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Can you believe it? December is almost upon us.

That means that, after a crazy year in share markets, expert predictions for 2023 will start to pop up.

One of the first cabs off the rank is Switzer Financial Group founder Peter Swtizer.

“I reckon the [Australian] market goes up 10% next year,” he told Switzer TV Investing.

“Add on dividends of 4% and franking too, and there’s 15% or 16%.”

As for individual stocks, he named three that are his favourites for next year:

The stock capable of doubling in 2023

Virtual networking provider Megaport Ltd (ASX: MP1) has seen its share price tumble a hair-raising 66% year to date.

But Switzer is convinced it is poised for a turnaround.

“Megaport is one I really like,” he said.

“Analysts really like it. At least two of the seven analysts see Megaport with over 100% gain over the next year.”

The returns won’t happen overnight, he added, and will need the market’s “forgiveness of the tech sector”.

“That will come when inflation peaks out in the US — and I think it’s already already happening — and interest rates have peaked as well.”

Those two conditions might still take some time to play out, Switzer warned.

“So it might not be until the second half of 2023 [that] the tech rebound will happen.”

Great world-class company

Healthcare giant CSL Limited (ASX: CSL) seems to be a favourite among analysts at the moment, and Switzer is no exception.

“CSL is a company that’s always worth investing in,” he said.

“The share price is still below what most analysts believe it will be this year.”

Consensus price target seems to be around $320, according to Switzer, but he reckons it will end up higher than that this time next year.

“CSL — great company, world class — has been going sideways for a number of years. It tends to do that and it takes off again.”

Buy this stock while it’s still out of favour

Electronics retailer JB Hi-Fi Limited (ASX: JBH) is Switzer’s third favourite for 2023.

“These sorts of companies are out of favour at the moment because interest rates are rising,” he said.

“People who have to make their mortgages on higher repayments will have less money to spend.”

But he feels JB Hi-Fi is “a good company” that’s worth considering as a long-term investment, with a nice income stream to keep investors going in the short term.

“JB Hi-Fi pays a really reasonably good dividend and is always a company of the future,” said Switzer.

“As the old saying goes, when great companies are being beat up by the market, it’s a good time to buy.”

The post ‘Over 100% gain next year’: Expert picks 3 best ASX shares for 2023 appeared first on The Motley Fool Australia.

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More reading

• 3 ASX shares to combat the next market dip: experts
• I’d aim for $1 million in retirement buying just 10 ASX 200 shares
• Here are the top 10 ASX 200 shares today
• Why did ASX 200 retail shares lead the market to fresh 25-week highs today?
• Why this could be a ‘powerful driver of sector dominance’ for CSL shares: Wilsons

Motley Fool contributor Tony Yoo has positions in CSL Ltd. and MEGAPORT FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL Ltd. and MEGAPORT FPO. The Motley Fool Australia has recommended JB Hi-Fi Limited and MEGAPORT FPO. 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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On Friday, the S&P/ASX 200 Index (ASX: XJO) finished the week with a small gain. The benchmark index rose 0.25% to 7,259.5 points.

Will the market be able to build on this on Monday? Here are five things to watch:

ASX 200 expected to fall

The Australian share market looks set to start the week in the red following a mixed session on Wall Street on Friday night. According to the latest SPI futures, the ASX 200 is expected to open the day 9 points or 0.1% lower this morning. On Wall Street, the Dow Jones was up 0.45%, the S&P 500 fell slightly, and the NASDAQ dropped 0.5%.

Oil prices drop

ASX 200 energy shares such as Santos Ltd (ASX: STO) and Woodside Energy Group Ltd (ASX: WDS) could have a tough start to the week after oil prices tumbled on Friday night. According to Bloomberg, the WTI crude oil price was down 2.1% to US$76.28 a barrel and the Brent crude oil price fell 2% to US$83.63 a barrel. Traders were selling oil due to concerns that soaring COVID cases in China could lessen demand.

Costa shares downgraded

The Costa Group Holdings Ltd (ASX: CGC) share price is fully valued according to analysts at Bell Potter. According to the note, the broker has downgraded the horticulture company’s shares to a hold rating with an improved price target of $2.90. It commented: “We downgrade our rating from Buy to Hold following the recent recovery in the share price.”

Gold price flat

Gold miners such as Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) could have a subdued start to the week after the gold price traded flat on Friday. According to CNBC, the spot gold price was steady at US$1,754.93 an ounce during the session. A stronger US dollar put pressure on the precious metal.

Fletcher Building given buy rating

The Fletcher Building Limited (ASX: FBU) share price could be great value according to Goldman Sachs. This morning the broker initiated coverage on the building products company with a buy rating and $5.90 price target. While Goldman believes that key markets are at or near cyclical peaks, it believes “the share price captures the cyclical headwind (and more).”

The post 5 things to watch on the ASX 200 on Monday appeared first on The Motley Fool Australia.

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More reading

• If you bought $20,000 worth of Fortescue shares this year, here’s how much dividend income you’d have
• Here are the top 10 ASX 200 shares today
• Why did ASX 200 retail shares lead the market to fresh 25-week highs today?
• Why is the Allkem share price diving 8% today?
• Here are the 3 most heavily traded ASX 200 shares on Friday

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

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If you’re interested in adding some ASX growth shares to your portfolio, you may want to look at the two listed below.

These growth shares have recently been named as buys by experts. Here’s what they are saying about them:

Cochlear Limited (ASX: COH)

The first ASX growth share that has been named as a buy is Cochlear. It is one of the world’s leading hearing solutions companies.

Due to its portfolio of world class products in an industry with high barriers of entry, Cochlear has been tipped to grow strongly over the long term. Particularly given how the industry is benefiting from favourable tailwinds such as ageing populations.

Goldman Sachs is bullish on Cochlear and has a buy rating and $247.00 price target on its shares. Its analysts believe the company is well-placed to hit the top end of its guidance in FY 2023. The broker said:

In our view, the backdrop for this year appears relatively more favourable, and we see clear scope for COH to deliver at the upper-end of another solid guidance (+8-13% to $290-305m, with further accretion possible from the Oticon Medical transaction, which is yet to close).

IDP Education Ltd (ASX: IEL)

Another ASX growth share that has been named as a buy is IDP Education. It is a language testing and student placement company and a co-owner of the IELTS test.

The IELTS test is the English test that is trusted by more governments, universities, and organisations than any other. This puts the company in a great position to benefit from the growing number of people learning English globally.

Goldman Sachs is also a big fan of IDP Education. Last week, the broker reiterated its buy rating and $36.00 price target on the company’s shares. Its analysts believe that IDP’s shares are trading at an attractive level based on its growth potential. It said:

IEL is trading c.10% below its 5-yr average P/E. The stock is trading at a relatively undemanding 2.2x PEG based on its historic FY22 PE of 79x and forecast 35% FY22-25E 3-yr EPS CAGR.

The post Are these the ASX growth shares to buy for 2023? appeared first on The Motley Fool Australia.

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More reading

• 11 ASX shares that make Abrdn’s World Cup team
• Worried about a stock market crash? I’d buy these 5 rock-solid ASX shares to ride it out
• Experts name 3 of the best ASX growth shares to buy in November
• Which are the best ASX 200 shares to buy now for 2023?
• Morgans names 2 fast-growing ASX 200 shares to buy now

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 Cochlear Ltd. and Idp Education Pty Ltd. The Motley Fool Australia has recommended Cochlear Ltd. 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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I think that ASX dividend shares are a great way to build a nest egg and live off the dividends. Investors that are getting ready to retire will want to know about how effective businesses can be for passive income.

In my opinion, businesses are very capable of producing dividends and growth because of what they do with their profit.

A company will hopefully generate a profit each year. It can then decide to pay some of that out as dividends and keep the rest to re-invest and grow the business. For example, it could decide to pay out perhaps half of its net profit and re-invest the other half.

While a lot of businesses do pay dividends, there are only a few that pay out all of their annual operating profit each year (such as Deterra Royalties Ltd (ASX: DRR) and Charter Hall Long WALE REIT (ASX: CLW)).

But, this financial flexibility allows investors to spend all of their dividends, if they want to, and still potentially experience a bigger payout a year later.

How dividend yields are boosted

When savers utilise a term deposit to get a safe return, the quoted interest rate is how much of a return they’ll get at the end of the period. Some savers may need to pay some tax on that interest when they do their tax returns.

However, fully franked dividends from ASX dividend shares offer investors a very interesting form of passive income.

A business like Telstra Corporation Ltd (ASX: TLS) could have a fully franked dividend yield of 4.25%. But, that dividend also comes with franking credits.

It’d be useful to read the above linked explainer about franking credits. But, it’s essentially the corporate tax paid by a company which is then ‘attached’ to the dividend for the shareholder as a refundable tax offset. This is so that the profit generated by the company isn’t doubled taxed – once at the company level and then once at the individual level.

For low tax rate individuals, (some) franking credits can be refunded when the tax return is done. Franking credits reduce the tax owed by an individual with a higher taxable income and tax rate.

The Telstra fully franked dividend yield turns from 4.25% into a grossed-up dividend yield of 6%. Franking credits make up almost a third of the total grossed-up yield, or said another way they can boost the cash yield by almost half.

But, it’s important to remember that an ASX dividend share isn’t worth buying just because it pays fully franked dividends.

Compound interest can do the heavy lifting

For investors that are a long way away from retiring, compounding can help grow a portfolio.

While it’s impossible to say what the future returns of the share market will be, historically the ASX share market has returned an average return per annum of around 10%.

Using the Moneysmart calculator, starting at $0 and investing $1,000 a month for 25 years turns into $1.18 million if it returned 10% per annum.

Generating annual dividends of $70,000

The dividend yield and the size of the portfolio determine how much annual dividend income is generated.

For example, a $1.5 million portfolio with an average dividend yield of 5% would generate $75,000 of annual dividends.

But, a $1 million portfolio with a 7% dividend yield would make $70,000 of annual dividends.

Higher dividend yields aren’t necessarily riskier than a lower dividend yield, but it could suggest the business is in a more volatile industry.

I have written a number of articles in recent weeks about potential (retirement) ASX dividend shares like this one, this one and this one.

In one of the articles, I reference Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) which has grown its dividend every year since 2000, though dividends are not guaranteed. It has a grossed-up dividend yield of 3.7%.

I also mentioned Metcash Limited (ASX: MTS), the supplier of IGAs, which has a grossed-up dividend yield of 7.3%.

By FY24, Wesfarmers Ltd (ASX: WES), the owner of Bunnings and Kmart, could pay a grossed-up dividend yield of around 6%.

Then there’s a name like BHP Group Ltd (ASX: BHP) – the ASX’s biggest company – which is projected to pay a grossed-up dividend yield of 10% in FY23 according to Commsec. But, with how resource prices change, the dividend yield could be smaller in FY24.

The post Almost ready to retire? How to generate $70k per year of passive income from ASX dividend shares appeared first on The Motley Fool Australia.

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More reading

• Does an investment in Fortescue shares provide the ‘healthiest’ ASX exposure to iron ore?
• 3 reasons this fundie is still bullish on ASX mining shares
• Could buying Wesfarmers shares give you $10,000 in annual dividend income by retirement?
• BHP share price has ‘no upside’: Goldman Sachs
• ‘Rare opportunity’: Expert explains why he just added this ASX 200 share

Motley Fool contributor Tristan Harrison has positions in Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Telstra Corporation Limited, Washington H. Soul Pattinson and Company Limited, and Wesfarmers Limited. The Motley Fool Australia has recommended Metcash 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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If you’re looking to boost your income portfolio next week, then you may want to look at the shares listed below.

Here’s why these ASX dividend shares could be worth considering right now:

Baby Bunting Group Ltd (ASX: BBN)

The first ASX dividend share that has been tipped as a buy for income investors is Baby Bunting.

It is a leading baby products retailer with a growing store network across Australia and New Zealand.

Morgans remains positive on Baby Bunting despite “an unwelcome surprise” from margin weakness just two months after management “expressed an ambition to hold or increase its gross margins in FY23.”

This is because the broker believes that the significant share price weakness since its update has more than compensated for this disappointment. Especially given how some of these margin pressures are transitory and its “compelling opportunities to grow its share of a growing market.”

Morgans has an add rating and $3.60 price target on its shares. As for dividends, the broker 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 $2.60, this will mean yields of 5.4% and 6.15%, respectively.

Transurban Group (ASX: TCL)

Another ASX dividend share that has been tipped as a buy is Transurban.

It is one of the world’s leading toll road operators with a portfolio of important roads and a lucrative pipeline of development projects. The former include CityLink in Melbourne, the Cross City Tunnel in Sydney, and AirportlinkM7 in Brisbane.

JP Morgan is a fan of the company and has a buy rating and $15.00 price target on its shares. The broker has been pleased with improving traffic trends and highlights the company’s positive exposure to inflation.

As for dividends, JP Morgan expects dividends per share of 60 cents in FY 2023 and then 63 cents in FY 2024. Based on the current Transurban share price of $14.28, this implies yields of 4.2% and 4.4%, respectively.

The post Buy these ASX shares for their dividends: analysts appeared first on The Motley Fool Australia.

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More reading

• 5 ASX 200 shares Macquarie just recommended its clients buy
• 3 ultra-high-yield ASX dividend shares you might regret not buying at these prices
• Will ASX 200 shares bottom before the year is out? Here’s Macquarie’s ‘best guess’
• Experts say these ASX dividend shares are buys today
• Here’s why the Transurban share price can ‘reap the benefits’: expert

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. 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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Perhaps no ASX 200 dividend share has gotten more attention in recent years than Fortescue Metals Group Limited (ASX: FMG).

Fortescue shares are notoriously volatile. This iron-ore mining company has fluctuated between $14.50 and $22.99 a share over just the past 12 months, after all.

But no one can take the fact that Fortescue has been absolutely pouring cash into shareholders’ pockets in recent years.

But exactly how much cash are we talking about for 2022? That’s what we’ll answer today.

How much income would $20,000 worth of Fortescue shares have yielded in 2022?

Let’s assume an investor bought $20,000 worth of Fortescue shares at the start of 2022. The company finished up 2021 trading at a share price of $19.21, so we’ll use that as our benchmark.

So $20,000 would have bagged our hypothetical investor 1,041 Fortescue shares at this price, with a little change left over.

Fortescue has once again funded two dividend payments for its shareholders over this year. The first was the interim dividend from March, worth 86 cents per share. The second was the September final dividend that came in at $1.21 a share. Both payments were fully franked.

These dividends equate to the second-highest annual dividend Fortescue has ever paid. The highest was in 2021, which saw an interim dividend of $1.47 per share, and a final dividend of $2.11.

So our 1,041 Fortescue shares would have granted our investor a payment of $895.26 in dividend income. The final dividend would have yielded up another $1,259.61, bringing the total for 2022 to $2,154.87.

That represents a very healthy yield on our cost base of 10.78%. Including Fortescue’s full franking, that grosses up to a pleasing 15.39%.

Fortescue has had a mildly disappointing year, share price-wise, though. Currently, the miner’s shares are down 4.58% year-to-date. Saying that, investors are still up by 10.18% over the past 12 months though. Over the past five years, Fortescue has appreciated by a whopping 316%.

The post If you bought $20,000 worth of Fortescue shares this year, here’s how much dividend income you’d have appeared first on The Motley Fool Australia.

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More reading

• Skin in the game: The ASX share in my portfolio I’m most excited about
• Here are the top 10 ASX 200 shares today
• Why did ASX 200 retail shares lead the market to fresh 25-week highs today?
• Why is the Allkem share price diving 8% today?
• Here are the 3 most heavily traded ASX 200 shares on Friday

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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Collins Foods Ltd (ASX: CKF) shares have the potential to deliver significant dividend income in my opinion.

Many of ASX’s biggest companies are also the biggest dividend payers, such as Commonwealth Bank of Australia (ASX: CBA) and BHP Group Ltd (ASX: BHP). But, a long time ago, these behemoths were a lot smaller.

While I’m not predicting that Collins Foods is going to become as big as those two, I do think it has plenty of growth potential.

There are three main areas to the business – KFC Australia, KFC Europe and Taco Bell Australia. It is a large franchisee of KFCs and Taco Bells in Australia.

At the end of FY22, it had 261 KFC restaurants in Australia after opening 10 more during the year.

KFC Europe has operations in both the Netherlands and Germany. It recently commenced a Netherlands corporate franchise agreement (CFA) which gives Collins Foods primary operational control over the entire market and incentives for market development, with a target of up to 130 net new restaurants over the next 10 years. At the end of FY22, it had 45 restaurants in the Netherlands.

Collins Foods is also responsible for Taco Bell in Australia. In FY22 it had 23 locations around Australia. FY22 saw Taco Bell’s revenue rise by 27.5% to $35.8 million.

Let’s now look at the dividend.

FY22 dividend

In FY22, the business paid a total fully franked dividend per share of 27 cents per share. That represented an increase of 17.4%.

This came after a 25% increase in underlying net profit after tax (NPAT) from continuing operations to $59.7 million. Statutory net profit jumped 47.2% to $54.8 million for the ASX share.

It has increased its dividend each year since 2014.

Future dividend expectations

It’s expected to pay an annual dividend of 30.9 cents in FY24 according to Commsec. This would be a grossed-up dividend yield of 4.4%.

The business is planning to open another 20 to 29 new restaurants in FY23 alone, with nine to 12 for KFC Australia, two to five for KFC Europe and nine to 12 Taco Bells.

The Collins Foods managing director and CEO Drew O’Malley said:

Collins Foods possesses the key ingredients to weather turbulent times – a strong balance sheet, world-class brands, and a passionate and dedicated team of experienced operators. We continue to monitor the landscape for acquisition opportunities that fit our portfolio and capabilities. And ultimately, we believe that by staying focused on providing unmatched experiences for our customers and people, our long-term prospects are as bright as ever.

I think that Collins Foods is capable of producing dividend growth of an average of more than 10% per annum over the next decade through a combination of same-store sales growth, store network rollout and potentially more acquisitions.

If the business can keep growing its underlying earnings per share (EPS) at an attractive rate, then this can continue funding bigger dividends over time.

Collins Foods share price snapshot

Collins Foods shares have dropped 26% in 2022 to date. But, over the last month, it has risen around 10%.

The post Want growing dividend income? I think this ASX share could be a future dividend king appeared first on The Motley Fool Australia.

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More reading

• Add these ASX 200 shares to your retirement portfolio: experts
• Chicken and health: Experts reveal 2 ASX shares to pounce on now

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 positions in and has recommended Collins Foods Limited. The Motley Fool Australia has recommended Collins Foods 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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Last week saw a number of broker notes hitting the wires once again. Three buy ratings that investors might want to be aware of are summarised below.

Here’s why brokers think investors ought to buy them next week:

Lovisa Holdings Ltd (ASX: LOV)

According to a note out of UBS, its analysts have upgraded this fashion jewellery retailer’s shares to a buy rating with an increased price target of $29.00. UBS was impressed with Lovisa’s trading update and points out that it is outperforming its peers. The broker also highlights that the company’s global expansion continues to gather pace with several new markets about to be entered. Combined, the broker has lifted its earnings estimates and valuation accordingly. The Lovisa share price was fetching $23.50 at Friday’s close.

QBE Insurance Group Ltd (ASX: QBE)

A note out of Citi reveals that its analysts have retained their buy rating and lifted their price target on this insurance giant’s shares to $15.40. The broker wasn’t overly surprised with QBE’s recent trading update. And while it sees a modest risk in QBE’s upcoming reinsurance renewal, it doesn’t appear overly concerned given the supportive premium rate environment and the exit running yield of 3.7% on fixed income investments. All in all, while the broker has reduced its earnings estimates for FY 2022, higher yields has led to an increase in earnings beyond this. The QBE share price ended the week at $13.02.

Qantas Airways Limited (ASX: QAN)

Another note out of UBS reveals that its analysts have retained their buy rating and lifted their price target on this airline operator’s shares to $7.60. This follows the release of a trading update last week which revealed a stronger than expected profit and lower net debt for the first half of FY 2023. UBS was pleased with the update and expects the strong form to continue into FY 2024. The Qantas share price was fetching $6.06 on Friday.

The post Top brokers name 3 ASX shares to buy next week appeared first on The Motley Fool Australia.

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More reading

• Brokers name 2 ASX dividend shares to buy next week
• Own Qantas shares? Guess what the airline is being accused of now
• 3 ASX 200 shares on the coveted Goldman Sachs conviction list
• Why is the Qantas share price having such a top run this week?
• 5 of the craziest things making news on the ASX this week

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 Lovisa Holdings Ltd. The Motley Fool Australia has recommended Lovisa Holdings Ltd. 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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Most investors know that the legendary Warren Buffett is considered one of the best investors of all time, if not the best. Most investors will also know that Buffett heads the famous investing conglomerate known as Berkshire Hathaway Inc (NYSE: BRK.A)(NYSE: BRK.B).

After taking over Berkshire in the mid-1960s, Buffett transformed the textiles company into a diverse powerhouse, owning many businesses outright and with significant investments in many other public companies.

Buffett’s love of his investments is also well known. He even likes to remind shareholders of his commitment to the Coca-Cola Co (NYSE: KO) by typically sporting a can or a bottle at Berkshire’s annual general meeting every year.

Berkshire Hathaway’s massive portfolio

Berkshire owns stakes in more than 50 different publically-traded shares. But it might surprise investors to learn that almost 74% of Berkshire Hathaway’s public investing portfolio is concentrated in just five companies. That’s according to the company’s latest 10Q filing, which is accurate as of 30 September.

Some famous names appear in Berkshire’s list. There’s Amazon.com Inc (NASDAQ: AMZN), Johnson & Johnson (NYSE: JNJ) and Visa Inc (NYSE: V). Buffett also owns chunks of Activision Blizzard Inc (NASDAQ: ATVI), Chinese electric vehicle manufacturer BYD Co Ltd and the relatively new-to-the-markets Snowflake Inc (NYSE: SNOW).

But none of these companies even come close to Buffett’s top five holdings.

They are (from largest):

1. Apple Inc (NASDAQ: AAPL)
2. Bank of America Corp (NYSE: BAC)
3. Chevron Corporation (NYSE: CVX)
4. Coca-Cola Co
5. American Express Inc (NYSE: AXP)

So what can we learn from this?

What can we learn from Warren Buffett?

Well, a few things to point out. Some of these holdings, namely Coca-Cola and AmEx, are old Buffett favourites. Buffett first bought Coca-Cola shares back in the 1980s. His investment in American Express goes back even further to the 1960s.

But others are far newer. Apple is by far Berkshire’s largest investment. The company has more than US$128 billion worth of Apple shares, which carves out a whopping 39.7% of Buffett’s entire public portfolio. Yet Buffett only began buying Apple shares back in 2016. His Chevron stake is even newer, with Berkshire picking up its first shares in the midst of COVID-ravaged 2020.

So Buffett is clearly an investor that holds onto his favourite shares through thick and thin. American Express is a company that has had many, many ups and downs since Buffett first bought in back in the ’60s. Yet Buffett has always stayed the course. Ditto with Coca-Cola.

But he is also an investor who knows how to jump on a trend. Buffett clearly saw the post-COVID collapse in global oil prices as an incredible opportunity.

It only took him two years to build Chevron into Berkshire’s third-largest position – one worth US$31.2 billion today. And Apple has gone from absent to Berkshire’s largest holding in just a few years as well.

So Warren Buffett is clearly an investor who likes to hold his favourite shares forever. But he is also one that isn’t afraid to jump on a trend or a new idea and quickly build it into a sizeable position.

Perhaps above all, Buffett’s Berkshire portfolio shows that he is just fine with having 40% of his portfolio in his favourite company: Apple. There are more than a few lessons we mere mortals can take away today.

The post 74% of Warren Buffet’s portfolio is in these 5 stocks. Could this help guide which ASX shares to buy? appeared first on The Motley Fool Australia.

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• Three comforting lessons for investors whose portfolio has been smashed versus the surprisingly good return of the ASX 200
• Warren Buffett owns these 5 value stocks
• Warren Buffett doesn’t follow his own advice – and it’s made him richer
• I’d use the Warren Buffett method to create a ‘best ASX shares to buy now’ list
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Bank of America is an advertising partner of The Ascent, a Motley Fool company. American Express is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Sebastian Bowen has positions in Amazon, American Express, Apple, Berkshire Hathaway (B shares), Coca-Cola, Johnson & Johnson, and Visa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Activision Blizzard, Amazon, Apple, Berkshire Hathaway (B shares), Snowflake Inc., and Visa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Johnson & Johnson and has recommended the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), long January 2024 $47.50 calls on Coca-Cola, long March 2023 $120 calls on Apple, short January 2023 $200 puts on Berkshire Hathaway (B shares), short January 2023 $265 calls on Berkshire Hathaway (B shares), and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Activision Blizzard, Amazon, Apple, and Berkshire Hathaway (B shares). 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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According to Oxford Languages, ‘motley’ means “incongruously varied in appearance or character”. But in relation to our Foolish writers, it means they vary greatly with regard to age, risk tolerance, and stage of life as well as investing budget, timeframe, and expectations.

Despite their many differences, a passion for investing in ASX shares is something all our writers definitely have in common.

So when we asked them to let us know which of the ASX companies they own shares in that they are feeling particularly upbeat about right now, they leapt at the chance to share their thoughts.

Here’s what they had to say:

8 of their own ASX shares our writers are especially pumped about (smallest to largest)

• Bailador Technology Investments Ltd (ASX: BTI), $185.59 million
• Alcidion Group Ltd (ASX: ALC), $199.72 million
• VanEck Morningstar Wide Moat ETF (ASX: MOAT), $454.32 million
• Vulcan Energy Resources Ltd (ASX: VUL), $1.01 billion
• Elders Ltd (ASX: ELD), $1.59 billion
• Telix Pharmaceuticals Ltd (ASX: TLX), $2.324 billion
• Domino’s Pizza Enterprises Ltd (ASX: DMP), $5.70 billion
• Fortescue Metals Group Limited (ASX: FMG), $58.32 billion

(Market capitalisations as of market close on 25 November 2022)

Why these ASX shares set our writers’ hearts aflutter

Bailador Technology Investments Ltd

What it does: Bailador exposes investors to a “portfolio of information technology companies with global addressable markets”. It generally makes initial investments of between $5 million and $20 million in businesses in the ‘expansion stage’. Some of the sectors that Bailador looks for are subscription-based internet businesses, online marketplaces, software, e-commerce, high-value data, online education, telco applications, and services. Siteminder Ltd (ASX: SDR) is currently one of its biggest investments.

By Tristan Harrison: The typical characteristics that Bailador looks for in a business to invest in are attractive to me. These include companies that are run by founders and have a “proven” business model with attractive unit economics, international revenue generation, “huge market opportunity”, and the “ability to generate repeat revenue”.

In the current climate of economic uncertainty, I think this sort of discerning approach could help this  ASX financial share excel over the long term. Yet, the Bailador share price is down 20% since the end of August.

Almost half the company’s portfolio value is cash after Bailador recently sold its Instaclustr and SMI stakes for a combined $138 million. Due to those sales, $119 million of Bailador’s total $246.8 million portfolio value is cash, providing protection and a hunting fund in these volatile times.

Motley Fool contributor Tristan Harrison owns shares in Bailador Technology Investments Ltd.

Alcidion Group Ltd

What it does: Alcidion is a healthcare informatics company that provides a range of software solutions to hospitals and healthcare professionals. Think everything from patient flow and bed management to real-time analytics, theatre management, waiting lists, and registrations.

Alcidion has an established foothold in Australia, New Zealand, and the United Kingdom, with its technology being used to manage more than 65,000 beds across 400 hospitals.

By Cathryn Goh: Although the digital transformation of business, in general, has been in train for some time, the healthcare sector has been somewhat of a laggard. Many hospitals are rooted in old-world systems. Others have embraced digital but use a variety of disparate systems that don’t talk to each other.

This is where Alcidion enters the fray, offering hospitals everything from a fully-fledged electronic patient record (EPR) solution to individual software modules that play nice with existing technology investments.

Put simply, Alcidion is a mission-critical, scalable software business that’s experiencing strong business momentum and has tipped into cash flow and earnings before interest, tax, depreciation and amortisation (EBITDA) positive territory.

With a newly-transformed offering and stiff industry tailwinds at its back, it’s a small-cap ASX share I think holds plenty of promise.

Motley Fool contributor Cathryn Goh owns shares in Alcidion Group Ltd.

VanEck Morningstar Wide Moat ETF

What it does: This exchange-traded fund (ETF) holds a small portfolio of US shares that are deemed to show characteristics of Warren Buffett’s famous ‘economic moat’. In other words, intrinsic and durable competitive advantages.

By Sebastian Bowen: The VanEck Wide Moat ETF invests in a relatively small portfolio of quality US companies. The holdings are selected for their ability to demonstrate an economic moat. Types of moats can include an exceptionally strong brand, pricing power in a particular sector, or selling a product that many customers have no alternative for, to name a few.

This ETF has proven its approach works. The VanEck Wide Moat ETF has outperformed its benchmark S&P 500 Index (SP: .INX) over the past five years and since its inception in June 2015.

Since inception, the fund has averaged a return of 14.48% per annum (as of 31 October). This is more than enough to earn the VanEck Wide Moat ETF pride of place in my ASX share portfolio.

Motley Fool contributor Sebastian Bowen owns units in the VanEck Vectors Wide Moat ETF.

Vulcan Energy Resources Ltd

What it does: Vulcan Energy is an ASX lithium company working to develop its flagship Zero-Carbon Lithium Project, a German lithium brine resource. The project is expected to power its production using renewable energy from the brine’s geothermal properties.

By Brooke Cooper: For me, my most exciting investment is one that also carries plenty of risk.

Vulcan Energy is working to develop a world-first zero-carbon lithium project. Thus, there’s lots of scope for potentially-significant upside, but also the risk of error and misfortune along the way. Being in my 20s and having a long investment horizon, I’m okay with taking on this risk. 

Beyond the company itself, unprofitable resource shares are typically particularly susceptible to shifting market sentiment, as I’ve delved into previously. That’s arguably one contributing factor to Vulcan’s 34% year-to-date share price tumble.

However, I remain excited about the Zero-Carbon Lithium Project’s potential, as well as the company’s work in the geothermal power space.

Motley Fool contributor Brooke Cooper owns shares in Vulcan Energy Resources Ltd.

Elders Ltd

What it does: Since its founding in 1839, Elders has taken many forms over its 183-year lifespan. Today, the company derives most of its gross profits from its agricultural chemicals operations and agency services. Elders’ agricultural industry involvement has also permeated into other areas such as fertilisers, animal health, and rural real estate.

By Mitchell Lawler: Upon releasing its FY22 full-year results last week, the market responded with a hefty sell-down of the agribusiness’s shares. The Elders share price was demolished by nearly 23% in a single session despite sales revenue and underlying profit increasing by 35% and 42%, respectively.

News of the company’s CEO, Mark Allison, retiring likely played a significant role in the shifting sentiment. Allison, without a doubt, was instrumental in conducting one of the greatest turnaround stories in Australia’s corporate history.

While it will be a loss to the company, I believe Elders is strongly positioned to continue its growth. The company has made many acquisitions recently, bringing the trusted Elders brand to more locations and potential customers than ever before.

With a price-to-earnings (P/E) ratio of around 9.7, I believe this long-standing S&P/ASX 200 Index (ASX: XJO) share looks acutely underappreciated and undervalued.

Motley Fool contributor Mitchell Lawler owns shares in Elders Ltd.

Telix Pharmaceuticals Ltd

What it does: Telix is a pharmaceutical company that makes cancer diagnostic and treatment products.
The business is currently transitioning from a pre-revenue phase to a growth stage. In April, Telix commercially launched prostate cancer diagnostic tool Illuccix into the US market. The pharma also has other cancer products in the pipeline.

By Tony Yoo: Many experts are bullish on healthcare as Australia and the world head into an economic slowdown. The sector has defensive characteristics because consumers will still spend money on their health while cutting other costs.

I believe Telix combines this defensive streak with the potential for explosive growth as it develops new products for release into an aging population. The share price is down 10.3% year to date, still presenting an attractive entry point for those willing to hold long-term.

Motley Fool contributor Tony Yoo owns shares in Telix Pharmaceuticals Ltd.

Domino’s Pizza Enterprises Ltd

What it does: Domino’s Pizza Enterprises holds exclusive master franchise rights for the Domino’s brand and network in Australia and several international markets such as New Zealand, France, and Japan.

By James Mickleboro: I recently took advantage of the significant weakness in the Domino’s share price in 2022 to pick up some shares. I made the move on the belief that the pizza chain operator’s shares are currently trading at a compelling level for a long-term investment.

While trading conditions are proving difficult for Domino’s at present due largely to inflationary pressures, these headwinds will inevitably ease in time. In light of this, I think investors should look beyond this and focus on the long term, which remains very positive thanks to the company’s store expansion plans.

Domino’s aims to more than double its store footprint over the next decade. Combined with its same-store sales growth target of 3% to 6% per annum, I believe this bodes well for its growth.

Motley Fool contributor James Mickleboro owns shares in Domino’s Pizza Enterprises Ltd.

Fortescue Metals Group Limited

What it does: Fortescue is the largest, pure-play iron ore miner on the ASX. It has multiple mining operations in the Pilbara region of Western Australia. It now has a subsidiary called Fortescue Future Industries (FFI), which is a green energy and technology business.

By Bronwyn Allen: I like investing in founder-led companies because I think there is inherently more passion and drive at the management level to keep the company growing and evolving.

Fortescue founder Andrew ‘Twiggy’ Forrest is one of Australia’s pre-eminent business leaders and, I believe, an incredible innovator who gives the miner a significant edge.

Fortescue is one of the world’s lowest-cost iron ore producers because Forrest has invested in infrastructure and technology, including robotics and artificial intelligence, like nobody else. I also think he’s way ahead on what may be the biggest investment thematic of my generation – climate change.

Forrest spent much of COVID-19 travelling the world, establishing business and government partnerships to develop green hydrogen and other renewable energy technologies under the FFI banner. His goal is to transition Fortescue from an iron ore miner to a ‘global green energy and resources company’.

I’m excited to see a leader in a ‘dirty’ industry like mining embracing climate change as an opportunity for business expansion, not a burden to core operations.

Motley Fool contributor Bronwyn Allen owns shares in Fortescue Metals Group Limited.

The post Skin in the game: The ASX share in my portfolio I’m most excited about appeared first on The Motley Fool Australia.

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More reading

• 3 fantastic ETFs for ASX investors to buy in December
• Does an investment in Fortescue shares provide the ‘healthiest’ ASX exposure to iron ore?
• 3 reasons this fundie is still bullish on ASX mining shares
• Don’t miss out on these top ASX dividend shares: analysts
• Three comforting lessons for investors whose portfolio has been smashed versus the surprisingly good return of the ASX 200

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alcidion Group Ltd, Bailador Technology Investments Limited, and SiteMinder Limited. The Motley Fool Australia has recommended Alcidion Group Ltd, Bailador Technology Investments Limited, Dominos Pizza Enterprises Limited, Elders Limited, and VanEck Vectors Morningstar Wide Moat ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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