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The ASX share market is having a fairly decent day of trading so far this Wednesday. At present, the All Ords has gained a robust 0.43%, putting it back over 7,700 points. But one ASX lithium stock isn’t joining in on the party.

The Winsome Resources Ltd (ASX: WR1) share price closed at $2.33 yesterday. And that’s where it’s going to stay, at least for a while.

That’s because, this morning, Winsome released an ASX announcement to the markets. This declared that the company’s shares would enter a trading halt, effective from today.

Why are Winsome Resources shares in a trading halt?

Winsome told investors that, “the trading halt is requested pending release of details of a capital raising“. It also stated that “the trading halt will remain in place until the earlier of the release of the announcement to the market or commencement of trading on Friday 3 February 2023″.

So it looks as though Winsome shares will be off the market until at least tomorrow, and probably until Friday.

Winsome hasn’t yet provided any details of this capital raising. But in an investor presentation released yesterday, the company outlined its plans for further acquisitions, as well as an intention to further exploration activity, particularly at its Decelles site, in Quebec, Canada.

It’s been a busy few months for Winsome Resources. It was only back in November last year that the company conducted a Canadian capital raising program, which netted Winsome just under $7 million at $1.67 per share.

In December, Winsome also announced that it has completed a secondary share listing on the ‘over-the-counter (OTC) US markets. This was done to provide “ease of trading for US and Canadian investors”.

So we’ll have to wait for Winsome shares to resume trading to find out how investors will react to this latest capital raising.

In the meantime, the last Winsome Resources share price gives this ASX lithium stock a market capitalisation of $363.39 million.

The post Why is ASX lithium stock Winsome Resources on ice? appeared first on The Motley Fool Australia.

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More reading

• Why BHP, Core Lithium, Santos, and Winsome shares are charging higher
• Why ASX lithium share Winsome Resources is surging 22% today

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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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to record a solid gain. At the time of writing, the benchmark index is up 0.4% to 7,508.7 points.

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

Argosy Minerals Limited (ASX: AGY)

The Argosy Minerals share price is up 5% to 66.7 cents. This morning, the lithium developer provided an update on its Rincon project in Argentina. Argosy Minerals revealed that it remains on track to start steady-state production by the end of the second quarter of calendar year 2023.

Credit Corp Group Limited (ASX: CCP)

The Credit Corp share price is up 2.5% to $22.20. This follows the release of the debt collection company’s half year results. Credit Corp reported an 8% increase in revenue to $220.5 million but a 30% decline in profit to $31.8 million. The market appears to have been expecting even worse for its profits.

Flight Centre Travel Group Ltd (ASX: FLT)

The Flight Centre share price is up 9% to $17.27. Investors have responded positively to the travel agent’s plan to acquire United Kingdom-based luxury travel brand Scott Dunn for $211 million. To support the acquisition, Flight Centre has raised $180 million from institutional investors at a 7.8% discount of $14.60 per new share. Flight Centre also released a solid trading update yesterday.

Mesoblast Ltd (ASX: MSB)

The Mesoblast share price is up over 11% to $1.06. This morning, the biotech company revealed that it has resubmitted its Biologics License Application (BLA) to the U.S. Food and Drug Administration (FDA) for the approval of remestemcel-L in the treatment of children with steroid-refractory acute graft versus host disease (SR-aGVHD). The resubmission contains substantial new information as required by the FDA.

The post Why Argosy Minerals, Credit Corp, Flight Centre, and Mesoblast shares are racing higher appeared first on The Motley Fool Australia.

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More reading

• Guess which ASX 200 share dropped then popped on a 30% profit dive
• ASX 300 lithium share Argosy Minerals soars 6% on imminent production
• Guess which ASX All Ords biotech share is rocketing 13% on FDA news
• Flight Centre share price rockets 15% as ASX 200 travel stock resumes trading
• Flight Centre share price frozen amid $211m ‘luxury’ acquisition

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 recommended Flight Centre Travel 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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1) US markets closed out January with solid gains as, according to Bloomberg, “investors cheered signs of labour costs easing and inflation cooling.”

“Data on Tuesday showed US housing prices continued to cool, while another report highlighted consumer confidence unexpectedly falling. Hanging over everything is Wednesday’s Fed decision, with the central bank widely expected to raise rates by a quarter percentage point.”

Marketwatch reported the Nasdaq Composite Index (NASDAQ: .IXIC) cemented its best January performance since it notched a 12.2% gain in 2001, while the S&P 500 Index (SP: .INX) booked its best start to a year since 2019, according to Dow Jones Market Data.

2) Here in Australia, the S&P/ASX 200 Index (ASX: XJO) ended January 6.2% higher, with the AFR reporting the one month rally in the stock market “entirely recouped last year’s losses.”

It’s a salient reminder that if you miss the best few days or months – in a futile attempt to get in and out of the market with perfect timing – your returns are likely to lag that of the market.

Perhaps not surprisingly, two of the best performing ASX 200 stocks in January were lithium stocks, with the Sayona Mining Ltd (ASX: SYA) share price gaining 37% and the Pilbara Minerals Ltd (ASX: PLS) share price jumping 27% higher.

To my detriment, I’ve let the whole lithium stock boom pass me by, just as I steered clear of the whole cryptocurrency and NFT craze. Fear of missing out (FOMO) is not an investing strategy. I don’t have the skills or frankly the interest in working out whether a lithium stock – and the lithium sector – will be a good investment or not.

3) In the AFR’s Chanticleer column titled “Why bad news is good news for lithium stocks”, author James Thomson quotes Macquarie as saying…

“Supply response will lag demand, resulting in a market deficit and elevated lithium prices. In addition, we believe the capex upgrades could also shift the cost curve upwards, translating to higher lithium prices in the long term.”

Rising electric vehicle (EV) production is fuelling demand for lithium, and this is translating into the surging prices of lithium stocks, something at Thomson says “speaks in part to a return to the global burst of speculative bullishness, and in part to new data suggesting lithium demand over the next decade could be even stronger than expected.”

A lot can change in a decade. History says there will be some big winners in the lithium space, and some will flame out. Good luck sorting the wheat from the chaff.

4) As ever, it takes two or more participants to make a market.

The bulls – buoyed by the great January – will point to inflation as having peaked, interest rates close to a peak, and corporate profits holding up. A soft economic landing could – somewhat amazingly given all we’ve been through since COVID first struck in early 2020 – see the stock market hit new highs this year.

The bears will point to inflation being a tough nut to crack, meaning interest rates will rise higher than current expectations, which in turn will see unemployment rise causing an inevitable recession. In effect, a hard landing. 

Good luck picking the winner. As an eternal optimist, I’m hoping the global economy will keep muddling through as it resets from the massive external shocks of COVID, Ukraine war, inflation and one of the sharpest pace of interest rate hikes on record. If markets can average a gain of 7 to 10% per annum over the next five years, I’ll be content. 

On the other hand, noted bear Jeremy Grantham continues to warn investors of a potential 50% decline in the stock market this year as he believes valuations are still too high, according to a report on Markets Insider. 

As an asset manager, billionaire Grantham can’t sit in cash waiting for the crash. Nor can he short the whole market, for the timing of any potential stock market crash is unknown. 

As for what Grantham is backing, Markets Insider quotes from his 2023 outlook letter…

“Despite the generally unattractive nature of the U.S. equity market and the extremely tricky global economy, there are still a surprising number of reasonable investment opportunities even if they are not sensational… emerging markets are reasonably priced and the value sector of emerging is cheap.” 

Australia may not be an emerging market, but we aren’t the US equity market. Writing on Livewire Markets, AMP Chief Economist Shane Oliver gives seven reasons why Australian shares are likely to outperform global shares over the medium term. Included are a new super cycle in commodities, population growth, higher dividends and a thawing in the China relationship.

Back to Grantham, who also says…

“For those with a longer horizon than average, say 5 years and above, I believe stocks related to addressing the problems of climate change and the increasing pressure on many raw materials have a substantial advantage over the rest of the economy as the world’s governments and corporations begin to accept the urgency of these problems.” 

Super cycle in commodities.

Climate change.

China.

Lithium stocks, anyone?

The post Jeremy Grantham just warned shares could crash 50%, but did he also suggest lithium stocks may have “a substantial advantage” over the long-term? appeared first on The Motley Fool Australia.

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More reading

• ASX 200 lithium share Sayona Mining leaps on strong quarterly
• The Pilbara Minerals share price has rocketed! Have I left it too late to buy?
• These were the best performing ASX 200 shares in January
• Why was the Lynas share price hit so hard on Tuesday?
• Here are the 3 most heavily traded ASX 200 shares on Tuesday

Motley Fool contributor Bruce Jackson 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) is back on form on Wednesday. In afternoon trade, the benchmark index is up 0.4% to 7,509.2 points.

Four ASX shares that have failed to follow the market higher today are listed below. Here’s why they are dropping:

Appen Ltd (ASX: APX)

The Appen share price is down 2.5% to $2.49. This is despite there being no news out of the artificial intelligence data services company. However, it is worth noting that the shares of Snapchat owner, Snap Inc, crashed on Wall Street in after-hours trade following a poor update. In its earnings call, CEO Evan Spiegel commented that digital advertising demand hasn’t improved. This could mean less demand for Appen’s ad relevance services.

Gold Road Resources Ltd (ASX: GOR)

The Gold Road share price is down 2% to $1.61. This may have been driven by a broker note out of Ord Minnett. Its analysts were disappointed with the gold miner’s quarterly update and have downgraded its shares to an accumulate rating with a trimmed price target of $1.80.

Healius Ltd (ASX: HLS)

The Healius share price is down 2% to $3.14. The catalyst for this may have been a note out of Morgans. While the broker remains positive on the healthcare company, it has removed it from its best ideas list. Morgans highlights that the “timing remains uncertain as to when volumes and revenue revert to long-term trends.”

Pinnacle Investment Management Group Ltd (ASX: PNI)

The Pinnacle share price is down over 4% to $9.95. Investors have been selling this fund manager’s shares after analysts at UBS downgraded them to a sell rating from neutral. The broker has also cut its price target on the company’s shares to $8.50. UBS is expecting Pinnacle to disappoint this earnings season.

The post Why Appen, Gold Road, Healius, and Pinnacle shares are dropping today appeared first on The Motley Fool Australia.

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More reading

• Top ASX shares to buy in February 2023
• How I’d invest $20,000 in ASX shares in 2023
• Why is the Block share price surging 6% on Tuesday?
• ASX income stocks: A once-in-a-decade chance to get rich?
• Waiting for ASX shares to bottom? Why you could miss out on a stock market rally

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 Appen and Pinnacle Investment Management Group. The Motley Fool Australia has positions in and has recommended Pinnacle Investment Management 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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Qantas Airways Limited (ASX: QAN) shares are up 1.1% to $6.41 at the time of writing.

The S&P/ASX 200 Index (ASX: XJO) stalwart is moving with the market today. The benchmark is also well into the green, up 0.61%.

Some of today’s momentum may relate to exciting news out of fellow ASX 200 travel share Flight Centre Travel Group Ltd (ASX: FLT).

Flight Centre shares were up 15% in earlier trading. The bump relates to yesterday’s news of a $180 million placement to acquire United Kingdom-based luxury travel brand, Scott Dunn.

Should you buy Qantas shares ahead of the next report?

So, earnings season is upon us, and Qantas is due to announce its FY23 half-year results on 23 February.

The last time Qantas gave us an update was in November last year. It upgraded its earnings guidance for the second time in just over a month due to continued strength in travel demand.

The airline said it was on course to deliver a stronger-than-expected profit for FY23. This pleased investors, who bidded up Qantas shares by 6% on the day.

In terms of numbers, management estimated an underlying profit before tax of between $1.35 billion and $1.45 billion for the half. That was $150 million above the guidance range it gave in early October.

Qantas noted that limits on international capacity were driving domestic leisure demand.

All of this is pretty impressive, particularly given Qantas expects a record fuel bill for FY23. It estimates fuel costs of about $5 billion due to elevated oil prices.

Qantas said it also expected net debt to fall to between $2.3 billion to $2.5 billion by the end of December. This estimate was about $900 million better than its guidance just one month before.

So, if Qantas manages to achieve all of this or better, it’s likely to get a share price boost on 23 February.

What do the brokers think?

Well, it’s hard to find a broker not backing Qantas shares right now.

As my Fool colleague Tristan reports, Commsec has 12 buy ratings, two hold ratings, and no sell ratings on the travel stock. And that’s despite the Qantas share price hitting a post-COVID high of $6.69 last month.

Morgans is bullish on the Qantas share price. It ranks the company as its top travel stock under coverage “given it has the most near-term earnings momentum”.

The broker has an add rating and an $8.50 price target on Qantas shares.

In a new note, Morgans says:

Looking across travel companies globally, airlines are now in the sweet spot given demand is massively exceeding supply.

QAN is trading at a material discount compared to pre-COVID multiples, despite having structurally higher earnings, a much stronger balance sheet, a better domestic market position, a higher returning International business and more diversification (stronger Loyalty/Freight earnings).

The strong pent-up demand to travel post-COVID should result in a healthy demand environment for some time, underpinning further EBITDA growth over FY24/25.

Goldman Sachs has a conviction buy on Qantas shares. The broker reckons they could go as high as $8.20 within 12 months.

Goldman said: “We believe the stock is not appropriately pricing QAN’s improved earnings capacity.”

UBS also has a buy rating on Qantas shares with a price target of $7.60.

Will Qantas pay a dividend in 2023?

Goldman Sachs tips that Qantas might pay a 10-cent per share dividend in FY23 and 20 cents in FY24.

Morgans says Qantas is more likely to conduct share buybacks than pay dividends due to a lack of franking credits. It forecasts a $400 million on-market buyback to be announced with the half-year result.

Morgans doesn’t foresee any dividends from Qantas shares as far out as FY25.

The post Should I buy Qantas shares before the company’s ASX earnings update? appeared first on The Motley Fool Australia.

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More reading

• Guess which ASX 200 share dropped then popped on a 30% profit dive
• Up 30% in 4 months! ASX 200 gold share Newcrest is still trading cheap: fundie
• Morgans names 2 of the best ASX 200 shares to buy in February
• ASX 200 lithium share Sayona Mining leaps on strong quarterly
• The Pilbara Minerals share price has rocketed! Have I left it too late to buy?

Motley Fool contributor Bronwyn Allen has positions in Qantas Airways. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. 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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Woodside Energy Group Ltd (ASX: WDS) shares are in the headlines.

This comes as the S&P/ASX 200 Index (ASX: XJO) oil and gas company’s lengthy legal stoush with unions over collective bargaining rights looks to have come to an end.

What’s happening with the company’s workforce?

The Maritime Union of Australia and the Australian Workers Union, together known as the Offshore Alliance, have been battling Woodside’s management to secure collective bargaining rights for Woodside’s employees at its offshore gas platforms.

Over the past seven months, Woodside has filed nine legal petitions against the push for collective bargaining. Those appeals included arguing that the unions had fraudulently collected signatures from some members to support the bargaining rights.

But those appeals look to have been for naught. As The Australian Financial Review reports, the Fair Work Commission ruled that the Offshore Alliance had legitimately secured the majority support of production workers.

That means Woodside will need to undertake collective bargaining at its North Rankin, Goodwyn Alpha, and Angel offshore for the first time since 1994.

Over the past 30 years, the company has preferred to directly engage with workers on an individual contract basis.

However, deputy president of the Fair Work Commission Melanie Binet dismissed that penchant.

According to Binet (quoted by the AFR):

The fact that Woodside prefer to negotiate individually with its workforce does not weigh against the granting of the determination. In fact, this is the precise reason why the statutory power to make the determination exists, to compel employers who would prefer not to bargain.

“Woodside tried every trick their lawyers could think of to frustrate their employees’ desire to bargain for a collective agreement and in the end they only delayed the inevitable,” Daniel Walton, spokesman of the Offshore Alliance said.

Woodside is reviewing this week’s decision. A spokeswoman commented:

Woodside highly values our people. We have directly engaged with our workforce for decades, and continue to do so on an ongoing basis to ensure we have the right settings in place to support the best outcomes for our teams and for the company.

The company estimated its fly-in, fly-out (FIFO) workers already earn more than $200,000 per year.

How have Woodside shares been tracking longer-term?

Down just over 1% in intraday trading today, Woodside shares, as pictured below, have leapt 43% over the past 12 months.

The post Looking to buy Woodside shares? You might want to read this appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Wednesday
• Worried about where ASX 200 oil stocks are heading? Read this
• Sick of the grind? Here’s how I’d aim to replace my wage with dividend income in 2023
• Investing in ASX 200 energy shares? Here’s why the oil price may already have hit its 2023 lows
• Is now the time to load up on Woodside shares?

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

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The Bapcor Ltd (ASX: BAP) share price may be a strong performer in 2023 because of the economic conditions. I think the S&P/ASX 200 Index (ASX: XJO) stock could be an underrated opportunity.

For readers who don’t know, Bapcor is an auto parts business with a number of different businesses including: Burson Auto Parts, Precision Automotive Equipment, BNT (NZ), Truckline (heavy commercial vehicles) and WANO (light commercial vehicles), Autobarn, Autopro, Midas, ABS, Shock Shop, and Battery Town.

It’s diversified across the automotive industry.

The Bapcor share price has dropped close to 10% over the past year. And there’s good reason to think that the company can outperform the ASX 200 in the coming months.

A downturn may not be bad news

Bapcor is a major seller of auto parts. It’s possible that a downturn will lead to a lower level of purchases of new cars.

But people still need to drive, and vehicles can still break down. Rather than buying a new car, more people may choose to go with fixing the vehicle with a new part. A downturn could mean stronger demand for many Bapcor businesses.

When the business gave an investor presentation in November 2022, it said that it had seen ongoing positive revenue growth despite lower market growth amid cost-of-living pressures in the retail sector and the New Zealand economy.

However, the company did say that it’s experiencing a temporary profit margin compression because its price adjustments lag the cost inflation that it’s seeing.

The current profit forecast on Commsec suggests the ASX 200 stock’s earnings per share (EPS) will be flat in FY23, at 38.7 cents. Then, it could grow EPS by 12% to 43.5 cents in FY24 and grow again by 19% to 51.7 cents in FY25.

Those projections would put the Bapcor share price at under 17 times FY23’s estimated earnings and at 12 times FY25’s estimated earnings.

Profit improvement potential

Bapcor has a program called ‘better than before’ where it aims to increase its net earnings before interest and tax (EBIT) by at least $100 million, enhance the return on invested capital (ROIC), and improve the company’s organisational health.

It’s going to achieve this in a variety of ways, including increasing internalisation of spending, supply chain optimisation, increasing the proportion of private label sales in certain categories, and consolidating supplier spending across the business for better pricing and rebates.

If the business is able to increase its presence in Asia, it could unlock a good source of new earnings in a large population region.

Profit growth could also enable the dividend to keep growing. It has increased its dividend every year since FY15. By FY25, it could be paying an annual dividend per share of 29.3 cents – this would translate into a grossed-up dividend yield of 6.5%.

Foolish takeaway

I think the ASX 200 stock is on track to grow its earnings in the coming years, which I think is promising for the Bapcor share price to rise in the future.

I’m not sure how the business will perform in the distant future when there are a substantial amount of electric vehicles on the road but in the next few years, it could still do well.

The post Why is nobody talking about this gem of an ASX 200 stock? appeared first on The Motley Fool Australia.

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More reading

• Still shopping, share price not dropping: Lovisa shines among 3 best ASX 200 retail shares of 2022
• 3 ASX 200 automotive shares worth buying despite headwinds: Citi

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

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It’s been a relatively pleasant day of trading on the ASX boards so far this Wednesday. At the time of writing, the All Ordinaries Index (ASX: XAO) has gained 0.45%, putting the index at just over 7,720 points. But let’s talk about the galloping Arafura Rare Earths Ltd (ASX: ARU) share price.

Arafura shares are on fire today. The rare earths producer is currently rocketing a stunning 11.82% to 62 cents per share — a new 52-week high for Arafura.

But it’s also the highest the company’s shares have traded at in not three, not five, not ten, but eleven-and-a-half years. Yes, the last time Arafura shares traded in the 60-cent range was in late 2011:

So what’s behind the new 11-year high that Arafura investors are enjoying today?

Why is the Arafura share price at an 11-year high?

Well, most of the heavy lifting was done in 2022 – a year that saw Arafura shares rise by a whopping 121%.

As my Fool colleague Monica reported last month, this was due to a few factors, including rising demand for rare earths, positive developments at the company’s Nolans Project, long-term supply deals with major companies like Hyundai, and love from ASX brokers.

But let’s talk about what Arafura shares are doing today. It’s not often that an ASX share rockets by more than 10%.

Well, unfortunately, it’s not entirely clear what is driving Arafura shares so convincingly higher. There hasn’t been any major news from the company itself today.

But what we do know is that Arafura’s peers in the materials sector are also having a cracker of a day. Take the Lynas Rare Earths Ltd (ASX: LYC) share price. It’s currently up by a robust 4.37% at $9.80 a share. Fellow minerals explorer Australian Strategic Materials Ltd (ASX: ASM) is doing even better than Arafura, currently up an eye-catching 12.53%.

Lithium shares were also on fire today, with Pilbara Minerals Ltd (ASX: PLS) gaining around 3% this monring, while Sayona Mining Ltd (ASX: SYA) was up close to 4%.

So it looks as though investors are flooding into these sorts of shares en masse today. Given there is no other news out from Arafura, perhaps we can conclude that the company is just benefitting from a flood of optimism and goodwill for ASX materials shares this Wednesday.

At the current Arafura Rare Earths share price, this ASX materials share has a market capitalisation of $1.31 billion.

The post Why is the Arafura share price surging 12% to an 11-year high? appeared first on The Motley Fool Australia.

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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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CSL Limited (ASX: CSL) shares have been positive performers over the last 12 months.

As you can see on the chart below, the biotherapeutics giant’s shares are up 15% since this time last year.

This has been driven by improving plasma collection conditions, which is expected to be a big boost to its earnings in the coming years.

Should you buy CSL shares before it reports its earnings?

While buying a share before it reports earnings carries risks, that hasn’t stopped Morgans from adding CSL’s shares to its best ideas list this morning.

According to the note, the broker has put it on its list with an add rating and $312.20 price target.

Morgans best ideas list is home to the ASX shares that the broker thinks offer the highest risk-adjusted returns over a 12-month timeframe supported by a higher-than-average level of confidence. They are also its most preferred sector exposures.

The note reveals that CSL was added to the list this month in the place of Healius Ltd (ASX: HLS). Morgans likes CSL due to its belief that 2023 could be the “break out” year for the company following a tough period during the pandemic. The broker explained:

A key portfolio holding and key sector pick, we believe CSL is poised to break-out this year, a COVID exit trade, offering double-digit recovery in earnings growth as plasma collections increase, new products get approved and influenza vaccine uptake increases around ongoing concerns about respiratory viruses, with shares offering good value trading around its long term forward multiple of 31.5x

Morgans isn’t alone with its positive view on CSL’s shares. This morning, Morgan Stanley has reiterated its overweight rating and notably higher price target of $354.00.

The post Should I buy CSL shares before this month’s earnings update? appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in CSL. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL. 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 share price of S&P/ASX 200 Index (ASX: XJO) consumer debt business Credit Corp Group Limited (ASX: CCP) plummeted this morning after the company revealed a major profit hit.

The Credit Corp share price fell 2.6% on open to $21.09 before plunging further to its intraday low of $19.64 – marking a 10.2% dive.

Interestingly, it has since bounced back to trade at $21.75 at the time of writing, 0.51% higher than its previous close.

ASX 200 financials share wobbles as profits fall 30%  

Here are the key takeaways from Credit Corp’s earnings for the first half:

• Post-tax profits tumbled 30% on the prior comparable period (pcp) to $31.8 million
• Revenue lifted 8% to $220.5 million
• Earnings per share (EPS) fell 31% to 46.9 cents
• Customer loan book grew 32% to $331 million
• Dividend slashed by 40% to 23 cents per share

While a lot of its first-half earnings look dire, the company’s consumer lending segment remains on track to post record full-year earnings.

Its profits tumbled due to up-front loss provisioning and marketing expense from rapid loan book growth; costs from increased United States resourcing; and run-off in the core Australia/New Zealand debt buying segment.  

What else happened last half?

The first half was a period of growth for the ASX 200 company.

Its loan book growth was born from its Wallet Wizard unsecured cash loan product. Strong demand brought a record $201 million of lending last half while the company maintained credit standards and rationed the volume of longer-duration auto loans.

What did management say?

CEO of Credit Corp Thomas Beregi commented on the news driving the ASX 200 company’s share price today, saying:

Wallet Wizard credit settings remain conservative and short durations coupled with relatively small loan sizes will contain risk should economic conditions deteriorate.

US charge-off volumes are growing and increased resourcing will enable Credit Corp to service recent and future purchases, growing collections and earnings over the medium term.

What’s next?

The remainder of financial year 2023 looks like it could be better for Credit Corp. The company expects an earnings recovery in the second half, mainly due to its consumer lending segment.

Its full-year profit is tipped to come in between $90 million and $97 million while EPS is forecast to end up between $1.33 and $1.43.

It’s also bolstered its purchased debt ledger acquisition guidance to between $290 million and $295 million and its net lending volumes guidance to between $140 million and $150 million.

Credit Corp share price outperforms ASX 200 in 2023

Today’s tumble included, the Credit Corp share price has posted a notable 14% gain so far this year. That’s compared to the ASX 200’s 8% rise.

Looking further back, however, the stock has fallen 40% over the last 12 months while the index has lifted 7%.

The post Guess which ASX 200 share dropped then popped on a 30% profit dive appeared first on The Motley Fool Australia.

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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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