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Looking for a growth share or maybe two to buy? If you are, the two listed below could be worth considering.

Here’s why these ASX growth shares are rated highly by experts:

Allkem Ltd (ASX: AKE)

If you’re not averse to investing in the mining sector, then the first ASX growth share to consider is Allkem. It is one of the world’s largest lithium miners with a collection of projects in Argentina, Australia, and North America.

Allkem is already producing a lot of lithium from these projects, but it won’t be stopping there. Management aims to grow its production multiples times current levels in the coming years in order to maintain a 10% share of global lithium supply over the long term.

Goldman Sachs may be bearish on lithium prices but it is bullish on Allkem. This is due to its production growth and exposure to several lithium types. The latter includes moving downstream from spodumene into lithium chemicals, which it sees as a margin accretive opportunity.

The broker has a buy rating and $15.50 price target on Allkem’s shares.

Lovisa Holdings Limited (ASX: LOV)

This fast-fashion jewellery retailer could be another top ASX growth share to buy right now.

It has been tipped to grow strongly in the coming years thanks to the popularity of its affordable offering, its focus on younger consumers, and its ambitious global expansion plans. The latter is being driven by a management team that has been here before and successfully grown other retail brands globally.

It is for this reason that Morgans believes Lovisa has the potential to “be one of the biggest success stories in Australian retail.”

Morgans currently has an add rating and $28.50 price target on its shares.

The post 2 explosive ASX growth shares to buy now according to analysts appeared first on The Motley Fool Australia.

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More reading

• How to create a million-dollar ASX share portfolio in two decades
• Morgans names 2 more of the best ASX shares to buy in February
• Should I buy ASX 200 lithium shares now or not?
• How I’d invest $200 a month in ASX shares to make a $20,000 passive income for life
• What’s with ASX 200 lithium shares today?

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 Lovisa. 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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The S&P/ASX 200 Index (ASX: XJO) finished Tuesday’s trading session 0.46% lower, closing back under 7,500 points.

For most of the day, the ASX 200 was well in the green. But when the decision of the Reserve Bank of Australia (RBA) to hike the official cash rate by 0.25% came out this afternoon, markets went into a tailspin.

But that was certainly not the case with ASX 200 coal shares.

This corner of the share market was on fire today. Take the Whitehaven Coal Ltd (ASX: WHC) share price. Whitehaven shares closed up a pleasing 1.89% at $8.62 a share.

New Hope Corporation Ltd‘s (ASX: NHC) share price did even better. It ended the day 3.7% higher at $6.16 a share. Yancoal Australia Ltd (ASX: YAL) also enjoyed a nice boost, recording a happy rise of 3.51% to $6.19 a share:

ASX 200 coal shares propped up the entire energy sector today – one of only two ASX sectors to finish in the green.

Some oil shares also did quite well, including Beach Energy Ltd (ASX: BPT) which gained 2.92%. But that wasn’t the case for the largest oil producer in the ASX 200. Woodside Energy Group Ltd (ASX: WDS) only managed to close 0.31% ahead after a largely anaemic day.

Thus, it was coal shares that were really behind the energy sector’s dominance of the markets this Tuesday.

So what was going on with ASX 200 coal miners? Why did these shares defy the gloom of the broader market?

Why are coal shares smashing the ASX 200 today?

Well, it’s probably down to a relatively simple reason: coal prices themselves.

As my Fool colleague covered this afternoon, coal prices rose strongly overnight, with Coal Nymex futures up a solid 5.3% to US$157.00 a tonne.

Such a meaningful jump in the primary commodity of Whitehaven, New Hope, and Yancoal was always going to excite investors.

As such, it was no real surprise to see this sector shining out amid the sea of red that the ASX 200 gave us this afternoon.

The post Why did ASX 200 coal shares have such a top run on Tuesday? appeared first on The Motley Fool Australia.

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More reading

• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• ASX 200: Buy high and sell higher
• Why Beach Energy, Medibank, Pushpay, and Whitehaven Coal shares are rising
• Will the stock market crash in 2023?
• Better buy: Core Lithium vs Pilbara Minerals shares

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

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If one looks at Fortescue Metals Group Limited (ASX: FMG) shares today, no doubt one metric in particular will jump off the page: Fortescue’s massive dividend yield.

At the time of writing, the Fortescue Metals share price is going for $22.22, up a healthy 1.21% for the session thus far:

At this share price, Fortescue shares have a trailing dividend yield of 9.32%.

This rather monstrous dividend yield comes from Fortescue’s last two dividend payments. Those consisted of the March interim dividend of 86 cents per share, as well as September’s final dividend worth $1.21 per share.

Both payments came fully franked, which means this already massive dividend yield grosses-up to a whopping 13.31% with the value of these franking credits.

So Fortescue shares are a no brainer for passive income investors seeking large dividends, right? Who wouldn’t want to get more than $9 in annual cash dividends for every $100 invested?

Is the Fortescue dividend a source of safe passive income?

Well, it’s not that simple. Dividends are not term deposits and ASX shares are not banks (with the exception of the bank shares, of course). A company is under no duty, responsibility, or obligation to fund its dividends at last year’s levels. Or to fund a dividend at all, in fact.

If Fortescue wished, it could announce tomorrow that it will never pay a dividend again.

Of course, this is unlikely. But Fortescue does have a dividend policy. According to the company, Fortescue targets dividend payments worth 80% of its full-year net profits after tax (NPAT).

However, investors need to consider this. Fortescue is almost solely a pure-play iron ore miner. As such, its profits are nearly entirely dependent on the price of iron ore. Right now, the industrial metal is trading at historically high levels of more than US$120 a tonne.

But in the past 10 years, iron ore has been as low as US$39 per tonne. Iron is an extremely cyclical commodity that tends to function as a bellwether for economic growth. During the next recession, whenever that might be, you can bet that the iron ore price will experience a significant slide.

And that will put a serious dent in Fortescue’s profits and, by extension, its dividends.

So, no, Fortescue’s 9%+ dividend yield is not ‘safe’ for passive income investors. Nor will it ever be.

If you want a truly ‘safe’ income stream, term deposits, government bonds, and annuities are where to look, not dividends from ASX shares.

But that doesn’t mean Fortescue shares won’t remain a significant source of passive income for ASX investors well into the future. They might, and probably will be. We just can’t call this passive income source a safe one.

The post Is the 9%+ Fortescue dividend yield safe for passive income investors? appeared first on The Motley Fool Australia.

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More reading

• Why are ASX 200 iron ore shares being hammered hard on Friday?
• Why are ASX 200 iron ore shares like Rio Tinto sliding lower today?
• Here’s the Fortescue dividend forecast through to 2025
• Will funding FFI drag the Fortescue share price lower?
• Broker warns that the Fortescue share price could crash 39% from current levels

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

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The S&P/ASX 200 Index (ASX: XJO) has taken a nasty dive over the course of this Tuesday’s trading and is now sitting at a sifnicant loss for the trading day. At the time time of writing, the ASX 200 has lost a notable 0.54% and is back to just under 7,500 points.

That’s after the index spent most of the day in the green, but thanks to the Reserve Bank of Australia’s interest rate decision this afternoon, investors might have to suck this one up.

But rather than dwelling on all of that, let’s now take a look at the ASX 200 shares that are currently topping the share market’s trading volume charts, according to investing.com.

The 3 most traded ASX 200 shares by volume this Tuesday

Chalice Mining Ltd (ASX: CHN)

ASX 200 diversified mining share Chalice is our first horse out of the stable this Tuesday. This session has seen a hefty 11.54 million Chalice shares change hands as it currently stands. There hasn’t been any recent news or announcements out of this company itself.

So today’s volume is probably a direct consequence of the share price movements we have seen today. At present, Chalice is up a healthy 1.48% at $6.52 a share.

But the miner spent most of the morning in the red and got down to $6.21 at one point. It’s probably this bouncy day of trading that has resulted in so many Chalice shares flying around.

Beach Energy Ltd (ASX: BPT)

Next up we have ASX 200 energy share Beach. So far this trading day, a decent 13.43 million Beach shares have found a new home. Beach shares are defying the market today and have pushed significantly higher.

The oil share is currently enjoying a 2.73% lift to $1.58 a share, which is the most likely explanation as to why we are seeing so many Beach shares trading.

This lift could be a result of higher oil prices, or perhaps a response to some recent love out of an ASX broker.

Sayona Mining Ltd (ASX: SYA)

Our final stock of the day is none other than ASX 200 lithium share Sayona Mining. This Tuesday has had a chunky 22.51 million Sayona shares bought and sold at the time of writing. This looks like a direct response to Sayona’s nasty share price actions this session.

The lithium producer has had a shocker of a day and is currently down to 24 cents a share, a full 3.3% down from where it ended up yesterday.

With no other news out from Sayona, we can only assume that this rather large drop in value is to blame for the high volumes on display here.

The post Here are the 3 most heavily traded ASX 200 shares on Tuesday appeared first on The Motley Fool Australia.

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More reading

• ASX 200: Buy high and sell higher
• Why Beach Energy, Medibank, Pushpay, and Whitehaven Coal shares are rising
• Will the stock market crash in 2023?
• Better buy: Core Lithium vs Pilbara Minerals shares
• 5 things to watch on the ASX 200 on Tuesday

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

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The S&P/ASX 200 Index (ASX: XJO) has done very well over the last few months, rising 16% since the end of September 2022.

Investor confidence seems to have come soaring back. Back in August 2021, the ASX 200 Index reached a peak of just over 7,630 points.

For investors who haven’t noticed, the ASX 200 reached 7,588 points earlier this month, which is less than 1% lower than its all-time high.

The ASX 200 is dominated by a few ASX shares from two sectors – ASX bank shares and ASX mining shares.

When BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB), Westpac Banking Corp (ASX: WBC), and ANZ Group Holdings Ltd (ASX: ANZ) do well, then it bodes well for the ASX 200 as a whole.

What’s driving the ASX share market higher?

The major banks and ASX iron ore shares have gone through a good recovery. Banks have risen amid the prospect of generating higher profits because of elevated interest rates with banks passing on the interest rate hikes quickly.

Share prices tend to follow earnings (and earnings projections).

Investors are also getting excited by how much iron ore profit BHP, Rio Tinto Limited (ASX: RIO), and Fortescue Metals Group Limited (ASX: FMG) could make in the coming months.

More profit could also mean that good dividends are headed to shareholder bank accounts.

Commsec numbers suggest that CBA, NAB, Westpac, and ANZ are all going to pay a higher dividend per share than last year.

Collectively, investors have sent the share prices higher of names that were thought of as being impacted by higher interest rates. These include companies such as JB Hi-Fi Limited (ASX: JBH), CSR Limited (ASX: CSR), Wesfarmers Ltd (ASX: WES), and Charter Hall Long WALE REIT (ASX: CLW).

Is it too late to buy?

The ASX 200 has essentially wiped out the decline seen in 2022.

Certainly, over the long-term, the ASX has historically returned an average of around 9% to 10% per annum. I don’t know for certain — nor does anybody else know — what’s going to happen next in the next few months or years.

Higher interest rates and inflation have made things volatile. I think there’s going to be more volatility throughout 2023. The market often acts with exuberance and, occasionally, becomes bearish.

I think the ASX 200 will be able to keep rising over the coming years if earnings growth is achieved. This could enable investors to sell at a higher price if they choose, or they may simply keep holding and benefiting from compounding.

For investors who invest in the whole share market with exchange-traded funds (ETFs), I think a regular investment plan will still be very effective. For investors who focus on individual ASX shares, I believe there will always be opportunities.

For now, I still think that smaller ASX shares that have been hit hard could be the best places to find mispriced ideas.

The post ASX 200: Buy high and sell higher appeared first on The Motley Fool Australia.

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More reading

• Will the stock market crash in 2023?
• Own CBA shares? Here’s the bank’s half-year results preview
• NAB shares: A top tip for passive income?
• Better buy: Core Lithium vs Pilbara Minerals shares
• 5 things to watch on the ASX 200 on Tuesday

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 positions in and has recommended Wesfarmers. The Motley Fool Australia has recommended JB Hi-Fi 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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The C29 Metals Ltd (ASX: C29) share price is having a day to remember on Tuesday.

In afternoon trade, the ASX lithium share is up a whopping 42% to 27 cents.

Why is this ASX lithium share rocketing?

Investors have been fighting to get hold of this ASX lithium share following the release of a drilling update from Pocitos 7 in Argentina.

According to the release, drilling at Pocitos 7 in the province of Salta, Argentina has concluded at 420 metres with a packer test intercepting a deep aquifer from 370 metres to 400 metres.

The release notes that a flow test was conducted through a 49mm pipe with a submersible pump and achieved a pumping rate in excess of 2,000L an hour.

Brine samples were then obtained over a three-hour pumping period, with separate sample lots then sent to SGS and Alex Stewart laboratories in Salta. In addition, a sample was sent to the University of Melbourne for testing using the Ekosolve direct lithium extraction process that the company has licenced.

Laboratory assay results are expected in 7 to 14 days.

‘Extremely pleased’

C29’s director, Jeremy King, was very pleased with the news. He commented:

We are extremely pleased to intercept brines and have hit a 30m plus aquifer zone at Pocitos 7 and have such a healthy pump rate particularly given the size of the pipe and pump utilised. The team are currently conducting SG measurements on the brine and we await the laboratory analysis to determine lithium content. Subject to those results, we intend to continue our exploration program with a view to rapidly establishing a mineral resource estimate at Pocitos 7.

The post Why did this ASX lithium share just rocket 42%? appeared first on The Motley Fool Australia.

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More reading

• Leading brokers name 3 ASX shares to buy today
• These could be the best ASX 200 growth shares to buy: analysts
• Need passive income? Turn $5,000 into $800 every month
• Morgans names 2 of the best ASX 200 shares to buy in February
• 3 of the best ASX 200 shares to buy in 2023: Bell Potter

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

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The S&P/ASX 200 Index (ASX: XJO) has taken a tumble on Tuesday after the RBA lifted the cash rate. In afternoon trade, the benchmark index is down 0.5% to 7,501.9 points.

Four ASX shares that are falling more than most today are listed below. Here’s why they are dropping:

ARB Corporation Limited (ASX: ARB)

The ARB share price is down over 10% to $29.88. This 4×4 auto parts company’s shares have come under pressure after Macquarie gave a lukewarm response to its half year update. Its analysts have downgraded ARB’s shares to a neutral rating with a $33.00 price target.

Centuria Capital Group (ASX: CNI)

The Centuria Capital share price is down 5% to $1.87. This follows the release of the property company’s half year results. Although Centuria Capital delivered strong top line growth, its operating profit was flat year over year.

Nick Scali Limited (ASX: NCK)

The Nick Scali share price is down 5% to $10.26. Investors have been selling this furniture retailer’s shares since the release of its half year results. Macquarie has also responded to its results by downgrading its shares to a neutral rating with an $11.30 price target. The broker appears concerned by the headwinds the company is facing from higher interest rates and a cooling housing market.

Tabcorp Holdings Limited (ASX: TAH)

The Tabcorp share price is down 2% to $1.016. This may have been driven by a broker note out of Goldman Sachs. It has warned that the gaming company could fall short of expectations with its results. It notes that industry feedback and data updates suggest that competition has been strong. This is being driven by disruption from a new entrant in the market, which it feels could be pressuring net margins and earnings.

The post Why ARB, Centuria Capital, Nick Scali, and Tabcorp shares are dropping appeared first on The Motley Fool Australia.

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More reading

• ASX share prices have rallied too hard to start 2023 says UBS equity strategist as one US analyst says don’t even think about turning bullish until 2024
• Why is the ARB share price beating the ASX 200 today?
• Why Brainchip, Core Lithium, IAG, and Nick Scali shares are dropping today
• Nick Scali share price plummets despite 70% profit boost
• These are the 10 most shorted ASX shares

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 ARB Corporation. The Motley Fool Australia has recommended ARB Corporation. 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) has slipped into the red amid the Reserved Bank of Australia (RBA) handing down another interest rate rise. At the time of writing, the index is 0.54% lower at just below 7,500 points.

The ASX 200 was up more than 0.2% during lunchtime trading. The benchmark index also proved resilient earlier in the day, despite a retrace in US markets overnight.

Then, at 2:30pm AEDT, the RBA released its interest rate decision following a meeting of its board.

The central bank announced another 0.25% increase in interest rates, bringing the official cash rate to 3.35%. This was broadly in line with consensus expectations, as the RBA continues to dampen stubbornly high inflation.

Atop today’s cash rate hike, the RBA board also increased the interest rate on Exchange Settlement balances by another 0.25%, taking that to 3.25%.

In the minutes following the announcement, the ASX 200 tumbled more than 0.6%.

February marks the ninth consecutive interest rate hike from the central bank. (The board does not meet in January.)

The first of those hikes came on 3 May last year, when the official cash rate was at a rock bottom 0.10%. At that time, the interest rate had not been lifted since November 2010.

What did the RBA announce post its meeting?

RBA governor Philip Lowe explained the board’s decision to hike rates yet again following the meeting, saying, “Global inflation remains very high.”

Lowe acknowledged that inflation pressures are easing somewhat, with lower energy prices and the impact of higher rates.

However, the ASX 200 is under pressure after he added, “It will be some time, though, before inflation is back to target rates. The outlook for the global economy remains subdued, with below-average growth expected this year and next.”

CPI inflation over the year to the December quarter came in at 7.8%, the highest level since 1990. And Lowe also noted that underlying inflation of 6.9% “was higher than expected”.

“Global factors explain much of this high inflation,” he said. “But strong domestic demand is adding to the inflationary pressures in a number of areas of the economy.”

The RBA forecasts CPI inflation will continue to ease this year to 4.75%. By mid-2025, the central bank expects inflation will be hovering at “around 3%”, right at the top of its target range.

As for the broader economy, Lowe said the board expects GDP growth will slow to around 1.5% during 2023 and 2024.

The labour market remains an area of concern in the bank’s inflation battle. The unemployment rate of 3.5% is the lowest since 1974.

“Given the importance of avoiding a prices-wages spiral, the Board will continue to pay close attention to both the evolution of labour costs and the price-setting behaviour of firms in the period ahead,” Lowe said.

What’s ahead for ASX 200 investors?

ASX 200 investors should expect at least one more interest rate hike to come. Perhaps more.

Lowe reiterated the RBA’s priority of bringing inflation back to its 2% to 3% target range.

According to Lowe:

High inflation makes life difficult for people and damages the functioning of the economy. And if high inflation were to become entrenched in people’s expectations, it would be very costly to reduce later.

He said the RBA would seek to keep “the economy on an even keel, but the path to achieving a soft landing remains a narrow one”.

Also likely pressuring ASX 200 shares today was Lowe’s reminder that more rate hikes are likely on the horizon:

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

As in previous statements, he added that the board “will do what is necessary to achieve that”.

The post ASX 200 falls following ninth consecutive RBA interest rate hike appeared first on The Motley Fool Australia.

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More reading

• Why ARB, Centuria Capital, Nick Scali, and Tabcorp shares are dropping
• ASX share prices have rallied too hard to start 2023 says UBS equity strategist as one US analyst says don’t even think about turning bullish until 2024
• Nuix share price rockets 43% following court win
• Does the Coles dividend forecast make it a great buy for income?
• Why Beach Energy, Medibank, Pushpay, and Whitehaven Coal shares are rising

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

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1) In the US, the soft landing versus recession debate continues, even as traders expect the terminal fed-funds interest rate to now peak at between 5% and 5.25%.

Goldman slashes US recession risk odds to 25 per cent, according to the AFR. 

“We have cut our subjective probability that the US economy will enter a recession in the next 12 months from 35 per cent to 25 per cent, less than half the 65 per cent consensus estimate in the latest Wall Street Journal survey,” Goldman’s chief economist Jan Hatzius said.

Labour markets remain tight both in the US and here in Australia, almost the exact opposite conditions that traditionally signal an imminent recession. Combined with a slowdown in the rate of inflation, and the goldilocks soft landing scenario is well and truly in play.

Last week, US federal reserve Chairman Jerome Powell said he continues to think there’s a path to getting inflation back down to 2% without a really significant economic decline or a significant increase in unemployment.

No wonder equity markets have had a strong start to 2023. The S&P/ASX 200 Index (ASX: XJO) is within a whisker of its all time highs, and up over 7% so far this year. The S&P/ASX All Technology Index (ASX: XTX) is an even more impressive 12.7%, with Block Inc (ASX: SQ2) shares up over 30% since the start of the year.

2) Doomsayers are never far from the headlines, especially in the US, as epitomised by this headline on MarketWatch…

“Look for stocks to lose 30% from here, says strategist David Rosenberg. And don’t even think about turning bullish until 2024.”

The former chief North American economist at Merrill Lynch said the US recession is just starting, and that investors can expect to endure more uncertainty leading up to the time when the Federal Reserve first pauses its current run of interest rate hikes and then begins to cut.

Excerpt:

Fortunately for investors, the Fed’s pause and perhaps even cuts will come in 2023, Rosenberg predicts. Unfortunately, he added, the S&P 500 Index (SP: .INX) could drop 30% from its current level before that happens. Said Rosenberg: “You’re left with the S&P 500 bottoming out somewhere close to 2,900.”

At that point, Rosenberg added, stocks will look attractive again. But that’s a story for 2024.

I’d be taking the other side of that “30% drop” bet, not because I’m incredibly bullish, but because such falls are very rare, and more so coming after a year where the S&P 500 index sank almost 20%, with the tech heavy Nasdaq Composite Index (NASDAQ: .IXIC) tumbling 33%.

3) Here in Australia, according to the AFR, UBS equity strategist Richard Schellbach says share prices have rallied too hard, with the investment bank believing they’re factoring in too much optimism.

“The reality is over the next six months we have the laggard impact of higher interest rates coming through, and fixed-rate mortgages getting priced higher and consumers starting to run down their savings significantly.

“Some of these profit results, which we think will be okay, are likely to see a muted share price reaction because prices have run up so hard, they’ve already factored in that earnings story.”

It’s not “the market is going to fall 30% rhetoric,” but suggesting investors don’t go all-on just because the ASX 200 has had a strong start to 2023. There’s a long way to go… and that’s just to get us to the end of February and this earnings season. 

4) Speaking of earnings season, growth is going to be hard to come by for a lot of companies as year on year comparisons are still impacted by abnormal COVID trading conditions in 2022.

Yesterday, Nick Scali Limited (ASX: NCK) reported a stunning 70% increase in first half profit on the back of record deliveries due to the large outstanding order bank at 30 June 2022. 

Yet despite January being the strongest trading month for the furniture retailer, and being better than the company’s expectations, Nick Scali brand written wales orders were down 12% from January 2022.

The Nick Scali share price sank 13% yesterday, and is down another 3.9% today to $10.38. Despite being one of the highest quality retailers on the ASX, Nick Scali shares are now down 35% from its November 2021 high. 

Stock picking can be tough.

Based on consensus estimates, Nick Scali shares trade on a forecast FY24 earnings multiple of 11.5 times and fully franked dividend yield of 6.5%. The shares look good value on those numbers, but the coming “mortgage cliff” is the great unknown, with Nick Scali themselves saying “at this point it is difficult to provide further guidance” for the rest of this financial year.

5) As widely expected, the Reserve Bank of Australia have hiked interest rates by another 25 basis points, bringing the cash rate to 3.35%.

It’s more good news for savers, with at-call savings accounts paying around 4% interest rates widely available. If you are not making your cash work hard for you, it’s time to shop around for a better interest rate on your savings. 

While higher interest rates naturally slows the economy – and is soon to inflict some serious pain on mortgage-holders – the good news is that with each RBA monthly meeting, we’re closer to peak interest rates for this cycle.

No longer will interest rates and inflation be the driver of share prices – 2023 will be all about earnings. 

Leading fund manager QVG Capital says it believes the job to be done in 2023 “is to own the relatively small number of companies run by motivated insiders that produce growing free cash flows.”
The fund’s top holdings include Hansen Technologies Limited (ASX: HSN), Johns Lyng Group Ltd (ASX: JLG) and Lovisa Holdings Ltd (ASX: LOV). 

The post ASX share prices have rallied too hard to start 2023 says UBS equity strategist as one US analyst says don’t even think about turning bullish until 2024 appeared first on The Motley Fool Australia.

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More reading

• Why ARB, Centuria Capital, Nick Scali, and Tabcorp shares are dropping
• Why Brainchip, Core Lithium, IAG, and Nick Scali shares are dropping today
• Nick Scali share price plummets despite 70% profit boost
• Top ASX dividend shares to buy in February 2023
• ASX income stocks: A once-in-a-decade chance to get rich?

Motley Fool contributor Bruce Jackson has positions in Block. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Block, Hansen Technologies, Johns Lyng Group, and Lovisa. The Motley Fool Australia has positions in and has recommended Block. 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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The Nuix Ltd (ASX: NXL) share price is on fire on Tuesday afternoon after emerging from a trading halt.

The investigative analytics and intelligence software provider’s shares were up as much as 43% to $1.29 at one stage.

The Nuix share price has since pulled back a touch but currently remains up 31% to $1.19.

Why is the Nuix share price rocketing?

As we covered here earlier today, Nuix put its shares into a trading halt this morning while it awaited a ruling in the Federal Court of Australia. This was in relation to a claim made by its former CEO, Edward Sheehy.

Mr Sheehy filed proceedings in the Federal Court in October 2020 claiming that he validly exercised options in January 2020 that would have entitled him to be issued with approximately 22.6 million shares.

And with the former CEO insisting that he would have sold these shares long before the Nuix share price had collapsed, he was claiming significant damages.

All in all, Sheehy was seeking an award of damages of up to $183 million plus interest, which was the equivalent of almost two-thirds of Nuix’s market capitalisation prior to today.

As you might have guessed from the Nuix share price reaction, the Federal Court has ruled in the company’s favour and dismissed Sheehy’s claims.

In a brief statement this afternoon, Nuix commented:

[T]he Federal Court of Australia has delivered its judgment in relation to the proceedings brought by Mr Edward Sheehy against Nuix.

The Federal Court this morning dismissed Mr Sheehy’s claims. There is no requirement for Nuix to amend its options register and Mr Sheehy is not entitled to any monetary compensation from the company.

And while Mr Sheehy will have a period of time to appeal the decision, it seems unlikely that this will be overturned if appealed. Particularly given that a previous claim for the same matter was dismissed in the supreme court in 2019.

The post Nuix share price rockets 43% following court win appeared first on The Motley Fool Australia.

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More reading

• Why is everyone talking about Nuix shares today?

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

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