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If you fancy yourself a long-term investor, it’s a good idea to pay attention when the market overreacts to an update from a quality company. 

A share price dip from slightly negative or even innocuous news could provide an attractive entry point for those who are willing to ride out the short-term bumps. 

One such case in point is S&P/ASX 200 Index (ASX: XJO) pokies maker Aristocrat Leisure Limited (ASX: ALL).

Last week, the ASX 200 gaming share released its 2022 financial year results and the stock instantly plunged 7%. 

Morgans senior analyst Alexander Mees reckoned all this did was provide a compelling chance to buy (more) shares in Aristocrat.

Why did the market react negatively?

There were potentially some short-term points that worried the market, admitted Mees. But overall he was not concerned with the ASX 200 stock’s price dip.

“Whether it was the disappointment of there being no acquisition announcements… the negative effect of higher finance costs on future estimates, or simply a reaction to FY22 earnings coming in slightly below consensus, the 5% decline in Aristocrat’s share price today creates a buying opportunity,” Mees said on the Morgans blog.

Aristocrat actually boosted its revenue, earnings and dividend in 2022.

“A post-COVID-19 recovery of casino capex budgets, combined with increased product penetration, drove a strong performance by Aristocrat Leisure’s land-based gaming business in FY22, especially in its key US market.”

The big downside was Aristocrat’s digital gaming arm, but it wasn’t a surprise to Mees.

“Growth in the digital gaming business, Pixel United, came to an abrupt — though expected — halt as the mobile games market normalised following the lockdown-fuelled sugar hit of the prior year.”

Why is Mees keeping the faith in ASX 200 share Aristocrat?

As far as Mees is concerned, all three reasons for buying Aristocrat shares for the long term still hold:

1. Long-term organic growth potential
2. Strong cash conversion and return on capital employed (ROCE)
3. Strong platform for investment

“Aristocrat is better capitalised than many of its competitors and has what we regard as a strong platform to continue investment in design and development,” said Mees.

“[It] is a capital-light business, despite its ongoing investment in gaming operations capex and working capital. It has a high level of cash conversion and ROCE.”

Mees’ peers generally agree with him, with 12 out of 14 analysts currently surveyed on CMC Markets rating Aristocrat shares as a buy.

With much of its revenue coming from offshore, currency fluctuations are always a risk for the company. As is an escalation in operational or user acquisition expenses.

An example of this was when the ASX 200 share experienced disruption due to the war in Europe. According to the Australian Financial Review, Aristocrat had the largest presence in Ukraine of any Australian business.

The post Buy this ASX 200 share now while the market’s distracted: expert appeared first on The Motley Fool Australia.

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More reading

• Top brokers name 3 ASX shares to buy next week
• Brokers name 3 ASX shares to buy today
• 3 ASX 200 shares that announced supersized dividends this week
• Why Aristocrat, CBA, Core Lithium, and GrainCorp shares are dropping today
• Why is the Aristocrat share price diving despite a 27% profit boost?

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 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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All Ordinaries Index (ASX: XAO) share BWX Ltd (ASX: BWX) hasn’t gone anywhere for nearly three months, but that could be about to change.

The beauty company suspended trading of its stock in late August amid confusion over certain revenue recognition issues for financial year 2021 and financial year 2022.

The BWX share price last trading at 63 cents – 85% lower than it was at the start of 2022.

For comparison, the All Ords fell 9% over the eight months ended 31 August.

Let’s take a closer look at when the market might expect the All Ords share to return to trade.

Shares in All Ords company BWX to return to trade

The BWX share price could be set to kick off for the first time in three months next week.

The company now expects to drop its audited financial year 2022 results on Monday before returning to trade on Tuesday. The latest update on the saga was released earlier this week.

The confusion over its earnings meant it wasn’t sure whether it met its previous guidance.

It also meant the company might have needed to restate its earnings for financial year 2021 and the first half of financial year 2022. Though, that wasn’t mentioned in its most recent update.

Its earnings were initially expected to be released in late September. That was later pushed back to late October before being delayed once more last month.

The company also deferred its annual general meeting (AGM) due to the delay. It hasn’t yet announced when the meeting will go ahead.

BWX develops, manufactures, and distributes natural beauty and wellness products under brands including Sukin, Andalou Naturals, and Mineral Fusion.

No doubt many will be watching BWX shares next week to see how the market reacts to the All Ords stock’s extended halt and financial year 2022 results.

The post ASX All Ords share BWX tipped to start trading next week after 3-month trading halt appeared first on The Motley Fool Australia.

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More reading

• Another ASX All Ords company has just been hit with a cyberattack. Here’s the lowdown

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 recommended BWX 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 Chalice Mining Ltd (ASX: CHN) share price has been a strong performer on Wednesday.

In early trade, the mineral exploration company’s shares rose as much as 10% to $5.11.

The Chalice share price has pulled back a touch since then but remains up 6% at $4.92.

Why is the Chalice Mining share price surging?

Investors have been scrambling to buy the company’s shares this morning following the release of drilling results from the Julimar Ni-Cu-PGE Project in Western Australia.

According to the release, exploration activities are continuing across the >30km long Julimar Complex, with two diamond drill rigs currently drilling across the 10km long Hartog-Baudin strike length and four rigs continuing resource drilling at the Gonneville deposit.

The good news is that recent drilling demonstrates the potential for material resource growth at Julimar, with several outstanding new intersections up to 650 metres beyond the current resource.

One of the holes, named HD042, intersected a significant interval in Gonneville-type ultramafic geology. Management believes this is a “highly encouraging result” and confirms the prospectivity of the Hartog Intrusion and demonstrates that it is a continuation of the Julimar Complex.

The company advised that access to additional drill sites to adequately test this offset part of the Julimar Complex is anticipated in the coming weeks. Systematic drilling into Hartog will then commence at a step-out of ~1.6km north of the current resource.

What else is on the horizon?

It looks set to be a busy period for Chalice with a number of activities on the go at Julimar.

This includes access discussions for the Bindoon Training Area which covers the high-priority Flinders Target, ~25km north east of Gonneville.

In addition, mine development studies to support a scoping study for a mine at Gonneville on farmland is targeted for completion in late 2022.

If these activities deliver positive outcomes, it could give the Chalice Mining share price a much-needed boost. Despite today’s gain, it remains down almost 45% in 2022.

The post Why is the Chalice Mining share price surging 10% on Wednesday? appeared first on The Motley Fool Australia.

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More reading

• 3 ASX mining shares that turned a $10,000 investment into $500,000

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 inflation environment is hurting a lot of households and businesses at the moment. Valuations have gone down for a wide range of assets. But, there are a select few S&P/ASX 200 Index (ASX: XJO) dividend shares that are benefiting from the environment with a higher share price and expected larger payouts.

There are no rules about how long inflation will stay elevated. That depends on a number of different factors. But, it is interesting to see which types of businesses have performed well this year with everything that has happened.

Here are a few examples of ASX 200 dividend shares that have performed this year.

New Hope Corporation Limited (ASX: NHC)

New Hope is one of the largest coal miners in Australia, and it’s much bigger after a 150% rise of the New Hope share price in 2022 to date.

It’s benefiting from a significantly elevated coal price. The consequences of the Russian invasion of Ukraine have led to significantly higher energy prices as countries look for alternative sources of power.

In FY22, New Hope reported a 143% increase in total revenue to $2.56 billion, boosting cash generated from operations by 285% to $1.14 billion. The total dividend per share was boosted by 1,129% to 86 cents per share.

The company also recently announced a share buyback of up to $300 million.

According to Commsec, it’s expected to pay a grossed-up dividend yield of 36% in FY23.

Computershare Limited (ASX: CPU)

This ASX 200 dividend share offers a number of different services including share issuer services, employee share plans, business services and so on.

The Computershare share price has gone on a big run this year, rising by 36%. The FY22 final dividend was increased by 30% to 30 cents per share.

While the business is experiencing cost inflation (across all its business lines), it’s benefiting from the global interest rate rises being faster and larger than expected – this is boosting Computershare because of all the cash that it holds.

At the AGM it upgraded its FY23 margin income guidance. It’s expected to be around $800 million, up $280 million compared to the August guidance. In FY24, the margin income could be around $1 billion, according to the company.

In FY23, management earnings per share (EPS) growth is expected to be around 90%.

APA Group (ASX: APA)

APA is a large owner and operator of gas pipelines around Australia. It connects sources of supply to various markets, delivering around half of the country’s natural gas usage.

The ASX 200 dividend share is benefiting from favourable tariff escalation from exposure to Australian and US inflation indices. Its revenue is linked to inflation. The FY22 free cash flow increased by 19.8%, helping fund a 3.9% increase to the distribution per security.

In FY23, the distribution is expected to grow by 3.8% on FY22, to 55 cents per security.

In 2022 to date, the APA share price has risen by 9%.

The business continues to invest hundreds of millions of dollars in “growth projects” for energy infrastructure “today and tomorrow” in both gas transmission and renewable energy generation.

The post 3 ASX 200 dividend shares beating inflation right now appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Will ASX 200 shares bottom before the year is out? Here’s Macquarie’s ‘best guess’
• Why Galan Lithium, New Hope, TechnologyOne, and Virgin Money UK shares are rising
• Why are ASX 200 coal shares smoking hot on Tuesday?
• 4 quality, undervalued ASX 200 shares in an earnings upgrade cycle revealed: fund manager

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 positions in and has recommended APA 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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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.

There’s no denying that 2022 has not been a great year for Amazon (NASDAQ: AMZN) stock. It’s easy to look at a chart, see that the stock is down over 40% year to date, and begin to panic.

Understanding why the stock has cratered is a bit more complex, though. At its core, Amazon can be thought of as two businesses: E-commerce and cloud computing. While the company has made a number of strategic investments in advertising, gaming, and media, the e-commerce and cloud segments are, by far, its largest operations.    

Given the lingering effects inflation has on consumer purchasing power, coupled with fears of recession and corporations adjusting budgets, both the e-commerce business and the cloud segment for Amazon have been beaten down.

As a result, the company is laying off employees in an effort to scale back expenses and preserve operating capital. While all this certainly is concerning, investors need to zoom out and think long-term. Amazon has several growth levers that have not reached peak performance, and the stock has done nothing but fall since its split earlier in the year. Let’s dig into Amazon’s entire business, analyze what’s growing and what’s not, and determine if the stock’s current valuation makes it a buy. 

The current state of Amazon

For the three months ended Sept. 30, 2022, Amazon reported $127 billion in total revenue, up 15% year over year. The company’s North American operation increased 20% annually, while its cloud segment, Amazon Web Services (AWS), increased 27% year over year. Meanwhile, Amazon’s International segment decreased 5% year over year. This is not entirely surprising when accounting for the fact that the company experienced a $5 billion negative effect from foreign exchange during the third quarter.

While revenue increased in two out of three of Amazon’s reporting segments, it’s more important to analyze the profitability profiles of each business. Despite 20% revenue growth in North America, this segment reported nearly $400 million in operating losses during the quarter. On top of that, the International segment reported $2.5 billion in operating losses just in Q3 alone. It’s important for investors to remember that these segments have been operating near breakeven levels for several quarters now.  

Now, as inflation continues to affect consumer spending and corporate budgets, executives must take a look at the entire business and find ways to stretch cash. During the Q3 call, Amazon CFO Brian Olsavsky stated:

As the third quarter progressed, we saw moderating sales growth across many of our businesses, as well as the increased foreign currency headwinds I mentioned earlier, and we expect these impacts to persist throughout the fourth quarter. As we’ve done at similar times in our history, we’re also taking actions to tighten our belt, including pausing hiring in certain businesses and winding down products and services where we believe our resources are better spent elsewhere.

Management did not mince their words. Amazon is cutting costs, mostly in the form of headcount reductions. While this can appear as a cause for concern on the surface, these synergies are what mature companies must execute during times of an unclear macroeconomic outlook. 

When in doubt, zoom out

While Amazon separates its revenue into North America, International, and AWS segments, a number of sub-categories comprise these three larger streams. The table below illustrates Amazon’s revenue by sub-category for the last five quarters.

Sub-Category	Q3 2021	Q4 2021	Q1 2022	Q2 2022	Q3 2022
Online stores	$49,942	$66,075	$51,129	$50,855	$53,489
Physical stores	$4,269	$4,688Â	$4,591	$4,721	$4,694
Third-party seller services	$24,252	$30,320	$25,335	$27,376	$28,666
Subscription services	$8,148Â	$8,123	$8,410	$8,716	$8,903
Advertising services	$7,612	$9,716	$7,877	$8,757	$9,548
AWS	$16,110	$17,780	$18,441	$19,739	$20,538
Other	$479	$710Â	$661	$1,070	$1,263

Data source: Page 14 of Amazon’s Q3 2022 earnings press release.

Looking at the data above, let’s isolate two viewpoints: Quarterly growth and annual growth. Comparing each sub-category to Q3 2021, investors can see that Amazon is generating growth across its entire business. Now, if we dilute this to quarterly growth throughout 2022, investors can also see that revenue is either growing, or in a worst-case scenario, is flat quarter over quarter.

If we zoom out, we should think about two things here. First, it’s pretty amazing that Amazon is generating growth across its entire business in consecutive quarters, even during times of volatile economic activity. However, as pointed out above, revenue growth is only one component to keep in mind. While Amazon has generated consistent growth, it has also invested heavily in the business, and so not all these sub-categories are profitable.      

Where do we go from here?

Given the current economic climate and the financials above, freezing new hires and having layoffs is a tough, but necessary, reality. In an interview on CNBC, CEO Andy Jassy said that the layoffs would occur throughout the fourth quarter and carry into 2023. More specifically, he acknowledged that the cost reductions would be contained to Amazon’s devices and services segment, as well as stores.

It’s important to note that during this interview, Jassy assured investors that fulfillment workers would not be affected due to anticipated demand from the upcoming holiday season.

During the earnings call, Olsavsky stated: “We’re also continuing to invest in new infrastructure to meet capacity needs, expanding to new geographic regions, developing new services and iterating quickly to enhance existing services.”

As an investor, the above comment is encouraging. While management is admitting that the organization as a whole may be bloated, they’re only reducing expenses in non-core initiatives. In other words, Amazon will continue to fund areas such as the cloud and advertising, both of which generate consistent growth and margin.

Amazon is currently trading roughly 2 times price-to-sales, or about half what it was trading at this time last year. As the stock trades near 52-week lows, it is tempting not to scoop up some shares.

In the long term, Amazon is a terrific, blue-chip stock to own. And given its current valuation, now is a great opportunity to lower your cost-basis. Long-term investors should keep a keen eye on the following earnings reports to ensure that management is executing on the cost reductions. Should these go according to plan, Amazon should recognize increased profits, which it can then use to stockpile cash or invest in growth areas when the time is right.  

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

The post Amazon stock is still a surefire buy despite growth plateau appeared first on The Motley Fool Australia.

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More reading

• Why Amazon stock fell today
• BrainChip share price dips despite ex-Amazon hire
• Does Amazon’s latest healthcare move make the stock a buy?
• Why Amazon stock fell today
• Is Amazon’s AWS creating a once-in-a-decade buying opportunity for the stock?

Adam Spatacco has positions in Amazon. John Mackey, 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 Amazon. The Motley Fool Australia has recommended Amazon. 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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The Rio Tinto Limited (ASX: RIO) share price is outperforming on Wednesday amid news the company has taken a major step towards near-net zero steelmaking.

The S&P/ASX 200 Index (ASX: XJO) iron ore giant’s low-carbon iron-making process’ effectiveness has been proven at a small-scale German pilot plant. The miner is now looking to develop a larger-scale pilot plant to further assess its potential.

Right now, the Rio Tinto share price is 1.22% higher at $106.28. For comparison, the ASX 200 has lifted 0.8% at the time of writing.

Let’s take a closer look at the latest news of Rio Tinto’s BioIron process.

Rio Tinto share price lifts on BioIron development

The Rio Tinto share price is in the green this morning amid good news about the company’s BioIron process.

The process removes the need for metallurgical coal in steelmaking. Instead, it uses biomass – including agricultural bi-products – as a reductant and microwave energy to convert Pilbara iron ore to metallic iron.

The company says the process could support near-zero emissions steelmaking, or negative emissions if linked with carbon capture and storage.

Steelmaking currently accounts for 8% of the world’s carbon emissions. It’s also behind 66% of Rio Tinto’s scope three emissions.

Rio Tinto chief commercial officer Alf Barrios commented on the success of the process so far:

Finding low-carbon solutions for iron and steelmaking is critical for the world as we tackle the challenges of climate change. Proving BioIron works at this scale is an exciting development given the implications it could have for global decarbonisation.

The results from this initial testing phase show great promise and demonstrate that the BioIron process is well suited to Pilbara iron ore fines.

The design for a larger-scale pilot plant is now underway. Rio Tinto is working to find a site on which to construct it.

The post Rio Tinto share price lifts amid ‘exciting’ decarbonisation development appeared first on The Motley Fool Australia.

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More reading

• Why is the Rio Tinto share price trailing the ASX 200 on Monday?
• Rio Tinto share price falls on Turquoise Hill takeover setback
• Which stocks are in the Vanguard Australian Shares Index ETF (VAS) right now?
• What’s going on with ASX 200 mining shares on Thursday?
• Why is Rio Tinto share price rolling downhill 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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Investors searching for ASX shares to buy and hold into their retirement may want to consider companies with the potential to significantly raise their dividends over time.

Why focus on this? Well, if you were to retire with $500,000 invested in shares and have a yield on cost of 10%, that will generate $50,000 in income each year. And while a 10% dividend yield sounds like a lot, it isn’t as outlandish as it first seems.

For example, CSL Limited (ASX: CSL) isn’t a name you would immediately think about for dividends because the yield on offer with its shares is always so slender.

However, investors who have held the biotherapeutics giant’s shares for a decade will think very differently.

In early 2012, there were opportunities to pick up CSL’s shares for approximately $31.00. Based on CSL’s dividend of $3.22 per share in FY 2022, this represents a yield on cost of 10.4% for investors. This means that $500,000 invested in CSL’s shares in 2012 would be generating just over $50,000 of dividends this year.

What about today?

That was then and this is now. So, which dividend-paying ASX growth shares could help you retire rich? Three that I would consider are listed below:

The first ASX growth share to consider is Domino’s Pizza Enterprises Ltd (ASX: DMP). This pizza chain operator appears well-placed for long-term growth thanks to its strong brand and bold store expansion plans. At present, its shares offer a trailing partially franked 2.4% dividend yield. Morgans currently has an add rating and an $88.00 price target on Domino’s shares.

Another ASX share that could be well-placed for growth over the next decade is Jumbo Interactive (ASX: JIN). It is an online lottery ticket seller and platform provider. Management sees the latter Powered by Jumbo software as a service platform as a major driver of growth in the future thanks to its huge global opportunity. Jumbo’s shares currently trade with a trailing fully franked 3% dividend yield. Goldman Sachs has a buy rating and a $15.20 price target on its shares.

Finally, Treasury Wine Estates Ltd (ASX: TWE) could be a dividend-paying growth share to buy. The wine giant currently trades with a trailing fully franked 2.6% dividend yield. Morgans is tipping the company to grow its earnings and dividend at a strong rate over the next few years thanks to its new operating model. The broker has an add rating and a $15.71 price target on Treasury Wine shares.

The post 3 dividend-paying ASX growth shares I would buy to retire rich appeared first on The Motley Fool Australia.

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More reading

• 4 ASX 200 shares to buy in an unmissable sector: expert
• Will ASX 200 shares bottom before the year is out? Here’s Macquarie’s ‘best guess’
• I’d buy these cheap ASX shares before the stock market recovers 
• To $300 and beyond! Why this top broker says CSL shares are a buy right now
• Here are the 10 most shorted ASX shares

Motley Fool contributor James Mickleboro has positions in CSL Ltd. and Dominos Pizza Enterprises Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL Ltd. and Jumbo Interactive Limited. The Motley Fool Australia has recommended Dominos Pizza Enterprises Limited, Jumbo Interactive Limited, and 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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With a number of ASX lithium shares rising strongly this year, they have given portfolios across the country a huge boost.

The good news is that it may not be too late to invest in the industry according to brokers.

Listed below are five ASX lithium shares that have recently been rated as buys:

Allkem Ltd (ASX: AKE)

Allkem is a speciality lithium chemicals company with a global portfolio of diverse and high-quality lithium operations. It is aiming to grow its production in a manner that allows it to command a 10% share of global lithium demand. According to a note out of Ord Minnett, its analysts are very positive on Allkem’s outlook and have a buy rating and $22.50 price target on its shares.

Lake Resources N.L. (ASX: LKE)

Lake Resources is the Argentina-based lithium developer behind the Kachi project. While short sellers may be betting against the company, the team at Bell Potter remain positive. The broker recently reaffirmed its speculative buy rating and lofty $2.52 price target on the company’s shares.

Liontown Resources Limited (ASX: LTR)

Liontown Resources is a lithium developer with two promising project. These are the 100%-owned Kathleen Valley and Buldania projects, which are both located in Western Australia. The former recently received approval for a 4Mtpa operation, which will supply tier-1 offtake customers including LG Energy Solution, Tesla, and Ford. Bell Potter currently has a speculative buy rating and $2.87 price target on Liontown’s shares.

Mineral Resources Limited (ASX: MIN)

Goldman Sachs is a big fan of this mining and mining services company due to its exposure to lithium. In fact, it is partly because of this exposure that the broker is forecasting the tripling of its EBITDA in FY 2023. In light of this strong outlook, Goldman has a buy rating and $96.00 price target on Mineral Resources’ shares.

Pilbara Minerals Ltd (ASX: PLS)

The team at Macquarie still see plenty of upside for this lithium giant’s shares. In response to its latest digital auction, the broker has retained its outperform rating and $7.70 price target on the company’s shares. This implies potential upside of over 50% for investors from current levels.

The post 5 ASX lithium shares to buy: brokers appeared first on The Motley Fool Australia.

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More reading

• Are these ASX 200 lithium shares about to become dividend machines?
• These are the ASX dividend shares to buy now: Goldman Sachs
• Will ASX 200 shares bottom before the year is out? Here’s Macquarie’s ‘best guess’
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• Could Mineral Resources shareholders be in for ‘a lot of fun’?

Motley Fool contributor James Mickleboro has positions in Allkem Limited. 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 Mesoblast limited (ASX: MSB) share price is dropping on Wednesday morning.

At the time of writing, the regenerative medicine company’s shares are down 2.5% to 97 cents.

Why is the Mesoblast share price falling?

Investors have been selling Mesoblast’s shares this morning after the company released an update on its first quarter update and a key trial.

In respect to the former, Mesoblast recorded minimal quarterly revenue and a loss after tax of US$16.9 million. But thanks to a recent equity raising, it finished the period with a sizeable cash balance of US$85.5 million.

Not much to get excited about there.

Trial update

Some potentially exciting news came from Mesoblast’s trial update. However, so far, the market has given it a lukewarm response.

Mesoblast released the top-line long-term survival results for remestemcel-L from its pivotal Phase 3 trial (GVHD-001) in children with steroid-refractory acute graft-versus-host disease (SR-aGVHD).

According to the release, the results showed durable survival through 4 years of follow-up.

Management notes that this new long-term survival data is a key component of the company’s resubmission to the FDA for remestemcel-L in the treatment of children with SR-aGVHD, which is a life-threatening condition with no approved treatments for children under 12 years.

Overall survival in the remestemcel-L cohort was 63% at 1 year, 51% at 2 years, and 49% at 4 years, with median survival of 2 to 3 years. This compares to survival rates of 40%-49% at 1 year and 25%-38% at 2 years for current treatments.

Importantly, these comparisons include very different patient cohorts, with 88% of children treated with remestemcel-L having with highest mortality risk. Whereas only 22% to 68% in other studies were considered to have severe disease.

Management believes this reaffirms the potential significance of remestemcel-L as a life-saving therapy for children with SR-aGVHD.

Dr. Joanne Kurtzberg from Duke University, was pleased with the results. She commented:

These exciting long-term results provide further evidence of remestemcel-L’s potential as a highly effective treatment for SR-aGVHD in children. Responses are durable, reducing mortality of this often lethal complication of hematopoietic stem cell transplantation.

Time will tell if this data helps Mesoblast gain FDA approval. But judging by its share price performance today, investors appear unsure and may be keeping their powder dry until a decision is made.

The post What’s going on with the Mesoblast share price today? appeared first on The Motley Fool Australia.

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More reading

• Why did the Mesoblast share price soar 9% today?
• Why has the Mesoblast share price gained 6% so far 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 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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Investors can look forward to a much more positive 2023 after leaving behind a distressing 2022, according to multiple experts.

Fidelity International investment director Tom Stevenson said in the UK’s The Telegraph that with shares, bonds, cryptocurrencies and gold all failing, this year “cash has been the only safe harbour”.

“I think 2023 could be very different and I expect to look back in 12 months’ time on a much more satisfactory year in the markets.”

DeVere Group chief executive Nigel Green agreed.

“After an astonishing bull run of 13 years, financial markets went into bear territory in 2022 amid increasing global volatility, creating a pretty grim environment,” he said.

“However, the landscape is already looking brighter for the year ahead.”

4 reasons why 2023 will see better investment returns

Green named four forces that would “excite” global financial markets in the new year.

The first tailwind will be inflation passing its peak.

“As inflation begins a return to target, the cost of living will drop for consumers and central banks will ease their feet off the economic brakes, going easier on interest rate hikes before winding down.”

Once that happens, investors will be happy to dive in because of the second force — discounted asset valuations.

“Market volatility has lowered valuations of some high-quality equities, which can create better long-term investment opportunities and generate higher income for investors,” said Green.

“In many cases, they will be currently viewing this backdrop as a buying opportunity to top-up their portfolios.”

The third tailwind is the continuing digitisation of business.

“This will help increase efficiency, increase productivity, lower operational costs, improve customer experience, improve competitive advantage, and improve speed and outcomes of decision making.”

Finally, a weakening US dollar would help pretty much every country.

According to Green, the greenback had been pumped up in 2022 from investors looking for a safe haven during troubled times. The US Federal Reserve’s steep interest rate rises has also made the US dollar more attractive.

“This has negatively impacted both developed and emerging markets globally, fuelling inflation and raising the cost of imported goods. It has also added to the need for some central banks around the world to tighten their own financial conditions,” he said.

“But we expect the dollar strength to peak in mid-2023.”

Don’t get investment sentiment mixed up with the actual economy

Stevenson predicted that in 12 months’ time sentiment will have shifted considerably from now.

“By the end of next year, stock markets will be looking through the ongoing recession to better times ahead,” he said.

“And bonds will have responded to falling interest rates as central banks shift their attention from overcoming inflation to supporting the economy.”

The paradox is that the global economy is likely to remain pretty gloomy throughout 2023, especially in Europe and the US. But Stevenson reminded investors that shares and bonds are all forward-looking.

“I expect to see positive returns from both bonds and shares next year, which may surprise an observer focused on the economic headlines,” he said.

“Holding a balanced and diversified portfolio throughout remains sensible.”

Green urged investors to snap up bargains now to hop on the ride.

“We expect some key market, macro and policy shifts that will provide a significantly more positive outlook for investors in 2023.”

The post 2023 is already looking much better for ASX shares. Here’s why appeared first on The Motley Fool Australia.

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More reading

• What’s going on with the Mesoblast share price today?
• Looking to buy ANZ shares? Here’s why the ASX 200 bank is hitting headlines
• Qantas share price soars 6% on surprise profit guidance upgrade
• Why is the PolyNovo share price sinking 7% today?
• Guess which ASX 200 bank share just upped its final dividend by 580%

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 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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