Tag: Motley Fool

Liontown Resources Ltd (ASX: LTR) shares were on form on Wednesday.

The lithium developer’s shares were up as much as 18% at one stage before ending the day with a 6% gain to $1.40.

Investors were buying the company’s shares after it entered into a $550 million debt facility agreement.

These funds will be used to ensure the Kathleen Valley Lithium Project is funded through to its first production and the ramp-up to the company’s three million tonnes per year base case.

Can Liontown shares keep rising?

One leading broker that believes the worst is over for the company is Wilsons.

In response to its debt funding news, the broker upgraded Liontown’s shares to an overweight rating. It also lifted its price target massively to $1.85 from 85 cents.

Based on where its shares ended yesterday’s session, this implies potential upside of 32% for investors.

The broker believes that this agreement means that the company is now fully funded through to positive cash flow in early 2025.

It also highlights that “now that funding has been finalized, another major de-risking hurdle has been cleared on that way to commissioning.”

Sitting on the fence

One broker that doesn’t think investors should jump in just yet is Goldman Sachs.

This morning, the broker responded to the news by retaining its neutral rating and $1.45 price target on its shares. This is largely in line with where they trade today.

Though, it agrees with the view that Liontown will be generating positive free cash flow next year. Goldman said:

We forecast Kathleen Valley turning FCF positive from mid-CY25 on our spodumene price forecast, which we expect to support any refinancing of the debt if not already agreed prior, where LTR is continuing to explore options for a longer-term funding solution in parallel to provide future flexibility and optionality beyond the 3Mtpa base case.

The post Could Liontown shares really rally another 32%? appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Why Accent, Liontown, PSC Insurance, and Zip shares are charging higher today
• Liontown share price leaps 10% on fresh $550 million funding
• Here are the top 10 ASX 200 shares today
• Liontown shares rocket 30% in a month ahead of Friday’s results

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 Goldman Sachs Group. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Are you searching for ASX dividend shares to buy?

If you are then you may want to check out these two listed below that analysts think are best buys at present.

Here’s what they are saying about them:

Healthco Healthcare and Wellness REIT (ASX: HCW)

The team at Bell Potter has this healthcare and wellness focused property company on its preferred list. It has a buy rating and $1.70 price target on the ASX dividend share.

The broker likes the company due its attractive valuation and huge addressable market. It said:

HCW has underperformed the REIT sector last 3 months (-10% vs. +22% XPJ) following bond yield reversion and is attractively priced at 20% discount to NTA (but only REIT to record flat to positive valuation movement at 1H24) with double digit 3 year EPS CAGR given high relative sector debt hedging and ability to grow its $1bn development pipeline via attractive YoC spread to marginal cost of debt. Longer term, HCW has significant scope for growth with an estimated $218 billion addressable market where an ageing and growing population should underpin long-term sector demand.

Bell Potter is forecasting dividends per share of 8 cents in FY 2024 and 8.3 cents in FY 2025. This equates to dividend yields of 5.6% and 5.8%, respectively.

QBE Insurance Group Ltd (ASX: QBE)

Morgans has insurance giant QBE on its best ideas list with an add rating and $17.96 price target on its shares.

The broker is feeling positive about the company due to rate increases and cost reductions. It said:

With strong rate increases still flowing through QBE’s insurance book, and further cost-out benefits to come, we expect QBE’s earnings profile to improve strongly over the next few years. The stock also has a robust balance sheet and remains relatively inexpensive overall trading on 8x FY24F PE.

Morgans expects this to underpin partially franked dividends of 99 cents per share in FY 2024 and 108 cents per share in FY 2025. This equates to yields of 5.7% and 6.2%, respectively.

The post Analysts say these ASX dividend shares are strong buys appeared first on The Motley Fool Australia.

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More reading

• Buy Coles and these ASX dividend shares next week
• Top ASX passive income shares to buy in March 2024
• Morgans names more of the best ASX 200 shares to buy in March
• 5 things to watch on the ASX 200 on Wednesday
• 2 ASX 200 dividend shares that could be strong buys this month

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

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The Vanguard Australian Property Securities Index ETF (ASX: VAP) has a number of appealing qualities as an exchange-traded fund (ETF). But, is it a good buy today?

For readers who don’t know, Vanguard is one of the world’s largest fund managers, with several trillion (US) dollars under management. An ETF allows us to buy a basket of shares (or other assets) in a single investment.

The VAP ETF looks to invest in property businesses within the S&P/ASX 300 Index (ASX: XKO). Let’s look at some of the positives.

Diversification

There are many different types of commercial property including industrial, office, retail, healthcare and social, storage units, farmland and hotels.

Within the VAP ETF are a total of 33 different ASX shares, with each of these businesses owning a property portfolio.

Looking at the holdings, these are some of the biggest positions: Goodman Group (ASX: GMG), Scentre Group (ASX: SCG), Stockland Corporation Ltd (ASX: SGP), GPT Group (ASX: GPT), Mirvac Group (ASX: MGR), Dexus (ASX: DXS), Vicinity Centres (ASX: VCX), Charter Hall Group (ASX: CHC) and National Storage REIT (ASX: NSR).

Vanguard said around a third of the VAP ETF is allocated to industrial real estate investment trusts (REITs), just over a quarter is focused on ‘diversified’ REITs and retail REITs make up another quarter. The other types of REITs account for the rest of the portfolio.

Low management fees

One of the most attractive elements of investing in a Vanguard ETF is the low management fee, which helps reduce leakage of the portfolio’s value. Some active managers can charge a lot more, putting a dent in the wealth-building efforts.

While it’s not the cheapest Vanguard ETF around, the VAP ETF does have a low annual cost of 0.23%.

Good tailwinds

Vanguard Australian Property Securities Index ETF is invested in a range of businesses that have appealing tailwinds.

Australia’s population continues to grow, which means more potential customers at shopping centres, and it creates indirect demand for more logistics.

More people in the country require more housing, which is good for businesses like Mirvac and Stockland. There should also be more overall demand for storage units, farmland, healthcare, and so on.

Interest rates are currently high, which is painful for the cost of debt, and has caused a share price decline for a number of the names within the VAP ETF portfolio. However, if/when interest rate cuts do occur, that could prove to be a catalyst for share prices to go higher.

Foolish takeaway

The VAP ETF is a great way to invest in the Australian commercial property market if you want exposure to the whole sector, or if you’re not sure which name(s) you want to own.

It has a decent record of producing returns – the total return over the past decade has been an average of 9.3%, with passive income making up a significant part of that return.

However, I’d suggest this isn’t likely to be the sort of investment that achieves a high rate of compounding capital returns.

In my eyes, there are other ASX shares that could deliver stronger growth. Rental growth is normally fairly low, while some companies can be capable of quick national (or global) expansion.

The post Is the Vanguard Australian Property Securities Index ETF (VAP) a good investment? appeared first on The Motley Fool Australia.

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More reading

• Beginners: Buy these 2 ASX shares to start your portfolio

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

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Mining giants BHP Group Ltd (ASX: BHP), Fortescue Ltd (ASX: FMG), and Rio Tinto Ltd (ASX: RIO) have come under pressure this month after the iron ore price tumbled.

This weakness continued overnight and saw the benchmark iron ore price fall a further 3.6% to US$105.35 a tonne.

This is down materially from around US$140 a tonne at the end of 2023, and has been driven by concerns over demand from China.

But what is next for the steel-making ingredient? Is this just a temporary blip or the start of greater declines?

Let’s take a look what the commodities team at Goldman Sachs is expecting for the iron ore price in the coming years.

Iron ore price forecast

Firstly, let’s start with a quarterly view on prices during 2024.

Goldman has been expecting a pullback in prices, but the speed of recent declines appears to have caught it by surprise. It is expecting the following average prices for 2024:

• Q1 US$120 a tonne
• Q2 US$115 a tonne
• Q3 US$105 a tonne
• Q4 US$100 a tonne

This leads to an average price of US$110 a tonne for 2024.

Weakness to continue

The broker expects the trend to continue in the years to come.

As a result, it is forecasting an average benchmark iron ore price of US$95 a tonne in 2025.

After which, it expects further softening to an average of US$93 a tonne in 2026.

Finally, the following year the broker expects a slightly weaker average price of US$92 a tonne in 2027 for the benchmark price.

What about Fortescue’s low grade iron ore?

The bad news for Fortescue is that the broker believes that the discount will widen on its low grade iron ore in the coming years.

And given how much the miner is planning to spend on its decarbonisation plans, this could have consequences for its free cash flow and ultimately its dividends.

Goldman expects Fortescue’s discount to the benchmark price to be 89% in 2024, 86% in 2025, and 83% in 2026 and 2027.

Should you buy these miners?

Despite forecasting these iron ore price declines, Goldman Sachs remains positive on BHP and Rio Tinto.

It currently has buy ratings on both mining shares with price targets of $49.40 and $138.30, respectively.

The post Here’s the iron ore price forecast through to 2027 appeared first on The Motley Fool Australia.

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More reading

• How are these passive income investors earning more than an 8% yield on Rio Tinto shares?
• After a rough start to 2024 these 3 ASX 200 mining stocks are looking cheap to me
• How much passive income will I get from shares vs. property?
• Why BHP, Brainchip, Lake Resources, and Yancoal shares are sinking today
• Why is the BHP share price getting hammered on Tuesday?

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

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On Wednesday, the S&P/ASX 200 Index (ASX: XJO) was on form and recorded a small gain. The benchmark index rose 0.2% to 7,729.4 points.

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

ASX 200 expected to rise again

The Australian share market looks for a positive session on Thursday despite a mixed night on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 37 points or 0.5% higher this morning. In late trade on Wall Street, the Dow Jones is up 0.1%, but the S&P 500 has fallen 0.25% and the Nasdaq is down 0.55%.

Oil prices rise

ASX 200 energy shares Beach Energy Ltd (ASX: BPT) and Woodside Energy Group Ltd (ASX: WDS) could have a good session after oil prices stormed higher overnight. According to Bloomberg, the WTI crude oil price is up 2.9% to US$79.81 a barrel and the Brent crude oil price is up 2.7% to US$84.13 a barrel. Oil prices rose after Ukraine hit Russian oil refineries.

Sell Core Lithium shares

Core Lithium Ltd (ASX: CXO) shares are a sell according to Goldman Sachs. This morning, the broker has retained its sell rating on the lithium miner’s shares with a trimmed price target of 13 cents. This follows the release of the company’s half-year results. It said: “We note that with the mining contract terminated and notice given on the processing contract, we expect that a near-term restart of the Finniss operation is increasingly unlikely.”

Gold price rebounds

ASX 200 gold shares Newmont Corporation (ASX: NEM) and Northern Star Resources Ltd (ASX: NST) could have a good session after the gold price rebounded overnight. According to CNBC, the spot gold price is up 0.6% to US$2,179 an ounce. A softer US dollar boosted the precious metal.

ASX 200 shares going ex-dividend

Another group of ASX 200 shares will be going ex-dividend this morning and could trade lower. This includes appliance manufacturer Breville Group Ltd (ASX: BRG), auto retailer Eagers Automotive Ltd (ASX: APE), poultry producer Inghams Group Ltd (ASX: ING), and telco TPG Telecom Ltd (ASX: TPG).

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

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More reading

• Here are the top 10 ASX 200 shares today
• Why Core Lithium, Jupiter Mines, Newmont, and Perpetual shares are dropping today
• At $29, I think the Woodside share price could be 20% undervalued!
• Core Lithium shares crash 9% after posting massive half-year loss
• 5 things to watch on the ASX 200 on Wednesday

Motley Fool contributor James Mickleboro has positions in Woodside Energy Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has recommended Eagers Automotive 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 love investing in exchange-traded funds (ETFs). ASX ETFs give us an easy way to gain exposure to an entire index, such as the S&P/ASX 200 Index (ASX: XJO), for one. But they can also provide easy access to sectors or entire markets that are difficult or impossible to invest in directly on the ASX.

I already invested in quite a few ASX ETFs. The Vanguard Australian Share Index ETF (ASX: VAS) is a core component of my portfolio. As is its bolt-on companion, the Vanguard MSCI Australian Small Companies Index ETF (ASX: VSO).

I also invest in more actively managed ETFs like the VanEck Morningstar Wide Moat ETF (ASX: MOAT) for a shot at some market-beating returns.

But there’s one ASX ETF out there that I still don’t own in my portfolio. My regret over this fact grows by the day.

It’s the BetaShares Global Cybersecurity ETF (ASX: HACK). This ASX ETF does pretty much what it says on the tin. It offers investors access to a portfolio of companies from around the world that are all major players in the cybersecurity industry.

The Betashares Global Cybersecurity ETF does pull companies from many different markets. Saying that though, the vast majority of its holdings (79.8% at the last count) are US-based stocks.

They include names like Broadcom, Crowdstrike Holdings, Palo Alto Networks, Fortinet, Okta and Juniper Networks.

Apart from having one of the best ticker codes on the ASX, why should I want to add this ETF to my own portfolio?

Why would I want to HACK my portfolio with this ASX ETF?

Well, there are two factors worth discussing here.

The first is the growing importance of cybersecurity to most facets of modern life. Every few months, it seems like we’re reminded of this fact. Major government departments, as well as multiple prominent ASX shares, have been hit by cyberattacks in recent years. Just one successful cyberattack is enough to severely damage a company’s reputation. Particularly if sensitive customer information is stolen.

As such, it is my belief that individuals, businesses and governments are all going to be prepared to pay more and more for cybersecurity services that keep their online information secure.

The second is this ASX ETF’s past performance.

You should never judge an investment on its past performance alone. However, I think in this case, it quantifies the ever-rising importance of this industry. Over the past five years, HACK units have returned an average of 18.69% per annum (including dividend distributions). Since this ASX ETF’s inception in 2016, that return rises to 19.31% per annum.

I wouldn’t be too surprised if HACK keeps banging out numbers like this going forward. As such, this ETF is one that I’d be more than happy to buy today, and that I hope to add to my portfolio in the near future.

The post This is the next ASX ETF I plan to buy appeared first on The Motley Fool Australia.

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More reading

• 4 ASX ETFs for smart investors
• 2 excellent ASX ETFs to buy for growth
• Here are 3 exciting ASX tech ETFs to buy right now

Motley Fool contributor Sebastian Bowen has positions in VanEck Morningstar Wide Moat ETF, Vanguard Australian Shares Index ETF, and Vanguard Msci Australian Small Companies Index ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended BetaShares Global Cybersecurity ETF, CrowdStrike, Fortinet, Okta, and Palo Alto Networks. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Broadcom. The Motley Fool Australia has positions in and has recommended BetaShares Global Cybersecurity ETF. The Motley Fool Australia has recommended CrowdStrike, Okta, and VanEck 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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Owning an investment property in the state of Victoria became far more expensive in 2024. Thanks to changes announced last year, landowners have faced a significant hike in land tax since 1 January.

According to reporting in The Age, even owners of second homes or investment properties worth between $50,000 and $100,000 will now have to pay a flat $500 annual land tax. For anyone owning a second home or investment property worth more than $1 million, the land tax hike is reportedly worth up to $1,675 in additional annual costs.

As such, many property investors may be deciding to sell down or out of their real estate portfolios, and move into ASX shares instead.

I can’t admit to owning any property in Victoria. But if I did and I was currently selling some land thanks to these tax hikes, here are the five ASX shares I’d consider buying instead. Property has historically delivered both income and capital growth, so that’s what I’d be seeking from my ASX shares as well.

5 ASX shares to buy for investors hit by land tax hikes

Starting off, my first choice would be Washington H. Soul Pattinson and Co Ltd (ASX: SOL). This ASX 200 investing house is a long-term favourite of mine, and a share that I would happily recommend to any investor, not just those affected by the land tax hikes.

Soul Patts runs a huge portfolio of different assets on behalf of its investors. These include other ASX shares, as well as property, private credit and venture capital investments.

This company has delivered significant capital growth over the past two decades, as well as a 23-year streak of annual dividend pay rises.

Next, I’d consider National Storage REIT (ASX: NSR). This real estate investment trust (REIT) allows investors to get exposure to property assets without the risk of any direct land tax hikes. National Storage owns a vast network of personal storage facilities around Australia. It is the largest single provider of such services in the country.

With low overhead costs and reasonably consistent demand, I think this is a great business to get a slice of. National Storage units are currently offering a distribution yield of around 4.7%.

MFF Capital Investments Ltd (ASX: MFF) is number three on our list of land tax hike replacements. This listed investment company (LIC) is another one of my favourite personal investments. It holds a portfolio of mostly US shares on behalf of its shareholders. These US shares are selected on their high quality and include names like American Express, Mastercard, Amazon and Alphabet.

Investors have enjoyed some pleasing returns in recent years, with MFF shares up more than 38% since March 2023. The company has been steadily increasing its dividend every year as well, with MFF shares today offering a fully-franked yield of 2.73%.

Chasing both growth and income

Wesfarmers Ltd (ASX: WES) is another stock investors who are selling up their properties to avoid those land tax hikes may want to take a look at. Wesfarmers is one of the most diversified blue chip shares on the ASX. It owns retail icons like Bunnings, Target, Kmart and OfficeWorks. But it also has its fingers in many other pies, including lithium, gas distribution, work wear and chemical and fertiliser production.

It has a long history of delivering both healthy capital growth and reliable dividend income to its shareholders. It also offers diversification that few other single ASX shares can match.

Finally, I think property investors who are fleeing land tax hikes can happily invest in an ASX index fund like the Vanguard Australian Shares Index ETF (ASX: VAS). This exchange-traded fund (ETF) gives investors exposure to the largest 30 companies on the ASX. That’s everything from Wesfarmers and Soul Patts to JB Hi-Fi Ltd (ASX: JBH) and AGL Energy Ltd (ASX: AGL).

An index fund like VAS can be expected to deliver a return that is in line with the average of the entire Australian share market. Investors have enjoyed an almost even split between capital growth and franked dividend income from this index fund over many years. What more could you want from an investment to replace your property?

The post Selling your investment property due to land tax hikes? 5 ASX shares I’d buy with the proceeds appeared first on The Motley Fool Australia.

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More reading

• Buy these ASX ETFs for a second income
• Own Soul Patts shares? Here’s the ASX 200 stock’s result preview
• How much would I have now if I’d invested $10,000 in Vanguard Australian Shares Index ETF (VAS) a year ago?
• How much passive income will I get from shares vs. property?
• The Wesfarmers share price has jumped 30% in a year, is it too late to buy?

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. American Express is an advertising partner of The Ascent, a Motley Fool company. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Sebastian Bowen has positions in Alphabet, Amazon, American Express, Mastercard, Mff Capital Investments, Vanguard Australian Shares Index ETF, Wesfarmers and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Amazon, Mastercard, Washington H. Soul Pattinson and Company Limited, and Wesfarmers. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2025 $370 calls on Mastercard and short January 2025 $380 calls on Mastercard. The Motley Fool Australia has positions in and has recommended Washington H. Soul Pattinson and Company Limited and Wesfarmers. The Motley Fool Australia has recommended Alphabet, Amazon, Jb Hi-Fi, and Mastercard. 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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With the S&P/ASX 200 Index (ASX: XJO) rocketing more than 14% since the start of November, stock selection has now become critical.

After all, you don’t want to be buying an ASX stock after it has already become expensive. Every cent you overpay eats into your future profit.

So here’s my take on three ASX shares that I think still have plenty of room to impress:

Exposure to mining without buying mining stocks

The trouble with mining shares is their cyclicality and volatility.

Commodity prices can fluctuate wildly up and down, so the fortunes of the companies that produce minerals are unpredictable.

However, if you still want to be exposed to that sector, buying shares in a supplier might be a more reliable way to go.

RPMGlobal Holdings Ltd (ASX: RUL) provides technology and solutions to clients in the resources sector.

Over the past five years, even through COVID-19 and the inflation crisis, the RPMGlobal stock price has rocketed 313%.

And with both western and Chinese economies bound to improve in the coming years, I like the chances of this stock rising further.

Analysts at both Moelis Australia and Veritas Securities agree with me by rating RPMGlobal as a strong buy right now, according to CMC Invest.

The ASX shares that are never cheap are cheap right now

Camplify Holdings Ltd (ASX: CHL) might be very much a small cap at the moment, but its addressable market is huge.

The company operates a peer-to-peer platform that allows campervan owners to rent out their vehicles when not in use.

The startup, hailing from Newcastle in NSW, grew its revenue for the first half by a whopping 95.4%.

The market reacted negatively though, which the analysts at Morgans put down to “some seasonality” in a few metrics, such as future bookings and gross margins.

That team, plus Canaccord and Ord Minnett, are not the least bit worried about the future trajectory. All three are maintaining strong buy ratings for Camplify, as shown on CMC Invest.

This could mean that the current dip is a golden buying opportunity.

Bringing in revenue while developing future products

Telix Pharmaceuticals Ltd (ASX: TLX) continues to score goals in the tough industry of biotechnology and pharmaceutical development.

The shares are already up 11.8% so far this year, and 68% if you go back 12 months.

The great ace up its sleeve is that it already has one cancer product, Illucix, on commercial sale. This brings in revenue while it’s working on other cancer diagnosis and treatment solutions.

The company recently announced its plan to acquire Canadian business ARTMS inc.

“The acquisition is crucial for the supply of 89Z and the pending rollout of Zircaix for renal cancer imaging,” Bell Potter analysts said in a memo.

“Telix is validating multiple production locations for 89Zr in the US using the ARTMS core technology. The company also owns significant quantities of ultra-pure 89Y, being the raw material for production of 89Zr.”

The post 3 ASX shares I think are set to soar in 2024 appeared first on The Motley Fool Australia.

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Motley Fool contributor Tony Yoo has positions in Camplify and Telix Pharmaceuticals. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended RPMGlobal and Telix Pharmaceuticals. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Camplify. The Motley Fool Australia has recommended Camplify, RPMGlobal, and Telix Pharmaceuticals. 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.

Nvidia (NASDAQ: NVDA) won over Wall Street last year, illustrated by its more than 280% stock growth since March 2023. The company’s years of dominance in graphics processing units (GPUs) perfectly positioned it to profit significantly from a boom in artificial intelligence (AI) as demand for the chips skyrocketed. As a result, Nvidia’s quarterly revenue and free cash flow are up 207% and 430%, respectively, in the last 12 months.

The company’s meteoric rise has some analysts questioning whether the company has much more to offer investors in 2024. However, trends in the chip market indicate Nvidia will have little problem retaining its leading market share in AI GPUs, despite new offerings from Advanced Micro Devices and Intel.

Meanwhile, the AI market is nowhere near hitting its ceiling. It’s projected to expand at a compound annual growth rate of 37% until at least 2030. The sector’s potential indicates GPU demand is likely to continue rising for the foreseeable future, with Nvidia well-equipped to continue enjoying significant gains from AI.

Here’s why Nvidia remains an attractive buy in March.

Nvidia will likely retain its AI dominance despite rising competition

Nvidia’s success in the AI chip market has led to countless tech companies announcing ventures into the industry. Leading chipmakers AMD and Intel plan to begin shipping new GPUs soon in an attempt to challenge Nvidia’s market share. Meanwhile, companies new to the sector are also joining in, as Amazon and Microsoft announced new AI chips last year.

However, market trends suggest Nvidia’s supremacy will be challenging for competitors to overcome. The company has held an over 80% market share in desktop GPUs for years, despite AMD’s and Intel’s presence in the sector.

Intel only entered the industry last year, while AMD’s history in desktop GPUs spans decades. Still, AMD’s GPUs only account for about 10% of the market.

A similar situation has occurred in another area of the chip market. Intel was a king in central processing units (CPUs) for years, with an 82% market share at the start of 2017 when AMD landed on the scene with its Ryzen line of CPUs. AMD has managed to steal a significant share from Intel since then. However, Intel is still responsible for most of the CPU market; its share is above 60% and AMD’s is at 36%.

Nvidia’s estimated 80% to 95% market share in AI GPUs could falter slightly as competition heats up. However, history indicates the company will retain its overall lead and continue to see major gains from AI for years.

Projections show Nvidia’s stock should continue beating the S&P 500

Nvidia has stunned Wall Street over the last year, posting multiple quarters of record earnings. In the fourth quarter of 2024 (ended in January), the company’s revenue increased by 265% year over year to $22 billion. Meanwhile, operating income jumped 983% to nearly $14 billion. The monster growth was primarily from a 409% increase in data center revenue, reflecting increased chip sales.

While a spike in AI GPU sales is mainly responsible for Nvidia’s stellar financial growth, the chipmaker is also profiting from an improving PC market. Spikes in inflation prompted steep declines in PC sales, with shipments dipping 16% in 2022 and continuing to fall for most of 2023. However, recent reports indicate the market is finally showing signs of recovery.

According to Gartner, PC shipments popped 0.3% in Q4 2023, marking the first such increase in over a year. Market improvements have been reflected in Nvidia’s sales, with its PC-centered gaming segment reporting an 81% rise in revenue in Q3 2024 (which ended October 2023).

A leading role in AI and a recovering PC market suggests Nvidia has a strong outlook in the coming years. Earnings-per-share (EPS) estimates seem to support this.

Data by YCharts.

The above chart shows Nvidia’s earnings could hit $34 per share by fiscal 2026. Multiplying that figure by its forward price-to-earnings ratio of 38 yields a stock price of $1,292.

Considering the company’s current position, that projection would see Nvidia’s stock rise 40% over the next two years. The company may not replicate last year’s growth but would still beat the S&P 500‘s 22% growth since 2022.

As a result, Nvidia still has much to offer new investors and is an exciting buy right now. 

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

The post Is Nvidia stock a buy? appeared first on The Motley Fool Australia.

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Dani Cook has no position in any of the stocks mentioned. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Advanced Micro Devices, Amazon, Microsoft, and Nvidia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Gartner and Intel and has recommended the following options: long January 2023 $57.50 calls on Intel, long January 2025 $45 calls on Intel, long January 2026 $395 calls on Microsoft, short January 2026 $405 calls on Microsoft, and short May 2024 $47 calls on Intel. The Motley Fool Australia has recommended Advanced Micro Devices, Amazon, and Nvidia. 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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It’s a bit of a misconception that you need a massive amount of money to start investing in ASX tech shares.

For one, the share prices on the ASX are not exorbitant like in the US. 

Take online travel booking site Booking Holdings Inc (NASDAQ: BKNG) as an example. Those shares are each going for an insane US$3,500 at the moment, which is more than $5,000.

It’s rare to see any ASX tech shares trading for more than a couple of hundred dollars, let alone thousands.

So if you have as little as $3,000, you can get started on your journey.

Here are three ASX technology stocks you could invest $1,000 into and be confident it’ll be worth significantly more in five years’ time:

‘Scaling margins and earnings rapidly’

Californian outfit Life360 Inc (ASX: 360) makes an eponymous smartphone app that’s now ranked 30th in the iPhone app store, and 5th in the social networking category.

The family security software is proving to be popular among Americans who want to track where their children are. The app can similarly be used to keep elderly folks safe.

Even though the share price has multiplied 5 times since its June 2022 low, experts are lining up to still express their bullishness for Life360.

In fact, seven out of eight analysts currently surveyed on CMC Invest believe the ASX tech stock is a strong buy.

“The company is now scaling margins and earnings rapidly off a low base, with attractive unit economics and potential structural profitability tailwinds on the horizon from a reduction in effective app store fees,” said Goldman Sachs Group Inc (NYSE: GS) analysts earlier this month.

New Zealand hero taking on the world

In recent years New Zealand software maker Xero Ltd (ASX: XRO) has been through a similar journey to Life360.

After interest rates rose steeply over 2022 and 2023, it was forced to look at itself in the mirror and change from its profligate ways.

The company cut expenses, which included staff cuts, and dialled down its ambitious expansion targets. Cash flow and profits were elevated in priority.

The reforms have worked in charming the market, with a 57% increase in share price over the past 12 months.

Many experts are betting the upward trend will continue for a while yet, with 10 out of 14 analysts surveyed on CMC Invest still rating Xero as a buy.

ASX tech shares for a business boosting earnings by 785%!

Almost exactly one year ago, Megaport Ltd (ASX: MP1) was in crisis after its chief executive exited without warning.

Maybe insiders knew it was coming but it shocked the market at the time.

Twelve months later, the Megaport share price has more than tripled and all its half-year numbers were impressive:

• EBITDA up 785%
• Revenue up 35%
• Record annual recurring revenue (ARR) 29%
• Gross profit up 43%

With all the data needing to be moved around for e-commerce, cloud computing and artificial intelligence, professional investors are excited for the future of the virtual networking provider.

Ten out of 15 analysts covering Megaport rate the ASX tech stock as a buy, according to CMC Invest.

The post Got $3,000? 3 ASX tech shares to buy and hold for the long term appeared first on The Motley Fool Australia.

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More reading

• 3 hypergrowth ASX shares to buy in 2024 and beyond
• Buy alert: 4 reasons I think Life360 stock is a must-own now
• Here are the top 10 ASX 200 shares today
• $10k of savings? I’d buy these ASX 200 shares to grow my money
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Tony Yoo has positions in Life360 and Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Booking Holdings, Goldman Sachs Group, Life360, Megaport, and Xero. The Motley Fool Australia has positions in and has recommended Xero. The Motley Fool Australia has recommended Booking Holdings and Megaport. 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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