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The Audinate Group Ltd (ASX: AD8) share price is having a strong start to the week.

In morning trade, the media networking solutions provider’s shares are up 13% to $8.10.

This follows the release of the ASX tech share’s half year results this morning.

Audinate share price jumps on record half

• Revenue up 39.3% to a record of US$20.6 million (A$30.8 million)
• Gross profit up 30% to US$14.5 million
• Net loss after tax of A$0.4 million
• Positive operating cashflow of A$1.8 million
• Cash and equivalents balance of A$37.9 million
• Sales backlog remains at record levels

What happened during the half?

For the six months ended 31 December, Audinate reported a 39.3% increase in revenue to US$20.6 million and a 30% lift in gross profit to US$14.5 million. This was underpinned by 44.9% growth in sales of chips, cards & modules (CCM) and 22.4% growth in software sales.

The successful launch of its next-generation Brooklyn 3 product was a key driver of its CCM growth during the period. This launch was made in response to sudden and ongoing chip shortages affecting the old Brooklyn 2 module.

Management notes that this product was launched with a higher average selling price (18% increase) and a slightly lower gross margin percentage resulting in an improved average revenue per unit compared to the old Brooklyn module. The good news is that from FY 2024 onwards, the company has a pathway to cost down to improve its gross margin.

Audinate’s software revenue grew 22.4% to US$4.7 million. This was thanks to OEM software product sales, including Dante Embedded Platform, IP Core, and Other Software Royalties.

On the bottom line, while the company recorded a small loss after tax of A$0.4 million, this was an improvement from a A$2.1 million loss a year earlier.

And with Audinate recording a 231% improvement in operating cashflow from a small base to $1.8 million, the company finished with a cash and equivalents balance of $37.9 million.

Management commentary

Audinate co-founder and CEO, Aidan Williams, commented:

We are very pleased that Audinate has again been able to deliver record growth in revenue and EBITDA, as well as improved operating cashflow. Our ability to manage chip supplies, the record demand for Dante products and our ability to successfully pass through price increases have offset the effects of supply chain pressures we first flagged two years ago.

Outlook

Audinate continues to have a significant lead over its rivals, which bodes well for the future.

At the end of the period, the total number of Dante-enabled products grew to a record high of 3,688 products. This represents a 12x lead on the next alternate technology.

Thanks to a combination of this leadership position, strong demand for Dante, a buoyant industry outlook, and an improving (but still constrained) chip supply, management believes it is well-placed for the second half and beyond.

Particularly given that it enters the half with a record backlog and a software revenue run-rate to support USD revenue growth in the historical range. The company also expects its fledgling video business to contribute revenue of at least US$3 million in FY 2023.

Mr Williams added:

Our first half results have been excellent in an environment that remains challenging for both Audinate and our customers. I am optimistic about the second half, in particular the prospects of meaningful further traction in video and ongoing revenue growth as supply chain pressures ease.

The post Audinate share price jumps 13% on record half appeared first on The Motley Fool Australia.

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More reading

• ‘Great product, dominance in one area’: Expert names unique ASX share to buy

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 Audinate Group. The Motley Fool Australia has positions in and has recommended Audinate 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 Endeavour Group Ltd (ASX: EDV) share price is charging ahead after the company dropped its earnings for the first half of financial year 2023 this morning.

Shares in the drinks retailer and hotel operator are trading 4.69% higher at $7.14 each right now.

Here are the highlights of the company’s 1H 2023 results.

Endeavour share price lifts as hotel earnings double

• After-tax profit lifted to $364 million – a 17% increase on that of the prior comparable period (pcp)
• Sales reached $6.5 billion – a 2.5% increase
• Earnings before interest and tax (EBIT) lifted 15.8% to $644 million
• Earnings per share (EPS) came in at 20.3 cents – up 16.7%
• Declared 14.3 cents per share interim dividend – a 14.4% year-on-year improvement
• Ended the period with a $1.3 billion net debt position

The company’s retail operations (which include BWS and Dan Murphy’s) EBIT slumped 9.3% last half to $418 million, while sales slipped 3.7% to $5.4 billion as the company cycled previous COVID-19 peaks.

Meanwhile, EBIT at its hotels business surged 111.6% to 256 million and sales rose 55.3% to $1.1 billion. That reflected the recovery of the group’s hotels business.

What else happened last half?

It was a big half-year for Endeavour. It expanded its network with 21 new liquor stores and five new hotels. Meanwhile, it renewed 60 retail stores and 34 hotels.

Both BWS and Dan Murphy’s saw record sales in the weeks leading up to the festive season, while the number of active My Dan members rose 9% year-on-year to 4.9 million.

The company also launched its MixIn retail media business and acquired the Shingleback Wines brand.

What did management say?

Endeavour managing director and CEO Steve Donohue commented on the results driving the company’s share price today:

Our team has delivered strong results group-wide, with a standout December from the first restriction-free festive season in three years.

Pleasingly, our [first half] EBIT result of $644 million was 15.8% higher versus prior period, reflecting both the return of hotels to full operation and our careful management of the deleverage impacts of lower retail sales as we cycle COVID-19 driven peaks.

On a three-year comparative basis, both Hotels and Retail sales are trading well ahead with 4.7% and 4.5% [compound annual growth rates (CAGRs)] respectively.

What’s next?

Endeavour’s retail sales remained stable over the first five weeks of this half, rising just 0.2% on those of the prior year. Sales at its hotels, however, lifted 31.5% year-on-year.

The company expects to see some volatility ahead but hasn’t yet seen any material softening in key customer indicators amid current economic uncertainty.

Finally, the company agreed to acquire winery Cape Mentelle last month.

Endeavour share price snapshot

The Endeavour share price has been outperforming the S&P/ASX 200 Index (ASX: XJO) in recent times

The stock has gained 12% so far this year compared to the index’s 7% lift. Meanwhile, the last 12 months have seen Endeavour shares soar 15% while the ASX 200 has risen just 3%.

The post Endeavour share price jumps as sales reach $6.5b appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Monday
• Here are the top 10 ASX 200 shares today
• Why Appen, Endeavour, Imugene, and Treasury Wine shares are pushing higher
• 10 ASX stocks to buy before they report this earnings season: Goldman
• Buy these ASX 200 shares for a passive income boost: analysts

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

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There are plenty of blue chip ASX 200 shares to choose from on the Australian share market.

But three of the best, according to Morgans, are listed below. Here’s why the broker thinks highly of these blue chips:

Treasury Wine Estates Ltd (ASX: TWE)

This global wine giant could be an ASX 200 share to buy according to Morgans. Its analysts believe the company is well-placed for strong growth over the next few years thanks to a recent restructure. Morgans said:

TWE owns much loved iconic wine brands, the jewel in the crown being Penfolds. We rate its management team highly. The foundations are now in place for TWE to deliver strong earnings growth from the 2H22 over the next few years. Trading at a material discount to our valuation and other luxury brand owners, TWE is a key pick for us.

Morgans has an add rating and $15.71 price target on the wine company’s shares.

Wesfarmers Ltd (ASX: WES)

Another ASX 200 share that the broker rates highly is Bunnings and Kmart owner Wesfarmers. Morgans likes the conglomerate due to its highly regarded management team and strong retail portfolio. It said:

WES possesses one of the highest quality retail portfolios in Australia with strong brands including Bunnings, Kmart and Officeworks. The company is run by a highly regarded management team and the balance sheet is healthy. We believe WES’s businesses, which have a strong focus on value, remain well-placed for growth despite softening macro-economic conditions.

The broker has an add rating and $55.60 price target on its shares.

Westpac Banking Corp (ASX: WBC)

Finally, this banking giant could be an ASX 200 share to buy according to Morgans. Its analysts are positive on Australia’s oldest bank due its return on equity improvement potential, which is being underpinned partly by its bold cost cutting plans. Morgans explained:

We view WBC as having the greatest potential for return on equity improvement amongst the major banks if its business transformation initiatives prove successful. The sources of this improvement include improved loan origination and processing capability, cost reductions (including from divestments and cost-out), rapid leverage to higher rates environment, and reduced regulatory credit risk intensity of non-home loan book. Yield including franking is attractive for income-oriented investors, while the ROE improvement should deliver share price growth.

Its analysts have an add rating and $25.80 price target on Westpac’s shares.

The post 3 of the best ASX 200 shares to buy now: broker appeared first on The Motley Fool Australia.

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More reading

• 5 ASX 200 shares I would buy if I was starting from scratch: expert
• Big yields and strong gains ahead for these ASX shares: analysts
• Here are the top 10 ASX 200 shares today
• Why Appen, Endeavour, Imugene, and Treasury Wine shares are pushing higher
• Do Wesfarmers shares really offer 13% upside AND passive income?

Motley Fool contributor James Mickleboro has positions in Westpac Banking. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Wesfarmers. The Motley Fool Australia has recommended Treasury Wine Estates and Westpac Banking. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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S&P/ASX 200 Index (ASX: XJO) shares can be quality businesses that are trading at a good discount. The investment team at the Contact Australia Ex-50 fund have outlined three businesses that look unmissable.

The Contact fund managers believe that investor sentiment domestically remains “too negative”. They noted that economic uncertainty is not new – there’s “always something to worry about and the bear case is often easier to believe.”

Higher interest rates are creating “headwinds” for valuations and consumer sentiment, but Contact also pointed to several positive signals including:

• Unemployment at record lows, a “critically important metric”
• Earnings expectations have “moderated significantly”, particularly in consumer-facing industries where consensus forecasts now expect a significant reduction in year over year growth
• Cash positions remain above average for a lot of investors, which would help in a market decline

The fund manager thinks that investing in quality businesses for the long term will continue to do well. Contact believes that market multiples are not “excessive by historical standards”, particularly in the S&P/ASX Small Ordinaries Index (ASX: XSO) which suffered in 2022.

With that in mind, there were three ASX 200 shares that it pointed to in its latest monthly update.

Ampol Ltd (ASX: ALD)

Ampol describes itself as the nation’s leader in transport fuels. It was previously called Caltex Australia. It supplies the country’s largest branded petrol and convenience network (with 1,900 branded sites, including around 690 company-operated retail sites), as well as refining, importing and marketing fuels and lubricants. Across its retail network, it serves approximately 3 million customers each week.

It also has a growing presence in New Zealand as the owner of Z Energy Limited. It sells approximately 40% of all fuel volumes across the country. Ampol also owns a 20% equity stake in Seaoil, a fuel company in the Philippines.

Contact said that Ampol recently reported a “solid” quarterly update, which highlighted the “continued improvement in retail shop and fuels profitability”. It continues to generate “sound refining margins” as well.

The fund manager said that Ampol is trading on a single-digit price/earnings (P/E) ratio multiple and a fairly high dividend yield. The investment team believe it’s “attractively priced”.

Deterra Royalties Ltd (ASX: DRR)

Deterra owns royalties, with its key exposure being to iron ore which relies on the BHP Group Ltd (ASX: BHP) mining area C (MAC) royalty. Deterra receives an ongoing royalty of 1.232% of Australian free on board (FOB) revenue from the MAC royalty. Plus, it receives extra revenue for increased annual mine production above a certain level.

Contact said that the ASX 200 share is benefiting from strong iron ore prices, despite the production of mining area C being marginally below expectations.

The fund manager pointed out that Deterra generates “outstanding” returns on capital and offers a “compelling income stream”

TPG Telecom Ltd (ASX: TPG)

TPG is a telco that owns a number of brands including TPG, Vodafone Australia and iiNet.

Contact pointed out that Vodafone Australia announced price increases for its mobile plans.

The fund manager noted that the ASX 200 share’s lowest-priced plan had increased by 13% to $45 per month with no additional data.

The investment team also said that the mobile market is now “more rational and operators are delivering average revenue per user (ARPU)”. Contact said this bodes well for earnings stability.

The post 3 ASX 200 shares that this fund manager loves at these prices appeared first on The Motley Fool Australia.

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More reading

• 5 ASX 200 shares I would buy if I was starting from scratch: expert
• This little-known ASX share offers ‘inflation protection at a reasonable price’: fund manager
• 2 ASX 200 shares to buy while energy shortage rages on: experts
• Here are the top 10 ASX 200 shares today
• 20+ years of growing dividends. Why I plan to buy more of this ASX 200 stock in 2023

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

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There are a handful of very promising S&P/ASX 300 Index (ASX: XKO) shares to consider investing in, according to the fund manager L1 Capital.

In its recent monthly update for the listed investment company (LIC) L1 Long Short Fund Ltd (ASX: LSF), the fund manager said it’s relatively cautious about the outlook because of the “lagged impact of the significant interest rate hikes, weakness in leading economic indicators, gradually increasing pressure on corporate earnings and tail-risk from geopolitical tensions”.

L1 Capital suggested that ongoing market volatility remains likely as investors reassess their outlook for the economy, interest rates, and corporate profits. However, the fund manager believes there are “numerous mispriced stocks” that can deliver “attractive long-term returns”.

Below are three of the names that were picked out.

James Hardie Industries plc (ASX: JHX)

The James Hardie share price had a strong performance in January 2023, rising by 19% as housing sentiment improved for US homebuilders. The US market has noted a “sharp increase” in new housing demand in January while the US 30-year fixed mortgage rates fell back to 6% after peaking above 7% in November 2022.

For investors who don’t know what James Hardie does, it’s described as the market leader in fibre cement siding and has been increasing its market share in the US for the last two decades.

Around two-thirds of its revenue comes from repair and remodelling exposure, while the rest is from new housing.

The fund manager believes James Hardie is well-placed to manage a period of “softer” new housing demand. After this period, it could “grow at an above-market rate for many years to come”.

BlueScope Steel Limited (ASX: BSL)

BlueScope steel is a sizeable steel business with operations in Australia and the US. The BlueScope share price went up 16% in January amid a recovery for US steel spreads, providing a “tailwind for the company’s second-half earnings expectations”.

The fund manager pointed out that the ASX 300 share is focused on growing its US operations with 850kt per annum capacity expansion at the North Star facility in Ohio. This follows the acquisition of the US’s second-largest metal coating/painting company.

BlueScope is also focused on the establishment of BlueScope Recycling from its acquisition of the MetalX recycling business.

Even though the BlueScope Steel share price has risen, L1 Capital thinks the market “significantly undervalues BlueScope’s unique and strategic asset base”.

Imdex Limited (ASX: IMD)

The Imdex share price went up 16% last month after the company announced a first-half result that beat market expectations.

The ASX 300 share also announced the acquisition of Devico, a leading global mining technology company based in Norway.

The fund manager believes the acquisition is “strategic and value accretive and will accelerate the company’s global growth strategy”.

L1 Capital pointed out that Imdex raised $224 million to fund the acquisition, which was “well-supported” by the market. The fund manager concluded with the following thoughts on the business:

We believe Imdex is well-positioned for long-term growth as it is in the early stages of launching the industry’s best suite of new and improved products.

The post These 3 ASX 300 shares are ‘significantly undervalued’: fund manager appeared first on The Motley Fool Australia.

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More reading

• 3 unmissable ASX AI stocks on my radar right now
• Fund reveals the type of ASX shares to buy for 2023, with 2 examples
• Brokers name 3 ASX shares to buy now
• Here are the top 10 ASX 200 shares today
• The ASX 200 is still full of cheap shares despite this year’s surge and I’m ready to buy more

Motley Fool contributor Tristan Harrison has positions in L1 Long Short Fund. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Imdex. The Motley Fool Australia has positions in and has recommended Imdex. 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 S&P/ASX 200 Index (ASX: XJO) tech share Altium Limited (ASX: ALU) could become the clear leader in the world at what it does.

Altium describes itself as a business that offers software tools that empower and connect PCB designers, part suppliers and manufacturers to develop and manufacture electronic products faster and more efficiently.

One of the key areas of Altium is the cloud platform Altium 365. The idea is that it will enable collaboration across the entire PCB design process.

Altium Designer is one of the main software offerings, as well as the electronic parts search engine called Octopart.

With that in mind, there are a few reasons that could make the business a global winner.

Investing for the future with strong tailwinds

Altium’s business model is changing, with “strong” platform adoption driving recurring revenue and average subscription seat price. The number of monthly active users and accounts on Altium 365 is increasing.

Altium is steadily growing its global PCB market share, but the competitor with the largest market share is losing its advantage.

More devices, vehicles and so on are becoming more advanced as time goes on. This is giving Altium a tailwind because electronics is “at the heart of a smart and connected world.”

Altium points to 5G connections, electrification of cars, autonomous driving, industrial internet of things (IoT), AI and data science, mobile devices and the general demand for “smart connected products are driving demand for electronics and continue to overburden supply chain.”

The company said that Altium 365 is increasing the attractiveness of Altium’s PCB design software resulting in greater demand and competitive advantage.

Impressive financials

Altium possesses some financial characteristics that are good signs of quality for the business and could help the Altium share price.

The amount of the ASX 200 tech share’s revenue that is recurring rose to 75% in FY22, up from 65% in FY21. That locks in more revenue for the next year and makes the revenue more sticky.

Altium had an earnings before interest, tax, depreciation and amortisation (EBITDA) margin of 36.7% in FY22, up from 34.3% in FY21. A growing EBITDA margin is an attractive factor, particularly if the revenue of the business is growing quickly. FY22 revenue rose 23%.

The company is very good at generating cash flow. In the FY22 result, Altium saw its net profit after tax (NPAT) reach $55.5 million (up 57%) while operating cash flow was $72.5 million (up 17%).

Generating lots of cash gives the business ample funds to pay a good dividend, ensure a good balance sheet and pay for good research and development to design the next generation of software for subscribers.

Growth expected

The Altium share price has done well over the long term. But, with the company expecting earnings growth in the future, this could help drive the Altium share price further.

The ASX 200 tech share has some aspirational targets for FY26.

In FY23, it’s expecting to generate total revenue of between $255 million to $265 million (up 15% to 20%). By FY26, it’s hoping to reach $500 million – almost doubling.

It’s hoping to reach an underlying EBITDA margin of between 38% to 40%, which means profit could grow even faster than revenue.

The business is also expecting to reach 100,000 software seats on subscription.

Altium share price valuation

According to Commsec, the business is valued at 60 times FY23’s estimated earnings.

The post Why I think this ASX 200 tech share could turn into a global superstar appeared first on The Motley Fool Australia.

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More reading

• This ASX 200 share is one of my top ideas to rake it in on a recovery
• Here’s why I’d buy this ASX 200 share with conviction if there’s a recession
• Down 30% since its peak, is this a great time to buy this ASX 200 share?
• Why this ASX 200 share smashed the market with a 5% rally today
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Tristan Harrison has positions in Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Altium. 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 a recession were to happen, there is an S&P/ASX 200 Index (ASX: XJO) share that I think could be a reliable performer: The Lottery Corporation Ltd (ASX: TLC).

It’s worth pointing out here that a recession isn’t seen as likely in Australia at this stage.

In the Reserve Bank of Australia’s (RBA) latest release, it said that its central forecast for GDP growth is expected to slow to around 1.5% during 2023 and 2024. The RBA said that the recovery in spending on services following the lifting of COVID restrictions has “largely run its course and the tighter financial conditions will constrain spending more broadly”.

However, total GDP growth is not quite the same as GDP per person. A household could be having a tough financial time, even if the economy as a whole is still growing.

This ASX 200 share could see strength

It’s possible that a recession could mean that The Lottery Corporation sees an increase in demand.

Following is an excerpt from a Sydney University article about gambling and its effects:

In times of economic recession, gambling, particularly on lotteries, usually stays strong. Gambling during recession times is typically highest amongst those who are experiencing the greatest financial hardship as it represents a potential way out.

There are numerous studies and research that show lottery participation is not hampered during a recession and that lotteries are essentially “recession-resistant”.

The Lottery Corporation operates many of Australia’s lotteries and Keno businesses. It runs Australia’s largest lottery, The Lott, and operates in every state and territory except Western Australia.

It is well-placed to be able to reach customers. At last disclosure, it had more than eight million active customers, equivalent to almost half the Australian adult population. That includes more than four million active registered customers. The ASX 200 share said it has more than 7,200 points of retail distribution, with fast-growing digital channels too.

Growth is already being achieved

FY22 saw a record result after a strong FY21. Management said this result demonstrated the business’ resilience, defensive qualities, and the benefits of an omnichannel model.

In FY22, comparable group revenue rose 9.4% to $3.5 billion. Comparable group earnings before interest and tax (EBIT) increased 13.8% to $603 million. The lotteries division saw comparable EBIT increase 16.3% to $541 million.

The business is achieving growth even in the good times, so it will be interesting to see how the company performs in 2023 with the economy facing a tough outlook.

Planned initiatives

The ASX 200 share has outlined a few different initiatives it’s been working on to drive it forward.

It has innovated its game portfolio with bigger prizes and more winners, enhanced the customer experience, increased its digital penetration, evolved its retail footprint, including the continued rollout of digital advertising at the point of sale, and it’s pursuing new licences and other opportunities.

The Lottery Corporation share price snapshot

Over the past year, The Lottery Corporation shares have gone up 5%.

Based on the Commsec forecast, the ASX 200 share is valued at 31 times FY23’s estimated earnings with a potential dividend yield of 2.8%, excluding franking credits.

The post Here’s why I’d buy this ASX 200 share with conviction if there’s a recession appeared first on The Motley Fool Australia.

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More reading

• Down 30% since its peak, is this a great time to buy this ASX 200 share?
• Why this ASX 200 share smashed the market with a 5% rally today
• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Friday
• Could an Aussie house price crash destroy the ASX 200 in 2023?

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 VanEck Morningstar Wide Moat ETF (ASX: MOAT) could be one of the best exchange-traded funds (ETFs) to consider in the current investment market.

There are a number of ETFs based on broad indices which simply buy a few hundred of the biggest businesses.

For example, the Vanguard Australian Shares Index ETF (ASX: VAS) tracks the S&P/ASX 300 Index (ASX: XKO). The iShares Core S&P/ASX 200 ETF (ASX: IOZ) tracks the S&P/ASX 200 Index (ASX: XJO). And so on.

But some ETFs have a portfolio based on analysts targeting businesses and trying to find opportunities.

I particularly like the VanEck Morningstar Wide Moat ETF for a number of reasons.

High-quality picks

One of the main elements of its strategy is its focus on “quality US companies Morningstar believes possess sustainable competitive advantages, or wide economic moats”.

Think of a company as a castle. The job of the moat is to protect the castle when competitors are trying to attack. Other competitors in an industry would love to take down the leader in the sector.

Moats can come in a number of different forms according to Morningstar, including cost advantage, intangible assets (patents, brands, and regulatory licenses), brand switching costs (expenses or inconvenience), network effects, and efficient scale.

Only 14% of the 1,500 companies under Morningstar’s coverage are deemed to have a ‘wide moat’. That’s where the analysts believe the company can earn excess normalised returns, with near certainty, in 10 years.

In Morningstar’s estimations, that company must also be more likely than not to earn excess normalised returns 20 years from now.

Investments done at attractive prices

Morningstar analysts will only decide to add a US company to the VanEck Morningstar Wide Moat ETF portfolio if they’re trading at attractive prices relative to Morningstar’s estimate of fair value.

As an example, analysts have decided that a particular wide-moat business might be worth $50 a share on paper. If it’s trading at $35 then it could offer enough potential capital growth to invest in and, hopefully, achieve good returns.

The lower the price that the investment is bought at compared to the fair value price, the greater the potential return and the bigger margin of safety.

Strong historical returns

Of course, past performance is not a guarantee of future performance. But, at the time of writing, the VanEck Morningstar Wide Moat ETF has outperformed the S&P 500 over the past six months, twelve months, three years, and five years.

Over the past five years, it has produced an average return per annum of 14.5%. That includes the ETF’s annual management fee of 0.49%.

Foolish takeaway

I think that combination of investing in businesses that can generate long-term profit, while being at a good price, seems very effective to me.

The post I think this ETF is one of the best to buy on the ASX 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 no position in any of the stocks mentioned. The Motley Fool Australia has recommended 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 S&P/ASX 200 Index (ASX: XJO) share REA Group Limited (ASX: REA) has suffered from higher interest rates and weakening sentiment in the property market.

Since its share price peak in November 2021, the online real estate advertising business has fallen around 30%.

To lose around a third of its value is a significant decline for any business although REA Group is still worth $16 billion, according to the ASX.

The company just delivered its FY23 half-year result for the six months to December 2022.

Let’s remind ourselves what REA Group just reported.

Earnings recap

The owner of realestate.com.au reported that its core operations generated revenue growth of 5% to $617 million. However, earnings before interest, tax, depreciation and amortisation (EBITDA) (excluding associates) dropped 2% to $359 million.

Net profit after tax (NPAT) declined 9% to $205 million, though the business reported its half-year dividend was maintained at 75 cents per share.

REA Group was proud to report its Australian revenue grew by 3%, with yield growth across its advertising products more than offsetting a challenging market environment and strong prior-year comparables, particularly in the second quarter. In the first half of FY23, national listings in Australia were down 9%.

The ASX 200 tech share also reported that REA India achieved year-over-year growth of 48%.

Outlook

I think one of the biggest influences on the REA Group share price is what’s going to happen next. Certainly, the company’s outook was revealing.

REA Group noted that rapid successive interest rate increases and softening consumer sentiment have significantly impacted property prices and volumes in the Australian residential property market.

The ASX 200 tech share also said that while the effects of higher interest rates “will take some time to become apparent and price declines are expected to continue, the company expects stabilisation of the interest rate cycle will improve confidence and encourage increased activity”.

However, trying to see the silver lining, the company said that “underlying demand continues to be supported by ongoing strong fundamentals including low unemployment, anticipated wage growth, and ongoing increases in migration”.

REA Group said that January national residential new listings were down 9% year over year, Sydney listings were down 16%, and Melbourne listings were down 15%. The year-over-year growth rate for the rest of the financial year will “reflect strong prior period listings volumes, particularly in Q4”.

This means listing volume growth numbers could continue to be quite negative over the rest of the financial year.

My take on the REA Group share price

REA Group shares are only down by 11% over the past year, though the company’s share price has dropped 31% since early November.

Despite falling more than 2% on Friday, the REA Group share price is still valued at 34 times FY24’s estimated earnings. I think that’s a fairly high valuation considering interest rates are now much higher than they used to be.

However, I do think that REA Group has some impressive qualities. It’s in the strongest position in the Australian market because it gets more than three times the daily visitors of its nearest rival. This enables it to pass through price increases with little detrimental impact.

The ASX 200 share has also very compelling investments in businesses that are leaders in the US, India, and Southeast Asia. Each of these regions could turn into important profit generators for the business.

If I already owned REA Group shares, I’d hold them for the long term. However, if I wanted to buy shares, I’d want a better price in 2023 before pushing the buy button.

The post Down 30% since its peak, is this a great time to buy this ASX 200 share? 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 no position in any of the stocks mentioned. The Motley Fool Australia has recommended REA 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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At the start of each week, I like to look at ASIC’s short position report to find out which shares are being targeted by short sellers.

This is because I believe it is well worth keeping a close eye on short interest levels as high levels can sometimes be a sign that something isn’t quite right with a company.

With that in mind, here are the 10 most shorted shares on the ASX this week according to ASIC:

• Flight Centre Travel Group Ltd (ASX: FLT) remains the most shorted ASX share despite its short interest falling heavily to 12.6%. Short sellers may have been closing positions after the travel agent’s recent update.
• Betmakers Technology Group Ltd (ASX: BET) has seen its short interest edge lower to 12.5%. Competition, cash burn, and valuation concerns may be weighing on this betting technology company’s shares.
• Megaport Ltd (ASX: MP1) has seen its short interest rise to 9.9%. Short sellers have been adding to their positions since the network as a service provider released a disappointing quarterly update.
• Core Lithium Ltd (ASX: CXO) has short interest of 9.6%, which is up week on week. Valuation concerns have been weighing on this lithium share.
• Sayona Mining Ltd (ASX: SYA) has 9.3% of its shares held short, which is up slightly week on week. Fears that lithium prices have peaked could be behind this high level of short interest.
• Liontown Resources Ltd (ASX: LTR) has short interest of 7.7%, which is down slightly week on week. Once again, lithium price concerns appear to be behind this. In addition, project cost blow outs have sparked fears that a capital raising could be coming.
• Lake Resources N.L. (ASX: LKE) is a fourth lithium share in the list with 7.6% of its shares held short, which is up week on week. J Capital is shorting this lithium developer due to concerns over its technology and project funding.
• Pointsbet Holdings Ltd (ASX: PBH) is back in the top ten with 7.3% of its shares held short. Competition and cash burn concerns appear to be why short sellers are going after this sports betting company.
• NextDC Ltd (ASX: NXT) has returned to the top ten with short interest of 7%. Short sellers may have concerns that economic conditions could weigh on its performance.
• Zip Co Ltd (ASX: ZIP) has short interest of 6.9%, which is flat week on week. Short sellers appear to be doubting that Zip will be able to deliver profitable growth.

The post Here are the 10 most shorted ASX shares appeared first on The Motley Fool Australia.

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• Top brokers name 3 ASX shares to buy next week
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• Why has the Flight Centre share price soared 20% in a month?

Motley Fool contributor James Mickleboro has positions in Nextdc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Betmakers Technology Group, Megaport, PointsBet, and Zip Co. The Motley Fool Australia has recommended Betmakers Technology Group, Flight Centre Travel Group, Megaport, and 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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