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The National Australia Bank Ltd (ASX: NAB) share price declined by 2.7% in November 2022. This compares to the S&P/ASX 200 Index (ASX: XJO) which climbed by 6.1%.

That means that NAB underperformed the market by 8.8%. That’s a lot in just one month.

For NAB, the main piece of news during the month was the bank’s 2022 financial year report.

Let’s recap the financial highlights.

FY22 result

The ASX bank share said that cash earnings were 8.3% higher at $7.1 billion. Revenue increased by 8.9%, and excluding the impact of the Citi consumer business, revenue rose by 7.8%. This mainly reflected higher volumes and slightly higher margins excluding markets and treasury.

Expenses increased 5.8%. Excluding the impact of the Citi consumer business, expenses rose 3.9%. Key drivers included higher remuneration and volume-related costs, higher technology and investment costs and increased financial crime and remediation spending, partly offset by productivity benefits.

The net interest margin (NIM) decreased 6 basis points to 1.65%. Excluding a 1 basis point increase from the Citi consumer business and 8 basis points reduction from markets and treasury (which includes the impact of holding higher liquid assets), NIM rose 1 basis point. NAB explained that this “primarily reflected higher earnings on deposits and capital as a result of the rising interest rate environment, mostly offset by home lending competition”.

The ASX bank share’s final dividend increased by 16% to 78 cents per share. That took the full-year dividend up by 19% to $1.51 per share. Bigger dividends could be a boost for the NAB share price if investors are getting larger cash returns.

Outlook for profitability

In the bank’s NIM commentary, it said that the FY22 fourth quarter NIM was 1.72%.

The change in this number is important because it measures what the lending profitability is for the bank. It compares the lending rate to the rate of the funding (such as savings).

However, NAB said that housing lending competitive pressures are “likely to intensify”. The deposit mix headwind is accelerating, leading to a further increase in funding costs.

The NIM impact of the RBA cash rate increases on unhedged deposits is expected to peak in the first half of FY23. The estimated benefit of cash rate increases from October 2022 is expected to be lower.

Economic expectations

NAB also said that, in Australia, consumption and overall growth are expected to soften from September 2022 as the impact of higher interest rates and inflation impacts household budgets more heavily.

The ASX bank share wrote in its earnings release:

While there are a number of uncertainties in the outlook, the most likely scenario has forecast inflation peaking in the December 2022 quarter before easing through 2023. This would see the cash rate peak at 3.6% in March 2023, but a more inflationary outcome would likely mean greater monetary policy tightening and a more pronounced economic correction.

2022 NAB share price snapshot

Despite the bank’s short-term problems, or lessened outlook, the bank’s shares have still risen by 7% over the year. That compares to a 5% rise for the Commonwealth Bank of Australia (ASX: CBA) share price in 2022 and a 4% drop for the ASX 200 in 2022.

The post Why did the NAB share price underperform the ASX 200 in November? appeared first on The Motley Fool Australia.

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More reading

• Down 10% in November, why did the Pilbara Minerals share price power down?
• These were the best performing ASX 200 shares in November
• 5 things to watch on the ASX 200 on Thursday
• Here are the top 10 ASX 200 shares today
• The 3 best-performing ASX 200 bank shares in November revealed

Citigroup is an advertising partner of The Ascent, a Motley Fool company. 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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Copper has been in the spotlight in 2022, alongside other future-facing commodities like lithium and nickel. Particularly, following BHP Group Ltd (ASX: BHP)’s takeover bid for S&P/ASX 200 Index (ASX: XJO) copper share Oz Minerals Limited (ASX: OZL).

The iron ore giant put forward a $28.25 per share “best and final” offer for its copper counterpart earlier this week. Oz Minerals has accepted the bid.

While that might be great news for those invested in the takeover target – the offer represents a 49% premium to its last undisturbed share price – it’s likely disappointing for those looking to snap up long-term copper investments. Right now, the Oz Minerals share price is just 3% lower than BHP’s bid.

Indeed, Shaw and Partners senior resource analyst Peter O’Connor, speaking with Market Matters’ James Gerrish, recently commented:

Everyone wants to be in copper but there’s so few copper equities.

Fortunately, the expert has another copper miner in their sights. Let’s take a look at the other ASX 200 copper share O’Connor believes is trading at around half of its fair value.

ASX 200 copper share tipped a winner

O’Connor has dubbed Oz Minerals a “dead duck”, continuing:

For all intents and purposes, Oz is no longer trading … if you want to see a 3% return, fine, but if you want to get a return better you need to look elsewhere.

Instead, he is bullish on “international, large-scale, long-life target” Sandfire Resources Ltd (ASX: SFR).

The $2 billion copper miner has been on a journey over the last few years. It’s been working on its Motheo project in Botswana and recently snapped up Spain’s MATSA mining complex.

And just in time. Mining activities ceased at its Western Australian DeGrussa copper mine last month.

Beyond that, the ASX 200 copper miner’s share price recently soared on news of a new CEO, set to take the reins in April. Additionally, Sandfire upgraded its financial year 2023 guidance in September.

Beyond Sandfire, there might be excitement among the market’s smaller copper stocks in the near future. O’Connor tipped consolidation among emerging copper miners in the coming years.  

Sandfire Resources share price snapshot

The Sandfire share price is down 25% this year to date. However, it soared 44% in November.

The post BHP beat you to Oz Minerals? Buy this ASX 200 copper share instead: fundie appeared first on The Motley Fool Australia.

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More reading

• These were the best performing ASX 200 shares in November
• 5 things to watch on the ASX 200 on Thursday
• Why is the BHP share price smashing the market with a 22% gain in November?
• Is a stock market crash coming for us in 2023?
• Here are the top 10 ASX 200 shares today

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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When it comes to analysing ASX shares, there are countless fundamental factors and characteristics to look at.

Last week, I zeroed in on management, profiling some ASX 200 shares with founders steering the ship and others with enormous insider ownership.

Today, it’s all about gross profit margins. 

Put simply, gross profit is the money that a company has left after paying for the stuff it sold. 

These selling costs are typically listed as ‘cost of sales’ or ‘cost of goods sold’. You’d find this towards the top of a company’s income statement. 

But in some cases, companies bypass this line item altogether and don’t break out cost of sales from the rest of their operating expenses.

The gross profit margin simply represents gross profit as a proportion of revenue. The higher, the better, because it means the company is holding onto a greater portion of every sales dollar.

With that in mind, let’s take a look at five ASX 200 shares with deliciously-high gross margins.

Pro Medicus Limited (ASX: PME)

Topping this list is ASX 200 healthcare share Pro Medicus, a global leader in radiology imaging software. 

In FY22, Pro Medicus generated $93.5 million in revenue against cost of sales of just $465,000. This translates to a staggeringly-high gross margin of 99.5%.

Crucially, Pro Medicus is a software-only business, so there are minimal costs involved in rolling out new contracts. The outcome is an incredibly capital-light, scalable business.

But while there are varying interpretations of what goes into cost of sales from company to company, Pro Medicus backs this up with extremely wide profit margins.

In fact, Pro Medicus turns two-thirds of every sales dollar into profit before tax. These margins have only been heading higher over time, demonstrating tremendous operating leverage.

Carsales.com Ltd (ASX: CAR)

Next up is the ASX 200 tech share behind Australia’s leading automotive classifieds business.

In FY22, Carsales incurred cost of sales of $50 million on the way to generating revenue of $509 million. This spins up a stunning gross margin of 90%.

Carsales operates an extensive network of classifieds websites, covering everything from motorbikes and boats to caravans, trucks, construction equipment, and tyres.

In a similar vein to REA Group Limited (ASX: REA), it also lays claim to a range of different automotive classified portals around the world through a mix of full and partial ownership stakes.

Importantly, Carsales’ juicy gross margin isn’t lost further down the income statement. It boasts an earnings margin of 53%, achieving earnings before interest, tax, depreciation, and amortisation (EBITDA) of $270 million in FY22.

Xero Limited (ASX: XRO)

I’m sure it’s no surprise to see Xero on this list, a software-as-a-service (SaaS) business leading the shift to cloud accounting.

As a Kiwi company, Xero handed in its first-half FY23 results last month. Across this period, the ASX 200 tech share drummed up revenue of NZ$658.5 million while cost of revenue came in at NZ$85.6 million.

So, all up, Xero held its gross margin steady over the prior year at an impressive 87%.

Unlike Pro Medicus and Carsales, Xero makes it easy for investors by specifying what goes into cost of revenue.

As detailed in its interim report, Xero’s cost of revenue comprises expenses directly associated with hosting its services, sourcing relevant data from financial institutions, and providing support to subscribers.

Breaking this down even further, the company noted that this includes hosting costs, bank feed costs, employee-related expenses directly associated with cloud infrastructure and subscriber support, and related depreciation and amortisation.

Despite its strong gross margins, Xero continues to operate at a loss. This is because the ASX 200 tech share is prioritising future growth, ploughing droves of money into product development and marketing efforts at attractive rates of return.

WiseTech Global Ltd (ASX: WTC)

Continuing the tech theme, WiseTech is another ASX 200 share with terrific margins.

In FY22, WiseTech posted revenue of $632.2 million against cost of revenues of $92.5 million. This spits out an eye-catching gross margin of 85%, up from 83% in the prior year.

The ASX 200 tech share attributed this margin expansion to the impact of revenue growth and continuing efficiencies from its cost reduction initiatives.

WiseTech notes that its cost of revenues consists of expenses directly associated with hosting its services and providing support to customers.

Similarly to Xero, this includes data centre costs, employee-related expenses directly associated with cloud infrastructure and customer support, contracted third-party costs, and related depreciation and amortisation. 

WiseTech is another ASX 200 share boasting a strong duo of gross margins and earnings margins. In FY22, the logistics software provider delivered an EBITDA margin of 50%.

Lovisa Holdings Ltd (ASX: LOV)

The common thread from the four ASX 200 shares I’ve profiled so far is that they’re all software-only businesses.

So while its gross margin isn’t quite as high as the others on this list, I wanted to give a nod to an ASX 200 share with enviable margins for a retailer.

Retailing is traditionally known as a low-margin business. But as I’ve covered previously, Lovisa flips the script with its vertically-integrated business model and low-cost products.

Surveying the ASX retail landscape, Accent Group Ltd (ASX: AX1) has gross margins of 55%, Temple & Webster Group Ltd (ASX: TPW) has gross margins of 45%, and JB Hi-Fi Limited (ASX: JBH) has gross margins of 23%, to pick out just a few.

But one of the things that set Lovisa apart is that all of the products it sells are designed and manufactured in-house. In contrast, many ASX retailers sell a mix of own-brand and third-party products.

This boosts Lovisa’s gross margins, which came in at a whopping 79% in FY22. Put another way, for every pair of $10 earrings flying off the shelves, it paid suppliers on average just $2.10.

The ASX 200 retailer’s small-store footprint also bodes well for earnings margins, with Lovisa achieving an EBITDA margin of 31% in FY22.

The post 5 ASX 200 shares with juicy gross profit margins appeared first on The Motley Fool Australia.

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More reading

• ‘Buy it for 5 years’: Jun Bei Liu’s 3 best ASX shares for 2023
• Top ASX shares to buy in December 2022
• Could these be the best ASX tech shares to buy now for 2023?
• Which ASX directors were buying and selling their company shares in November?
• Why I’m buying ASX shares in this once-in-a-lifetime market to try and retire early

Motley Fool contributor Cathryn Goh has positions in Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Lovisa Holdings Ltd, Pro Medicus Ltd., Temple & Webster Group Ltd, WiseTech Global, and Xero. The Motley Fool Australia has positions in and has recommended Pro Medicus Ltd., WiseTech Global, and Xero. The Motley Fool Australia has recommended Accent Group, JB Hi-Fi Limited, Lovisa Holdings Ltd, REA Group Limited, Temple & Webster Group Ltd, and carsales.com Limited. 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 Pilbara Minerals Ltd (ASX: PLS) share price went backwards in November, falling by over 8% in the month.

There was a large underperformance compared to the S&P/ASX 200 Index (ASX: XJO) which rose by 6.1% in November. That means that the index did better by 14%.

Of course, over longer-term time periods, Pilbara Minerals shares have done much better. In 2022 alone, the ASX lithium share has risen 32%. So, the decline may just have been some investors taking profit off the table.

It was a busy month for the business.

A few weeks ago it announced a long-term $250 million Australian government debt facility to support the P680 project expansion. The facility will provide flexibility to pursue further growth and diversification opportunities at Pilgangoora.

But that was just one of a number of other announcements.

Dividends to start

In the middle of the month, the company revealed its capital management framework and dividend policy on the back of a “strong” operating performance and cash flow.

It’s going to balance available capital between investment into the existing business, sustainability commitments, strategic growth opportunities, as well as the start of sustainable returns to shareholders.

Pilbara Minerals is targeting a dividend payout ratio of 20% to 30% of free cash flow. Dividends are expected to start in FY23.

Commsec numbers suggest it could pay an annual dividend per share of 15 cents in the 2023 financial year.

Latest BMX auction

The business also revealed the result of its latest Battery Material Exchange (BMX) platform.

A cargo of 5,000 dry metric tonnes (dmt), at a target grade of around 5.5% lithia, presented for sale on the digital platform. It accepted a bid of US$7,805 per dmt, or US$8,575 on a pro rata basis for lithia content and inclusive of freight costs.

Remember, despite achieving an even higher price for its production, the Pilbara Minerals share price went backwards.

Joint venture

Near the end of the month, Pilbara Minerals announced that it was entering into a joint venture with Calix Ltd (ASX: CXL).

They are going to develop a demonstration plant at the Pilgangoora project. The aim is to produce lithium salts through an “innovative midstream ‘value added’ refining process utilising Calix’s patented calcination technology”. There could also be a commercialisation of the process.

Pilbara Minerals explained that the objective of the mid-stream demonstration plant project is to “deliver a superior value-added lithium product enabling lower product cost, reduced carbon energy intensity, and reduction of waste product logistics”.

The post Down 10% in November, why did the Pilbara Minerals share price power down? appeared first on The Motley Fool Australia.

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More reading

• These were the best performing ASX 200 shares in November
• 5 things to watch on the ASX 200 on Thursday
• Getting cold feet on ASX 200 lithium shares? Here’s why UBS ‘remains positive’
• 2 ASX lithium shares to buy, and 3 to sell: brokers
• Here are the top 10 ASX 200 shares today

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 S&P/ASX 200 Index (ASX: XJO) was on form again in November and charged notably higher. The benchmark index rose 6.1% to finish at 7,284.2 points.

While a good number of shares climbed higher with the market, some recorded particularly strong gains during the month. Here’s why these were the best performers on the ASX 200 last month:

Sandfire Resources Ltd (ASX: SFR)

The Sandfire share price was the best performer on the ASX 200 in November with a 45.2% gain. This follows a very eventful month for the copper miner, which included the appointment of a new CEO and completion of a $147 million institutional entitlement offer. But the key driver of its strong share price gain was a rebound in the copper price during the month.

Origin Energy Ltd (ASX: ORG)

The Origin Energy share price wasn’t far behind with a stunning gain of 41.1%. The catalyst for this was news that the energy company has received an indicative, conditional, and non-binding proposal from Brookfield Asset Management and MidOcean Energy to acquire it for $9.00 cash per share. This represented a premium of almost 55% to its last close price.

Champion Iron Ltd (ASX: CIA)

The Champion Iron share price was on form and charged 35.9% higher during the month. Investors were buying this Canadian iron ore miner’s shares after the steel making ingredient rebounded strongly. After starting the month at around US$80 a tonne, the iron ore price climbed above US$100 a tonne at the end of it.

Nickel Industries Ltd (ASX: NIC)

The Nickel Industries share price was a strong performer and recorded a 33.6% gain last month. This was driven by news that the company’s 70%-owned Oracle Nickel Project within the Indonesia Morowali Industrial Park in Central Sulawesi has produced its first batch of nickel pig iron. A bullish note out of Bell Potter may also have given its shares a lift. The broker has reiterated its buy rating and lofty $1.71 price target on the nickel producer’s shares.

The post These were the best performing ASX 200 shares in November appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Thursday
• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• Why are ASX 200 coal shares burning brighter on Wednesday?
• Why did Telstra have a mediocre performance in November?

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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened 

Tesla‘s (NASDAQ: TSLA) stock was rising this afternoon after Federal Reserve Chairman Jerome Powell said that smaller interest rate hikes will begin in December. 

That news caused market indices to jump — with the S&P 500 gaining 2.3% and the Nasdaq Composite rising 3.4% — and they took Tesla’s share’s along with them. 

The electric vehicle stock was up by 5.3% as of 3:34 p.m. EST. 

So what 

Speaking at the Brookings Institution today, Powell said that the Federal Reserve will likely begin smaller increases to the federal funds rate at its December meeting. 

Powell also said that the Fed’s moves, including past interest rate hikes, will take time to slow inflation and that “it makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down.” 

Investors were very happy to hear that today, and they specifically latched onto Powell’s comments when he said that “The time for moderating the pace of rate increases may come as soon as the December meeting.” 

Growth stocks like Tesla have been especially vulnerable to the Fed’s aggressive interest rate hikes as investors have worried that the Fed will end up pushing the U.S. economy into a recession. 

Tesla CEO Elon Musk has been concerned about exactly that and tweeted earlier today, before Powell’s comments were published, about the potential for a recession: 

Trend is concerning. Fed needs to cut interest rates immediately. They are massively amplifying the probability of a severe recession.

— Elon Musk (@elonmusk) November 30, 2022

Now what

While the Fed isn’t cutting rates like Musk hoped, investors are happy to see that the severity of the increases will at least decrease.

But Powell also warned that the Fed has more work to do. “Despite some promising developments, we have a long way to go in restoring price stability,” he said today. 

But with central bank officials now indicating that less aggressive interest rate increases could be on the horizon, many growth stock investors are celebrating the news today. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Tesla stock hit the accelerator today appeared first on The Motley Fool Australia.

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More reading

• 3 ultra-popular stocks billionaires have been busy selling
• Will the Nasdaq or S&P 500 have a better 2023?
• Why Tesla stock popped today
• Down more than 50% from their highs, are Tesla and these other EV stocks buys for 2023?
• Why Tesla shares hit a 2-year low today

Chris Neiger 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 Tesla. 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.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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If you’re searching for cheap ASX dividend shares to buy, then the two listed below could be worth looking at.

Both have fallen heavily in recent months and have been tipped as buys with major upside potential and big future yields.

Here’s what you need to know about them:

Baby Bunting Group Ltd (ASX: BBN)

The first ASX dividend share that could be in the buy zone is leading baby products retailer Baby Bunting.

While the company has been having a tough time this year and seen its margins come under pressure, the team at Morgans remains positive on the future and believes its significant share price weakness has created a buying opportunity. The broker has an add rating and $3.60 price target on its shares.

It highlights that these margin pressures are transitory and reminds investors of Baby Bunting’s “compelling opportunities to grow its share of a growing market.”

In respect to dividends, Morgans is forecasting fully franked dividends per share of 14 cents in FY 2023 and then 16 cents in FY 2024. Based on the current Baby Bunting share price of $2.54, this will mean yields of 5.5% and 6.3%, respectively.

Elders Ltd (ASX: ELD)

Another ASX dividend share that has been beaten down this year and could be cheap now is Elders. It is a leading agribusiness company offering a range of services to rural and regional customers across the ANZ region.

Its shares were sold off last month following the release of its FY 2022 results. Although Elders delivered strong revenue and earnings growth, this was overshadowed by its uncertain outlook for FY 2023 and news that its CEO will retire next year.

Goldman Sachs remains positive on the company and believes investors should be snapping up its shares. So much so, it has put a conviction buy rating and $18.40 price target on its shares.

Although heavy rainfall poses a short term headwind, the broker remains positive on the future and believes “ELD is very well positioned to grow through the cycle.”

As for dividends, the broker is expecting fully franked dividends per share of 53 cents in FY 2023 and 57 cents in FY 2024. Based on the current Elders share price of $10.32, this will mean yields of 5.1% and 5.5%, respectively.

The post Buy these cheap ASX dividend shares now: analysts appeared first on The Motley Fool Australia.

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More reading

• Buy now: Experts name 2 ASX 200 companies essential to Aussie life
• Buy these ASX shares for their dividends: analysts
• Skin in the game: The ASX share in my portfolio I’m most excited about
• Don’t miss out on these top ASX dividend shares: analysts
• 3 ultra-high-yield ASX dividend shares you might regret not buying at these prices

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 Baby Bunting Group and Elders. 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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As the Santa rally gathers pace, buyers are re-entering the share market, looking to catch a ride uphill into 2023.

But in an environment of rising interest rates and a slowing economy, stock selection is critical.

Shaw and Partners portfolio manager James Gerrish this week mentioned three ASX shares that look prime for a rally:

• Treasury Wine Estates Ltd (ASX: TWE)
• Centuria Capital Group (ASX: CNI)
• Virgin Money UK CDI (ASX: VUK)

The ASX shares going for ‘significant discounts’

This year has been brutal for any ASX share involved in the real estate industry.

A whopping 275-basis point interest rate rise would certainly do that. Most experts are predicting that by Tuesday afternoon, 2022 will end with a 300-point hike.

However, Gerrish feels like real estate stocks have been punished enough.

“What we are reading and [listening] to around the outlook for interest rates is well and truly factored into the market,” he said in a Market Matters Q&A.

“Real estate trusts/companies are trading at significant discounts to the carrying value of their assets — 30% in some cases.”

Centuria specifically has been hard done by, Gerrish added.

“Markets are prone to get too optimistic and too pessimistic on things, we think broadly the latter has played out with Centuria.”

The Centuria share price has almost halved since the start of the year, and Gerrish did admit one weakness with the investment company.

“CNI is at the higher end of the risk spectrum as they have made the decision not the hedge interest rate risk,” he said.

“The Australian 10-year [bond] yield, for example, is down ~0.70% from its highs so this is working out okay so far. However, many of the other property companies have taken a more conservative route and spent large sums on hedging for certainty.”

Who wants a drink?

The Treasury Wine share price has enjoyed a nice 10% rally since early October.

“We like TWE as a business. The company recently gave a good update and we think this has legs to rally further.”

Gerrish noted costs for the current financial year are forecast to remain steady from the previous year, which is vital heading into a period of economic weakness.

“They also have expectations of solid growth and EBITS margin expansion towards the 25%+ group target in FY23, which implies they have pricing power — an important element as rates rise.”

The Market Matters team actually doesn’t hold Treasury Wine shares at the moment, but will pounce as soon as there’s a dip.

“Any pull backs to the $13 region will be attractive.”

Meanwhile, Gerrish is also a fan of UK banking group Virgin Money.

“Virgin Money actually looks good following their last update. [We] could easily see it rallying into the mid $3s.”

Virgin shares closed Wednesday at $3.05.

The post ‘This has legs to rally’: Expert names 3 ASX shares that just hit the buy zone appeared first on The Motley Fool Australia.

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Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Treasury Wine Estates Limited. 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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Multiple experts are already tipping that 2023 will be a vastly different year to 2022 for ASX shares.

This year, growth stocks have taken a beating as interest rates have risen sharply and inflation rages on. But next year the markets are looking forward to a reversal of that situation.

So one expert reckons now is an opportune time to buy some to hold for the long run.

“We are seeing a lot of value in local business, particularly [in] growth,” Tribeca portfolio manager Jun Bei Liu told Switzer TV Investing.

“There’s just a lot of them being left behind.”

Here are three ASX growth shares that Liu likes at the moment:

Global expansion to drive growth

Domino’s Pizza Enterprises Ltd (ASX: DMP) has already enjoyed a renaissance, with the share price rocketing 24.8% since 3 November.

Liu sees the pizza maker as an excellent long-term investment.

“You don’t buy Domino’s for next week’s earnings. You buy it for five years, and things are going pretty well for them.”

Despite the rally this month, the stock is still historically cheap as it is 46% lower than where it started the year.

The theme for the company is that it’s not Australians that are going to start eating more pizzas.

“In Australia, it’s pretty mature,” Liu said.

“What Domino’s has done is, globally, it’s rolling out more territories.”

The business is “just ramping up the pace” in Europe, as well as expanding in Taiwan and Japan.

“It’s the global expansion that’s going to drive growth.”

This won’t slow down in a recession

Some may perceive CSL Limited (ASX: CSL) as a defensive and “boring” stock, but it will certainly end up higher in a few years, according to Liu.

Even though the biotech stock has also rallied 7% over the past month, relative to other investments the price is still tempting to her.

“It still looks pretty good,” said Liu.

“Even if we have a US recession or a global recession, it’s not going to slow down. It will grow double digits for the next three years.”

Pricing power and sticky clientele

Cloud accounting software maker Xero Limited (ASX: XRO) is facing much uncertainty with a new chief executive starting, and difficulties expanding in new markets.

That anxiety has shown up in the share price, which has dipped 11% over the past month. For the year to date, the Xero stock price has more than halved. 

According to Liu, investors also bid the stock down due to concerns about the slowing global economy.

But Xero has already demonstrated to her that it has some resilience.

“This company just put through some massive price increases… and the customers are still there,” Liu said.

“And this is a penetration story [via] market expansion. The UK is still going very well.”

The post ‘Buy it for 5 years’: Jun Bei Liu’s 3 best ASX shares for 2023 appeared first on The Motley Fool Australia.

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• Top ASX shares to buy in December 2022
• Could these be the best ASX tech shares to buy now for 2023?
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• ‘Back a winner’: Expert names his 3 best ASX shares for 2023
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Motley Fool contributor Tony Yoo has positions in CSL Ltd. and Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL Ltd. and Xero. The Motley Fool Australia has positions in and has recommended Xero. The Motley Fool Australia has recommended Dominos Pizza Enterprises Limited. 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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Is your ASX share portfolio lacking in Christmas cheer? Perhaps you’re hoping some sparkly new additions to your holdings will make for many happy returns in 2023.

Or, maybe you’re just keen to jump aboard the possible ‘Santa Rally’, if ASX share prices do, indeed, enjoy a traditional festive boost in December.

For their thoughts on which companies should be on your wish list, we asked our Foolish contributors to make a list and check it twice.

These are the ASX shares they reckon will help make for a merry investment portfolio:

8 best ASX shares for December 2022 (smallest to largest)

• Shaver Shop Group Ltd (ASX: SSG), $145.42 million
• Renascor Resources Ltd (ASX: RNU), $635.68 million
• Lovisa Holdings Ltd (ASX: LOV), $2.53 billion
• JB Hi-Fi Limited (ASX: JBH), $4.89 billion
• Carsales.com Ltd (ASX: CAR), $7.76 billion
• Xero Limited (ASX: XRO), $10.44 billion
• Mineral Resources Limited (ASX: MIN), $15.9 billion
• Brambles Limited (ASX: BXB), $16.69 billion

(Market capitalisations as of 30 November 2022)

Why our Foolish writers love these ASX shares

Shaver Shop Group Ltd

What it does: Shaver Shop operates a network of shops across Australia and New Zealand as well as an established online channel. It’s a speciality retailer of male and female personal grooming products and also sells products relating to oral care, hair care, massage, air treatment, and beauty.

By Tristan Harrison: According to Shaver Shop, it operates in a sector with a $10 billion total addressable market. By 2026, this market is forecast to grow to $12 billion. Furthermore, major brands stocked by Shaver Shop release new products every year, giving the ASX company more opportunities to sell the latest high-tech products.

Shaver Shop is planning to continue growing its store network, increase its range, and grow its contribution from exclusive products. Currently, more than 50% of sales and around 60% of gross profit come from the company’s exclusive lines.

FY23 sales to 6 November 2022 saw total sales growth of 13% year over year, with gross profit margins “consistently up” on the prior year.

Shaver Shop shares are valued at just seven times FY24’s estimated earnings with a projected FY24 grossed-up dividend yield of 14.1%.

Motley Fool contributor Tristan Harrison does not own shares in Shaver Shop Group Ltd.

Renascor Resources Ltd

What it does: Renascor engages in the exploration of minerals such as graphite, as well metals including gold and copper, among others. It has projects located within South Australia.

By Matthew Farley: Renascor has been announcing some positive developments of late. These included the company forecasting strong demand for its purified spherical graphite product.

The materials explorer also recently received government approval to move ahead with plans for its Siviour Mine and Concentrator. According to Renascor, this brings it “another key step closer to becoming a producer of 100% Australian-made Purified Spherical Graphite”.

Once fully operational, the company has the potential to produce up to 150,000 tonnes of graphite concentrates per annum.

Despite some recent positive momentum, it should be noted that Renascor is currently unprofitable. The company was running at a $1.5 million loss for the trailing 12 months ending 30 June 2022.

Loss-making companies are generally much riskier investments than those consistently generating earnings and profit, so caution should be exercised before jumping in. But for those who are prepared to carry the risk, I believe Renascor could be a speculative ASX investment worth considering.

Motley Fool contributor Matthew Farley does not own shares in Renascor Resources Ltd.

Lovisa Holdings Ltd

What it does: Lovisa is a fashion jewellery retailer and, increasingly, a shopping centre staple. After starting out with a single Sydney store in 2010, Lovisa stores can now be found in 25 countries around the globe.

By Brooke Cooper: ‘Tis the season for sparkles, whether they be lights in trees, bubbles in glasses, or shiny new trinkets. December has also turned my attention to retailer of sparkly things, Lovisa.

The company has been doing particularly well this year. It was added to the S&P/ASX 200 Index (ASX: XJO), has doubled its full-year profits, and most recently announced a strong start to this fiscal year.

It’s also been growing its international footprint and dividends, increasing the latter by 95% in financial year 2022.

And the future could be even brighter for the stock. UBS tips it to rise another 21% to $29, slapping it with a buy rating.

Motley Fool contributor Brooke Cooper does not own shares in Lovisa Holdings Ltd.

JB Hi-Fi Limited

What it does: JB Hi-Fi is a dominant retailer of electronics, home appliances and other consumables. Customers can choose from a wide range of goods at a JB Hi-Fi store, including mobile phones, computers and other tech, vinyl records, DVDs, televisions, refrigerators, and espresso machines.

By Sebastian Bowen: Chances are at least some readers will be heading to a JB Hi-Fi store sometime this month, so we have a fitting choice for the festive season.

I believe JB is one of the best-run retailers in the country. It has made an art of effortlessly pivoting to keep ahead of consumer trends, which explains why it sells more TVs than hi-fi equipment these days.

JB’s share price has taken a hit over this year. And yet the company delivered an impressive set of full-year results back in August, reporting a 7.7% rise in net profits and a 52.8% lift in online sales.

With an earnings multiple under 10 and a fully franked dividend yield over 7%, I think this ASX 200 retail share is the perfect stocking stuffer this December.

Motley Fool contributor Sebastian Bowen does not own shares in JB Hi-Fi Limited.

Carsales.com Ltd

What it does: When it comes to buying or selling a car, there’s no doubt that carsales.com is one of Australia’s go-to websites. In fact, it’s ranked number one in Australia under the vehicles category according to Similarweb, boasting 15.1 million total site visits last month. The online classifieds company provides a digital marketplace for new and used cars in Australia and internationally.

By Mitchell Lawler: The Carsales share price has been on the up and up since last month, rallying by more than 18%. Yet, the revved-up valuation still remains 11% discounted compared to where it was situated at the end of 2021.

I’m bullish on Carsales’ future growth potential as it acquires the remaining 51% of US-based Trader Interactive. This move expands the company’s exposure to international markets, reduces its reliance on Australian operations, and opens the door to recreational vehicles and power sports consumers (non-automotive).

I believe the sheer size of the US non-automotive market – double Australia’s automotive market – is a desirable proposition. This could ultimately provide a greater runway for growth over the coming decade.

Motley Fool contributor Mitchell Lawler does not own shares in Carsales.com Ltd.

Xero Limited

What it does: Xero provides a cloud-based accounting software platform that connects small business owners with their numbers, their banks, and their advisors. It has 3.5 million subscribers and is a leader in cloud accounting across New Zealand, Australia, and the United Kingdom.

By James Mickleboro: With the Xero share price losing more than half its value in 2022, I think it is trading at a very attractive level for patient long-term investors. This is because I believe Xero is well-placed to continue its solid growth over the next decade, thanks to the quality of its platform, the structural shift to the cloud, and its significant global opportunity.

At the end of the first half of FY 2023, Xero had amassed 3.5 million subscribers with a lifetime value of NZ$13 billion. The former compares to its total addressable market of 45 million subscribers globally. In addition, the company continues to squeeze more dollars out of each subscriber with price increases and its growing app ecosystem.

Goldman Sachs appears to agree. It currently has a buy rating and $115 price target on its shares.

Motley Fool contributor James Mickleboro owns shares in Xero Limited.

Mineral Resources Limited

What it does: Mineral Resources is a diversified mining and mining services company. It has four business branches — iron ore, energy (gas), lithium, and mining services like crushing (in fact, it’s the world’s largest crushing contractor).

By Bronwyn Allen: I like the business diversity in this ASX mining share. Mineral Resources doesn’t just dig stuff up; it provides services to other miners. What it does dig up are some of the world’s hottest commodities today – iron ore, lithium, and gas.

I believe the company’s lithium business is especially attractive. Mineral Resources is a global top-five lithium producer, and now it’s investing heavily in the refining space. Electric vehicle (EV) pioneer Elon Musk describes refining as “like minting money” because it’s refined lithium that is required in EV batteries and demand is sky-high.

Mineral Resources owns a stake in two of Australia’s largest hard-rock lithium mines. Its partners are Chinese lithium giant Ganfeng Lithium Group Co Ltd (SHE: 002460) and US lithium behemoth Albemarle Corporation (NYSE: ALB).

It commands a 29% market share of the world’s hard-rock supply. This company is an amazing growth story. It was listed on the ASX in 2006 with a market capitalisation of $100 million. Today it’s worth $16 billion. It claims to have delivered the second-highest total shareholder return (TSR) growth of the ASX 200, at 30% per annum since listing. It’s also increased its fully-franked dividends by 20% per annum for the past decade.

Today, it has a lot of broker support. Goldman Sachs says buy and has a $96 share price target. It reckons Mineral Resources will triple its earnings before interest, tax, depreciation and amortisation (EBITDA) in FY23. Macquarie says the company is valued at only four times its FY24 estimated earnings and could pay a grossed-up dividend yield of as much as 15.5% in FY24.

Motley Fool contributor Bronwyn Allen does not own shares in Mineral Resources Limited.

Brambles Limited

What it does: Brambles is a global transport and logistics company with operations in 60 countries and a market cap north of $16.5 billion. Its pallets and containers are used to transport goods across the world.

By Bernd Struben: With inflation and interest rates likely to remain elevated in 2023, I like the outlook for companies with strong balance sheets that are able to pass on higher costs to their customers. And I believe Brambles ticks that box nicely.

The analysts at Perpetual recently noted, “The transport and logistics company has been able to use its considerable pricing power and clout in the market as insulation from inflationary costs, while also being disciplined in recovering costs.”

Despite the skyrocketing price of timber adding US$470 million to its pallet costs, Brambles achieved 14% year-on-year profit growth in 2021-22. The Brambles share price has gained 18% over 12 months. The stock pays a 2.7% dividend yield, partly franked.

Motley Fool contributor Bernd Struben does not own shares in Brambles Limited.

The post Top ASX shares to buy in December 2022 appeared first on The Motley Fool Australia.

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More reading

• Getting cold feet on ASX 200 lithium shares? Here’s why UBS ‘remains positive’
• 2 ASX lithium shares to buy, and 3 to sell: brokers
• Here are the top 10 ASX 200 shares today
• Could these be the best ASX tech shares to buy now for 2023?
• Why this ASX 200 dividend share could be an income gold mine hiding in plain sight

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Lovisa Holdings Ltd and Xero. The Motley Fool Australia has positions in and has recommended Xero. The Motley Fool Australia has recommended JB Hi-Fi Limited, Lovisa Holdings Ltd, Macquarie Group Limited, and carsales.com Limited. 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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