world is going to need significant copper, nickel, and other minerals to meet decarbonisation targets.

Copper is necessary for the electrification of cars, network grids, and so on.

BHP is also working on opening the Jansen potash project in Canada. Potash is seen as a greener form of fertiliser. This project could achieve high margins and have a mine life of many decades. It could also be a useful addition for BHP once operational.

Fortescue’s major green energy plans

Fortescue has a plan to be a leading producer of green hydrogen. It’s working with governments and organisations around the world to create a portfolio of green hydrogen-producing locations. Green hydrogen and green ammonia could be effective at replacing fuel for heavy machinery, aircraft, and boats.

Green hydrogen is produced by using renewable energy to separate hydrogen from water. European energy giant E.ON has already signed up to buy around a third of Fortescue’s green hydrogen production by 2030.

Fortescue also wants to become a global leader in advanced batteries.

Are Fortescue shares or BHP shares a better buy?

After the strong run of both ASX iron ore shares, I wouldn’t jump on either of them at the moment. A drop of around 20% from here could represent a good price for the long term.

According to Commsec, Fortescue could pay a grossed-up dividend yield of around 10% in FY23 and BHP could pay a grossed-up dividend yield of around 9%.

I think Fortescue is the higher-risk choice of the two due to its green energy plans, but I also think this has greater growth potential. It could be a leader in a large new market. That’s why I own Fortescue shares.

The post Better buy: Fortescue vs BHP shares appeared first on The Motley Fool Australia.

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• Own Fortescue shares? Here’s what the market expects from its half year results
• ASX 200 shares: How to invest $10,000 to get $910 per year in passive income
• Own BHP shares? Here’s what the market expects from its half year results
• Fortescue share price shrugs off layoff rumblings
• Why Morgans just added these ASX 200 shares to its best ideas list

Motley Fool contributor Tristan Harrison has positions in Fortescue Metals Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has 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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