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The All Ordinaries Index (ASX: XAO) is tumbling on Friday, but not all shares that call the index home are suffering.

Right now, the All Ordinaries is down 0.61% following a rough night on Wall Street.

Major New York indices tumbled overnight amid concerns about further rate hikes. The Dow Jones Industrial Average Index (DJX: .DJI) fell 2.25%, the S&P 500 Index (SP: .INX) plunged 2.5%, and the Nasdaq Composite Index (NASDAQ: .IXIC) plummeted 3.2%.  

Fortunately for ASX fans, there are plenty of pockets of green on the Aussie bourse today.

We’ve rounded up three that are positively outperforming – beating the index by as much as 4.6%.

3 ASX All Ordinaries shares taking off today

The All Ordinaries is tumbling today, but its downturn hasn’t upset the Catapult Group International Ltd (ASX: CAT) share price.

The sports analytics technology company’s stock is leaping 2.7% to trade at 76 cents at the time of writing.

It’s the second day in a row the stock has posted a notable gain. It lifted 4.2% in Thursday’s session. There’s been no news from the company since November.

Meanwhile, the 4.03% gain posted by the Aurizon Holdings Ltd (ASX: AZJ) share price is easier to explain. The All Ordinaries company announced it’s found a buyer for its East Cost Rail business – and it’s expecting to walk away with $425 million cash.

The sale of the business was a condition imposed by the competition watchdog on Aurizon’s acquisition of One Rail Australia earlier this year.

Right now, the Aurizon share price is $3.87.

Finally, the share price of All Ordinaries mineral developer BCI Minerals Ltd (ASX: BCI) is outperforming the broader market, gaining 1.92% to trade at 26.5 cents.

Like Catapult before it, there’s been no news from the stock to explain its Friday rise.

However, it’s worth mentioning the minerals share has been relatively volatile lately. It gained on Monday and Wednesday this week and posted falls on Tuesday and Thursday.

The post 3 ASX All Ordinaries shares smashing the market on Friday appeared first on The Motley Fool Australia.

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More reading

• Why Aurizon, Norwest, Rio Tinto, and Strike Energy shares are rising today
• Here are the top 10 ASX 200 shares today
• 3 ASX All Ords shares that had a cracking run on Friday

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 positions in and has recommended Catapult Group International. The Motley Fool Australia has positions in and has recommended Catapult Group International. The Motley Fool Australia has recommended Aurizon. 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 end the week in the red. At the time of writing, the benchmark index is down 0.5% to 7,168.3 points.

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

Bank of Queensland Ltd (ASX: BOQ)

The Bank of Queensland share price is down 2% to $6.79. This appears to have been driven by a broker note out of Citi. According to the note, the broker has downgraded the regional bank’s shares to a neutral rating with a reduced price target of $7.30. Citi believes the bank’s profit growth will be challenged in the near term.

Block Inc (ASX: SQ2)

The Block share price is down 5% to $97.69. Investors have been selling this payments company’s shares after a poor showing from its US listed shares overnight. Block’s shares on the NYSE sank 7.5% on Thursday night after the tech sector was sold off amid concerns over rising interest rates.

Fletcher Building Limited (ASX: FBU)

The Fletcher Building share price is down almost 3% to $4.59. This morning, this building materials company released an update on the New Zealand International Convention Centre and Hobson Street Hotel project (NZICC). According to the release, despite good progress on site, the complexity of the rebuild means costs are now expected to exceed insurance proceeds on NZICC. This has resulted in an additional NZ$150 million provision for costs to complete the project.

Newcrest Mining Ltd (ASX: NCM)

The Newcrest share price is down 2% to $20.42. Investors have been selling Newcrest and other gold miners today after interest rate expectations climbed. This put pressure on the gold price during overnight trade and has led to the S&P/ASX All Ordinaries Gold index falling 2.4% this afternoon.

The post Why Bank of Queensland, Block, Fletcher Building, and Newcrest are dropping today appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Friday
• 3 ASX 200 value shares I think could soar in 2023
• Here are the top 10 ASX 200 shares today
• Why Arafura, Block, Leo Lithium, and St Barbara shares are storming higher
• Why Bendigo Bank, Block, Megaport, and Starpharma shares are rising 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 positions in and has recommended Block. The Motley Fool Australia has positions in and has recommended Block. 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 followed Wall Street’s lead and is on course to end the week in the red. At the time of writing, the benchmark index is down 0.55% to 7,166.1 points.

Four ASX shares that have not let that hold them back today are listed below. Here’s why they are rising:

Aurizon Holdings Ltd (ASX: AZJ)

The Aurizon share price is up 4% to $3.87. This morning this rail freight operator announced the sale of the East Coast Rail (ECR) business. Aurizon expects to receive cash proceeds of approximately $425 million, which represents the equity value of ECR. The purchaser, Magnetic Rail Group, will also assume ECR’s existing debt facilities. This divestment was required to gain approval for the acquisition of One Rail Australia.

Norwest Energy NL (ASX: NWE)

The Norwest Energy share price is up 33% to 6 cents. Investors have been buying this energy explorer’s shares after Mineral Resources Ltd (ASX: MIN) announced plans to make a takeover offer. Mineral Resources intends to make an all-scrip offer that equates to 6 cents per share. The two parties own the Lockyer Deep joint venture.

Rio Tinto Ltd (ASX: RIO)

The Rio Tinto share price is up 2% to $115.85. This follows a rise in iron ore prices overnight. In addition, this morning, Goldman Sachs retained its buy rating on the mining giant’s shares with an improved price target of $119.20. Goldman notes that Rio Tinto’s shares have a “[c]ompelling valuation: trading at c. ~0.95x NAV.”

Strike Energy Ltd (ASX: STX)

The Strike Energy share price is up 2% to 35.2 cents. Investors have responded positively to news that the energy developer plans to test the Southwest Erregulla and Erregulla Deep prospective resource. Management believes this has high impact and low risk upside resource potential.

The post Why Aurizon, Norwest, Rio Tinto, and Strike Energy shares are rising today appeared first on The Motley Fool Australia.

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More reading

• Why is the Norwest Energy share price rocketing 31% on Friday?
• Mineral Resources share price lower despite Norwest Energy takeover offer
• Why is the Rio Tinto share price wallowing on Wednesday?
• Why is the Fortescue share price tanking on Tuesday?
• 5 things to watch on the ASX 200 on Tuesday

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 Aurizon. 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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One of the biggest risks for income investors is buying an ASX stock based on its current dividend yield.

The reason for this is because a dividend yield is usually based on the dividends the company has paid over the last 12 months. This is why it is also referred to as a trailing dividend yield.

The issue here is that there is no guarantee that the company will be in a position to pay this kind of dividend again over the next 12 months.

For example, the embattled Magellan Financial Group Ltd (ASX: MFG) currently trades with a trailing dividend yield of 14.5%. However, due to its significant underperformance, shareholders may be lucky to even get a dividend in FY 2023!

With that in mind, let’s take a look at one ASX stock that trades with one of the biggest dividend yields on the Australian share market.

Is this ASX stock really going to pay such a big dividend in 2023?

The ASX stock in question is coal miner Yancoal Australia Ltd (ASX: YAL).

As a reminder, over the last 12 months, Yancoal Australia has rewarded its shareholders with dividends of 70.4 cents per share and 52.7 cents per share. Combined, this is a total of 123.1 cents per share, which equates to a whopping trailing dividend yield of 20%.

While it is impossible to say what the Yancoal Australia board will decide to pay to shareholders in 2023, another dividend of 123.1 cents per share certainly seems possible.

Why 20%+ could be possible in 2023

The company’s FY 2022 interim dividend of 52.7 cents per share equates to a total dividend payment of $696 million. Based on this, a 123.1 cents per share dividend is the equivalent of approximately $1,625 million being returned to shareholders.

So, in order to maintain this dividend, Yancoal needs to have at least $1,625 million in free cash flow available to return to shareholders.

During the first half of calendar year 2022, the ASX stock reported a realised average price of A$314 per tonne for its mix of coal. This helped underpin the bumper interim dividend mentioned above.

Pleasingly, since then, coal prices have been even stronger. So much so, the company averaged A$481 per tonne for its coal during the third quarter of 2022.

This led to the company’s cash balance increasing by a staggering $1.9 billion during the three months. That quarterly increase in cash is more than what is needed to pay all the dividends it paid over the last 12 months and more.

And with coal prices remaining strong today, the company’s cash balance looks likely to receive equally large boosts in the coming quarters.

All in all, I believe this ASX stock is well-placed to be able to afford to pay dividends that equate to a 20% yield in 2023. But whether its board decides to do so, we’ll have to wait and see.

The post Is this ASX stock’s 20% dividend yield too good to be true? appeared first on The Motley Fool Australia.

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More reading

• On the back of a cracking year, these 3 ASX 200 coal shares soared again in November
• What’s happening with ASX 200 coal shares this week?
• Why are ASX 200 coal shares smoking hot on Tuesday?

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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It has been another busy week for Australia’s top brokers. This has led to the release of a large number of broker notes.

Three broker buy ratings that you might want to know more about are summarised below. Here’s why brokers think these ASX shares are in the buy zone:

Pilbara Minerals Ltd (ASX: PLS)

According to a note out of Morgans, its analysts have upgraded this lithium miner’s shares to an add rating with a $4.70 price target. This upgrade comes just a day after the broker initiated coverage on Pilbara Minerals with a hold rating. Morgans believes that a selloff this week has been an over-reaction and created a buying opportunity for investors. Though, it concedes that sentiment towards the industry could weaken in the short term and may not change until the release of a strong quarterly update. The Pilbara Minerals share price is currently trading at $4.07.

Whitehaven Coal Ltd (ASX: WHC)

A note out of Citi reveals that its analysts have upgraded this coal miner’s shares to a buy rating with an improved price target of $11.10. The broker made the move on the belief that coal prices will be higher for longer. Citi expects this to underpin some big dividends in the coming years. So much so, it is forecasting double digit dividend yields through to FY 2025. The Whitehaven Coal share price is fetching $10.30 this morning.

Woolworths Group Ltd (ASX: WOW)

Analysts at Goldman Sachs have retained their conviction buy rating and $41.70 price target on this retail giant’s shares. This follows news that Woolworths has acquired a 55% stake in pet accessories and food retailer Petspiration Group. Goldman believes the transaction is an incrementally positive step in the evolution of its eco-system strategy. It also notes that the transition from liquor retail and gaming/hotels into higher growth, and closer synergies with the family shopper pet retail is in line with its strategy. The Woolworths share price is trading at $34.03 on Friday.

The post Brokers name 3 ASX shares to buy today appeared first on The Motley Fool Australia.

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More reading

• Make or break: the one metric I’ll be watching for Pilbara Minerals shares next year
• Pilbara Minerals share price selloff ‘a significant over-reaction’: broker
• 5 things to watch on the ASX 200 on Friday
• Why did the Sayona Mining share price dive 7% on Thursday?
• 3 ASX shares to buy for a possible recession next year

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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Woodside Energy Group Ltd (ASX: WDS) shares are under the spotlight as the company earns big profits and takes flak from climate-focused groups.

The business has been making a lot of money recently. The higher energy prices are powering its financials. In the third quarter of 2022, it generated $5.8 billion of revenue, which was up 70% from the second quarter, though this was the first full quarter after the merger with the BHP Group Ltd (ASX: BHP) petroleum business.

Time will tell how much profit Woodside has generated in the six months to December 2022, but it’s going to be a large number.

All of this profit is attracting heat, though it has been supportive for the Woodside share price.

Green criticism

Greenpeace has called Woodside’s current development efforts in Western Australia’s oceans “the most polluting project currently proposed in Australia”.

The organisation also said:

Woodside’s Burrup Hub project — which includes the Scarborough, North West Shelf, and Browse projects — would wreck the climate and impact protected marine parks that are home to already vulnerable species.

The leader of the Greens, Adam Bandt, has made numerous comments about the gas sector in prior years and months. The Greens party has a lot more policy clout after its election wins earlier in the year.

In the last few days, Bandt has made claims such as “this is the beginning of the end of gas” in relation to recent legislation to electrify homes.

He also said the gas industry is “price gouging an essential service, climate wrecking drilling, banking obscene profits and often not paying any tax…It’s the beginning of the end for gas grifters”.

Gas industry defends itself

Unsurprisingly, the gas industry is looking to defend itself amid the criticism, strong profits, and the government’s price caps on uncontracted gas.

According to the Australian Financial Review, the Santos Ltd (ASX: STO) CEO said the price caps are “Soviet-style” and will require the government to “guarantee fiscal terms for new projects”.

Players in the gas sector suggest there are other policies in the works that could harm the industry, so there could be a “long fight”, according to the AFR.

Woodside may also point to the fact that it’s investing in new energy projects, not just gas, as it works to play its part in the transition, while also delivering a large amount of gas to customers.

As reported by the AFR, the merger with the BHP petroleum division is seen as transformational by Woodside CEO Meg O’Neill, including helping it fund its greener projects:

It’s hard to look beyond Woodside’s merger with BHP’s petroleum business, which happened in June, as the highlight of 2022.

The merger has been transformational for Woodside, as we now have a larger and more diversified portfolio which is delivering significant cash flow. That means we can fund our committed projects, invest in the new lower-carbon products and services that will support the energy transition, and also maintain returns to our shareholders.

Woodside is reportedly going to spend $5 billion on hydrogen and solar in the US, as well as solar, hydrogen, and ammonia in Western Australia.

Woodside share price snapshot

Over the last month, Woodside shares are down around 9% as energy prices fall. However, they are up 56% this year to date.

The post Dirty dichotomy: Why Woodside’s record profits might have only painted a bigger target on its back appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Friday
• 5 things to watch on the ASX 200 on Wednesday
• Woodside share price holds steady despite oil giant’s warning over gas intervention
• Here are the top 10 ASX 200 shares today
• Why is the Woodside share price smashing the ASX 200 on Monday?

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 Norwest Energy NL (ASX: NWE) share price is rocketing higher on Friday morning despite the market selloff.

At the time of writing, the energy explorer’s shares are up 31% to a new high of 5.9 cents.

This compares very favourably to a disappointing 1.1% decline by the All Ordinaries index (ASX: XAO).

Why is the Norwest Energy share price rocketing higher today?

Investors have been scrambling to buy the company’s shares this morning after it received a takeover offer from its joint venture partner at the Lockyer Deep gas project in the Perth Basin – Mineral Resources Ltd (ASX: MIN).

According to the release, Mineral Resources plans to table an offer of one fully paid ordinary share for every 1,367 Norwest Energy shares held on the register date.

Based on the Mineral Resources share price at Thursday’s close, this implies an offer price of 6 cents per Norwest Energy share. This represents a sizeable premium of 33.3% to its last close price and Norwest Energy’s equity at $403 million.

Mineral Resources’ managing director, Chris Ellison, believes the transaction would create value for both sets of shareholders. He commented:

The scrip-based Offer for our JV partner Norwest will consolidate Lockyer Deep’s project ownership and provide Norwest Shareholders with exposure to a bigger prize. It is also a natural progression that can create lasting value for both groups of shareholders under the MinRes ownership umbrella.

This Offer presents a compelling and unique opportunity for Norwest Shareholders to join the MinRes family and be part of the next chapter in our significant value creation.

Past successes

Mineral Resources also listed a number of similar transactions that have been very successful for the shareholders of acquired companies.

This includes Polaris Metals shareholders benefiting from a 1,837% total shareholder return and Mesa Minerals shareholders benefiting from a 1,529% total shareholder return since these transactions closed in 2010.

It also notes that the Norwest Energy share price could fall if a takeover doesn’t happen. Particularly given how the company is exposed to funding and development uncertainties.

The Norwest Energy board has not yet made a recommendation to its shareholders regarding the proposed takeover.

The post Why is the Norwest Energy share price rocketing 31% on Friday? appeared first on The Motley Fool Australia.

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More reading

• Mineral Resources share price lower despite Norwest Energy takeover offer
• 5 things to watch on the ASX 200 on Thursday
• Here are the top 10 ASX 200 shares today
• I’d aim for $1 million, buying just 10 cheap ASX shares
• ‘Really exciting’: Experts name 2 ASX mining shares ready to take off

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 Core Lithium Ltd (ASX: CXO) share price is back in the green after Thursday’s major tumble on positive news of the company’s lithium exploration.

Drilling at its flagship Finniss Lithium Project’s Hang Gong and Far West prospects has returned encouraging results while shallow mineralisation has been confirmed at its Bilatos prospect.

The Core Lithium share price has recovered from an earlier fall that saw it opening 3.79% lower at $1.015.

Right now, the S&P/ASX 200 Index (ASX: XJO) lithium stock is trading for $1.07. That’s 1.42% higher than it was at yesterday’s close.

Let’s take a closer look at what’s going on with the ASX lithium favourite on Friday.

Core Lithium share price lifts on exploration results

The Core Lithium share price is dusting itself off this morning, recovering some of the 9.4% tumble it experienced on Thursday. Yesterday’s fall came amid the results of Pilbara Minerals Ltd (ASX: PLS)’s latest lithium auction, wherein its realised price for the material fell month-on-month.

Today’s gain, meanwhile, appears to have been sparked by assay results from a drilling campaign conducted at various Finniss prospects.

The latest results have discovered excellent grades and improved pegmatite continuity at Far West. They’ve also allowed better definition and the extension of previously announced mineralisation at Hang Gong. Both prospects are nearby the company’s Grants DMS processing plant.

Meanwhile, 22 kilometres south at Bilatos, the company has confirmed large pegmatite body with at least 760 metres of strike length. It also has the potential to be suitable for open-pit mining.

Core Lithium CEO Gareth Manderson commented on today’s news, saying:

The RC and diamond drilling results are encouraging and demonstrate that the additional investment in the drilling program at Finniss in 2022 is the right approach for the exploration strategy.

Far West, Hang Gong, and Bilatos represent further upside potential for the Finniss Project and we have planned an expanded exploration program for 2023.

Today’s gain included, the Core Lithium share price is 70% higher than it was at the start of 2022. It’s also 106% higher than it was this time last year.

For comparison, the ASX 200 has fallen 6% year to date and 2% over the last 12 months.

The post Why is the Core Lithium share price gaining on Friday? appeared first on The Motley Fool Australia.

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More reading

• Why did the Sayona Mining share price dive 7% on Thursday?
• Here are the 3 most heavily traded ASX 200 shares on Thursday
• Why is the Core Lithium share price cratering 8% today?
• Why are ASX 200 lithium shares sinking like stones on Thursday?
• Here are the old and new energy ASX 200 shares that investors were buying last month

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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The Mineral Resources Ltd (ASX: MIN) share price is trading lower on Friday after market weakness offset a positive announcement.

In morning trade, the miner and mining services company’s shares are down 3% to $79.29.

Mineral Resources share price lower despite acquisition plans

This morning, Mineral Resources revealed that it plans to make an off-market takeover bid to acquire the Norwest Energy NL (ASX: NWE) shares that it does not already own.

Norwest Energy is the company’s minority joint venture partner in the Lockyer Deep gas project in the Perth Basin.

According to the release, Mineral Resources intends to offer one fully paid ordinary share for every 1,367 Norwest shares held on the register date.

Based on the Mineral Resources share price at yesterday’s close, this implies an offer price of 6 cents per Norwest share. This is a premium of 33.3% to its last close price and values Norwest’s equity at $403 million.

Unsurprisingly, the Norwest Energy share price is taking off this morning and is up 28% at the time of writing.

Why is it acquiring Norwest Energy?

Mineral Resources’ managing director, Chris Ellison, sees huge potential from the Lockyer Deep gas project. He said:

MinRes has become one of Australia’s most successful companies because of our ability to identify and act early on opportunities that benefit all of our shareholders.

The significant conventional gas discovery we made at Lockyer Deep last year, which we believe may be the largest onshore gas find in Australia, is driving us to develop and commercialise this high-quality energy source as quickly as possible.

Ellison believes the offer is attractive for Norwest Energy shareholders and expects the transaction to create significant value. He added:

The scrip-based Offer for our JV partner Norwest will consolidate Lockyer Deep’s project ownership and provide Norwest Shareholders with exposure to a bigger prize. It is also a natural progression that can create lasting value for both groups of shareholders under the MinRes ownership umbrella.

This Offer presents a compelling and unique opportunity for Norwest Shareholders to join the MinRes family and be part of the next chapter in our significant value creation.

The post Mineral Resources share price lower despite Norwest Energy takeover offer appeared first on The Motley Fool Australia.

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More reading

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has 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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It may not feel like a bull market is coming based on how the ASX 200 index is performing today following a sell-off on Wall Street. However, I remain confident that once inflation is under control and interest rates settle, global share markets will take off once again.

In light of this, I recently bought Xero Limited (ASX: XRO) shares.

Why did I buy this ASX share?

The main reason I bought this ASX share is its valuation. With the Xero share price down 50% since the start of the year, as shown below, I believe it has been oversold and created a wonderful opportunity for patient long-term investors.

Last month, Xero released its half-year results and revealed that its subscribers had grown 16% to 3.5 million despite the tough economic environment.

Together with price increases and foreign exchange tailwinds, this solid subscriber growth underpinned a 31% increase in annualised monthly recurring revenue (AMRR) to NZ$1.5 billion and a 30% lift in total subscriber lifetime value (LTV) to NZ$13 billion.

The latter metric is the important one, in my opinion. Xero has a subscriber LTV of NZ$13 billion but, following its share price weakness this year, a market capitalisation of approximately NZ$11.6 billion.

This is a rare opportunity for investors to be able to buy Xero shares at a discount to the long-term value of the company’s subscriber base. This is something that analysts at Morgans recently noted. They commented:

XRO is a high quality cash generative business with impressive customer advocacy and duration. Over the last 12 months rising interest rates and competition have made things harder for Xero. However, we see the current short-term weakness as a rare opportunity to buy a high quality global growth company at a discount to the life time value of its current customer base.

Looking to the future

Another reason why I think this is an ASX share to buy and hold for the long term is the company’s huge market opportunity.

Although 3.5 million subscribers is certainly a large number, it pales in comparison to its total addressable market (TAM). This is estimated by management to be about 45 million subscribers globally, which means that it currently has just 7.8% of its TAM.

And while Xero is never going to bring all 45 million potential subscribers to its platform, I believe the quality of its offering means it is possible for it to triple its subscriber base to 10 million in the next decade or so.

Combined with price increases and value-added services from its app store, this has the potential to deliver incredible revenue and earnings growth over the 2020s and 2030s.

All in all, this is why I think Xero is a share to buy before the bull market comes.

The post One ASX share I’ve been buying in preparation for the next bull market appeared first on The Motley Fool Australia.

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More reading

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Motley Fool contributor James Mickleboro has positions in Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Xero. The Motley Fool Australia has positions in and has recommended Xero. 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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