Tag: Motley Fool

ASX shares are my favourite way to invest and build wealth for the long term.

But, there is a lot of uncertainty right now in the world. The Russian invasion of Ukraine. Inflation. Rising interest rates. The US elections. Until this year, the COVID-19 pandemic was heavily on investors’ minds in Western countries as well.

But, despite everything that’s going on, and could happen, there are a number of reasons why I think that right now is a great time to invest for the long term.

Lower prices

One of the main goals of investing is to buy attractive assets for less than we think they’re worth or will be worth in the future.

It’s impossible to say what share prices will do next week, next month or next year.

But, what we can see is that the share prices of many great businesses have fallen heavily this year. For example, the Xero Limited (ASX: XRO) share price has declined by around 50% this year. The Microsoft share price is down by more than 33% in 2022. And so on.

It’s a cheesy phrase, but ‘buy low, sell high’ is worthwhile paying attention to. Share prices are lower this year, substantially so, largely thanks to inflation and higher interest rates.

If I could choose to invest at any point in time, I’d obviously choose when the price is low. Now seems like as good a time as any to put money to work into the ASX share market.

There is always uncertainty

Share prices don’t fall for no reason. For the market to fall more than 10% or even 20%, there has to be a serious event that’s causing investors to panic. A global pandemic and the GFC are two of the most recent examples.

But, if we look back over the past two decades, there have always been things for the market to be uncertain about. Higher interest rates and inflation are the latest things. But Brexit, the debt issues in Europe about a decade ago, wars and so on all caused fear for investors in the past. History is full of examples of things that were going wrong. But, the share market is currently higher than nearly all times in history. My point is that life goes on.

For me, it’s times of uncertainty that can open up the best buying opportunities with ASX shares, as we’re seeing now.

While I’m sure there will be things in the future to worry about, I think history has shown it’s useful to be optimistic for the long term.

Long-term returns

I think investing for the long-term, essentially forever, is the best way to invest. We can’t know for sure what’s going to happen. But, I believe that ASX shares are a great way to deliver attractive compounding over time.

According to Vanguard, over the last 30 years, ASX shares have delivered an average return per annum of 11.1% per annum.

If ASX shares managed to produce an average return per annum of 10% over the next two decades, this would be very helpful for wealth building. For example, using the Moneysmart calculated, investing $1,000 a month into ASX shares would grow into $687,000 in two decades.

I think that the prices we’re being presented with can generate attractive returns in the long term. Investing for the long-term also means we can avoid unnecessary capital gains tax events as well as reduce brokerage.

The post 3 reasons why I’d buy ASX shares now and hold them forever appeared first on The Motley Fool Australia.

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More reading

• Why is the Rio Tinto share price having such a stellar start to the week?
• Why is the Westpac share price dropping 4% today?
• Arafura share price rockets 10% on Hyundai and Kia rare earths deal
• Why is this newly minted ASX 200 share rocketing 10% on Monday?
• Warren Buffett’s portfolio is different from yours. Here’s why

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 Microsoft and Xero. The Motley Fool Australia has positions in and has recommended Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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We seem to be having a fairly positive start to the trading week for ASX shares and the S&P/ASX 200 Index (ASX: XJO). So far this Monday, the ASX 200 has put on a decent 0.32% and is up to around 6,917 points. But something else is happening to the Macquarie Group Ltd (ASX: MQG) share price.

Macquarie shares appear to be having a rather awful Monday so far today. The ASX 200 bank closed at $170.37 a share last week. But today, Macquarie shares opened at $168.14 and have dipped down to $167.10 at the time of writing, a good 1.92% lower than last week’s close.

So why are Macquarie shares getting such a shunning today?

Macquarie share price tumbles as ex-dividend date arrives

Well, the answer is that it is not as bad as it seems. Macquarie shares have just traded ex-dividend for the financial giant’s upcoming interim dividend.

As we covered last week, Macquarie is scheduled to pay out its latest dividend next month, on 13 December. This will be a shareholder payment worth $3 a share, partially franked at 40%. That’s a pleasing increase over 2021’s interim dividend of $2.72 per share and the final dividend of $1.40 per share that investors enjoyed back in July.

But next month’s dividend is now closed to new investors. That’s because Macquarie’s ex-dividend date for this payment is today. This means that new investors won’t be eligible to receive this payment.

As such, the value of the dividend is no longer included in the Macquarie share price. This is why we are seeing such a steep fall for Macquarie shares during today’s session.

Investors have until 9 November to decide if they want to receive a cash payment or else opt for the optional dividend reinvestment plan (DRP) if they wish to receive new Macquarie shares in lieu of cash.

As of last week’s closing share price, this latest shareholder payment will give Macquarie shares a dividend yield of 2.58%.

Macquarie Group shares have lost 20.7% year to date in 2022 so far and 16.6% over the past 12 months. The ASX 200 bank share remains up by 71% or so over the past five years.

The post Why is the Macquarie share price starting the week lower? appeared first on The Motley Fool Australia.

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More reading

• Do Wesfarmers shares really offer 22% upside AND growing dividends?
• Has this overlooked ASX 200 share really gained more than 1,200% in just 10 years?
• Top broker names 2 ASX dividend shares to buy now
• 5 things to watch on the ASX 200 on Monday
• Top brokers name 3 ASX shares to buy next week

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 recommended Macquarie Group 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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One of the most popular options for income investors on the Australian share market is the Westpac Banking Corp (ASX: WBC) dividend.

Australia’s oldest bank regularly shares a portion of its profits with investors and more often than not provides an above-average dividend yield.

The good news is that this remains the case today, with Westpac reporting its full year results this morning and increasing its dividend payment year over year.

Westpac dividend for FY 2022

In case you missed it, this morning Westpac released its FY 2022 results and revealed a 1% decline in cash earnings to $5,276 million. This reflects weakness in the consumer and business segments, which offset growth in New Zealand and the institutional business.

Nevertheless, despite posting a cash earnings decline for the year, that didn’t stop the Westpac board from lifting its full year dividend.

According to the release, the Westpac board declared a fully franked final dividend of 64 cents per share. This was up 6.7% from FY 2021’s final dividend of 60 cents per share. This took the Westpac dividend for FY 2022 to a total of $1.25 per share fully franked, which was an increase of approximately 6% on last year’s payment of $1.18 per share.

All in all, this will mean Westpac returns over $7.8 billion to shareholders via dividends and a share buyback in FY 2022.

Commenting on the dividend, Westpac’s chairman, John McFarlane, said:

The Group remains well capitalised. When considering dividends, the Board focuses on cash earnings but also looks through selected irregular large items. This led to the Board determining a final dividend of 64 cents per share and total of 125 cents per share fully franked for the year, an increase of 6%, just ahead of statutory profit growth.

What else do you need to know?

The release notes that the final Westpac dividend will be paid on 20 December to shareholders that are on the register at the record date of 18 November.

In addition, Westpac will be running its dividend reinvestment plan (DRP) again this year. However, there will be no discount to the market price. If you wish to take part in the DRP, you’ll need to make sure your DRP election reflects this before the close of play on 21 November.

The post Everything you need to know about the latest Westpac dividend appeared first on The Motley Fool Australia.

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More reading

• Westpac share price on watch following FY22 results
• 5 things to watch on the ASX 200 on Monday
• Morgans names 2 more of the best ASX shares to buy in November
• Own Westpac shares? What to expect from next week’s FY22 results
• Is Bendigo Bank the best bet for dividends out of all the ASX 200 bank shares?

Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation. 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 Westpac Banking Corporation. 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 decided to invest in Fortescue Metals Group Limited (ASX: FMG) shares in 2021 after a sizeable fall of its share price. But, it wasn’t the easiest decision to make because there are a number of different factors to consider.

In the long term, I think companies that can grow their revenue and margins are the ones that can deliver attractive compounding returns.

Businesses that are able to scale globally have large addressable markets, which means they have more room to grow. Names like Altium Limited (ASX: ALU), WiseTech Global Ltd (ASX: WTC), Xero Limited (ASX: XRO) and Pro Medicus Ltd (ASX: PME) are examples are ASX tech shares that have done this very well.

However, ASX mining shares are not typically known for that sort of growth profile. So, I believe it’s wise for investors to go into resource businesses with their eyes wide open about how things can go up and down, sometimes like a rollercoaster.

What is the iron ore price?

One of the first things that I think it’s worth questioning is what Fortescue’s key commodity is priced at.

Most readers have probably heard of the cliched phrase ‘buy low, sell high’. I believe it’s a good idea to take that approach when waiting for the right time to buy an iron ore miner.

Supply and demand can have a significant impact on the iron ore price. The rise and fall of the amount of money that Fortescue can get for its production per tonne can have a big impact on how much net profit after tax (NPAT) and cash flow Fortescue can generate.

It may seem obvious to say, but the Fortescue share price rises when the iron ore price goes up and drops when the iron ore price goes down. A lower iron ore price can prove an opportunistic time to invest.

I’m happy to start thinking about buying Fortescue shares when the iron ore price drops below US$100 per tonne. According to Commsec, the iron ore price was sitting at US$83 per tonne on Friday, comfortably below the level I’d like to start looking at the iron ore miner.

How much could the Fortescue dividend fall?

With an expectation that Fortescue’s dividend will sometimes fall, I believe it’s wise to anticipate that the company won’t pay a big dividend every year. However, I still want to see and receive decent cash flow for owning a resource business like this.

Bear in mind when the Fortescue share price drops, it can boost the prospective dividend yield.

According to Commsec, the Fortescue annual dividend could fall to just $1.02 per share by FY24. But, at the current share price, that would still equate to a grossed-up dividend yield of 9.2%.

So, I can see from this that at the current level, investors can still be pleasingly rewarded during lean times for the iron ore price.

Is it making good progress with its green hydrogen?

The main reason why I invested in Fortescue is that it’s diversifying away from just iron ore, and the business is investing heavily in that.

It aims to become a global power in green hydrogen. It’s looking to produce millions of tonnes of it by the end of the decade. This could be very helpful for the world’s decarbonisation. Fortescue aims to make hydrogen by just using water, powering the process with renewable energy. This is being done through the subsidiary Fortescue Future Industries (FFI).

Over time, I think this segment will become increasingly important for the Fortescue share price.

The company is betting billions of dollars on creating a worldwide portfolio of green hydrogen production facilities.

It has already signed on large clients that want to buy large amounts of green hydrogen in the coming years, including European energy giant E.ON.

In its latest quarterly update, Fortescue reminded investors that it signed a deal with energy infrastructure developer Tree Energy Solutions in October, which aims to accelerate the development of a “world-leading green hydrogen and green energy import facility” in Germany.

It also announced last month that Fortescue and Incitec Pivot Ltd (ASX: IPL) had progressed with planning for the conversion of Incitec Pivot’s Gibson Island ammonia facility to run on green hydrogen to its final stages, with the start of front-end engineering design as well as executing a framework agreement to govern the project through to a final investment decision.

In summary, I think this part of the business is going well.

Foolish takeaway

After considering these things, I think that the Fortescue share price looks attractive to consider for the long term. However, I will point out that a lot of Fortescue’s revenue comes from China, so what goes on with the Asian superpower is very important – it’s a risk worth keeping in mind.

The post Looking to buy Fortescue shares? Here are the questions I asked before jumping in appeared first on The Motley Fool Australia.

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More reading

• Hotels, hurt feelings, and HR hassles, but Fortescue’s biggest shareholder still got richer this week
• What’s the forecast for the iron ore price right now?
• Which ASX 200 mining shares managed to dig up gains in October?
• Here’s the Fortescue dividend forecast through to 2027
• 5 things to watch on the ASX 200 on Wednesday

Motley Fool contributor Tristan Harrison has positions in Fortescue Metals Group 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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At the start of each week, I like to look at ASIC’s short position report to find out which shares are being targeted by short sellers.

This is because I believe it is well worth keeping a close eye on short interest levels as high levels can sometimes be a sign that something isn’t quite right with a company.

With that in mind, here are the 10 most shorted shares on the ASX this week according to ASIC:

• Betmakers Technology Group Ltd (ASX: BET) has become the most shorted share on the Australian share market after its short interest rose to 15%. This betting technology company’s shares are down 69% this year but short sellers appear to believe they can keep falling.
• Flight Centre Travel Group Ltd (ASX: FLT) has dropped from the top spot at long last after its short interest eased to 14.85%. Some short sellers may believe the worst is over for Flight Centre. Though, there’s still an abnormally high level of shares held short.
• Block Inc (ASX: SQ2) has seen its short interest remain flat at 12.1%. Short sellers will have been disappointed to see this payments company’s shares shoot higher last week after a strong quarterly update.
• Megaport Ltd (ASX: MP1) has seen its short interest fall to 11.6%. Megaport’s shares came under pressure recently following the release of a soft quarterly update.
• Domino’s Pizza Enterprises Ltd (ASX: DMP) has seen its short interest remain at 11.1%. This pizza chain operator’s shares sank into the red last week after a very disappointing trading update at its AGM.
• Perpetual Limited (ASX: PPT) has seen its short interest rise to 11.1%. This fund manager’s shares charged higher last week after receiving a takeover approach.
• Breville Group Ltd (ASX: BRG) has seen its short interest rise to 9%. Concerns that the uncertain economic backdrop could impact consumer spending appears to be weighing on sentiment.
• Sayona Mining Ltd (ASX: SYA) has entered the top ten with short interest of 8.9%. This may be due to valuation and funding concerns for this lithium developer.
• Nanosonics Ltd (ASX: NAN) has short interest of 8.6%, which is up week on week. Short sellers continue to target this infection prevention company’s shares due to its business model change in the key US market.
• Temple & Webster Group Ltd (ASX: TPW) has short interest of 8.3%, which is down week on week. Valuation concerns may be behind this high level of short interest. Temple & Webster trades at ~70x FY 2023 earnings.

The post Here are the 10 most shorted ASX shares appeared first on The Motley Fool Australia.

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More reading

• How did Pendal shares fare today amid takeover talk and an earnings update?
• Here are the top 10 ASX 200 shares today
• Brokers name 3 ASX shares to buy today
• Why Allkem, Block, Bowen Coking Coal, and CSR shares are racing higher
• Block share price jumps 10% on Q3 beat

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 Betmakers Technology Group Ltd, Block, Inc., MEGAPORT FPO, Nanosonics Limited, and Temple & Webster Group Ltd. The Motley Fool Australia has positions in and has recommended Block, Inc. and Nanosonics Limited. The Motley Fool Australia has recommended Betmakers Technology Group Ltd, Dominos Pizza Enterprises Limited, Flight Centre Travel Group Limited, MEGAPORT FPO, and Temple & Webster Group 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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Those invested in Wesfarmers Ltd (ASX: WES) shares, rejoice! One broker has tipped the stock to grow another 22% in the near future, while the company is expected to up its dividends.

That’s likely uplifting news for potentially downtrodden investors.

The Wesfarmers share price has suffered a major tumble in 2022, falling 24% year to date to trade at $45.44 today.

For comparison, the S&P/ASX 200 Index (ASX: XJO) has dumped 9% so far this year.

So, why is Aussie broker Morgans bullish on Wesfarmers shares? Keep reading to find out.

Wesfarmers shares tipped to gain 22% amid rising dividends

The Wesfarmers share price could regain 22% on the back of the company’s retail businesses, management team, and balance sheet, according to Morgans.

The broker recently said Wesfarmers holds “one of the highest quality retail portfolios in Australia”. Its behind the likes of Bunnings, Kmart, Target, Catch.com.au, and Priceline.

It had a $4.3 billion net debt position at the end of financial year 2022 – down from a $109 million net cash position at the end of the prior year.

Though, the drop was largely due to a $2.3 billion capital return and the $1.9 billion of fully franked dividends handed to investors over the period.

Speaking of dividends, Wesfarmers has offered investors $1.80 per share in dividends over the last 12 months, leaving it trading with a 4% yield.

The broker tips its payouts to increase to $1.82 this financial year and to $1.89 next financial year, my Fool colleague James reports.

That would see the share trading with yields of 4% and 4.2% respectively, considering its current share price.

However, Morgans also thinks the Wesfarmers share price could lift to $55.60 – representing a potential 22.4% upside.

At that price, its forecasted dividends would see it with a 3.3% yield this financial year and a 3.4% yield next financial year.

The post Do Wesfarmers shares really offer 22% upside AND growing dividends? appeared first on The Motley Fool Australia.

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More reading

• Has this overlooked ASX 200 share really gained more than 1,200% in just 10 years?
• 5 things to watch on the ASX 200 on Monday
• Morgan Stanley tips how to pick the market bottom, but should you wait to buy ASX shares?
• Experts name 2 ASX 200 dividend shares to buy next week
• Hotels, hurt feelings, and HR hassles, but Fortescue’s biggest shareholder still got richer this week

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 positions in and has recommended Wesfarmers 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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ASX 200 coal shares have blasted ahead in the year to date, but could there be trouble ahead?

Coal shares include New Hope Corporation Limited (ASX: NHC) and Whitehaven Coal Ltd (ASX: WHC). For perspective, the S&P/ASX 200 Index (ASX: XJO) has slid 7% year to date.

Let’s take a look at the outlook for ASX 200 coal shares.

Could developments in China impact coal prices?

Whitehaven Coal shares have soared 284% year to date, while New Hope shares have exploded 191%.

However, moves from China to construct more coal-fired power plants could weigh on coal prices, according to analysts at ANZ.

In a research report late last week, commodity strategists Daniel Hynes and Soni Kumari said:

China is ramping up construction of coal-fired power plants amid an increased focus on energy security.

Following recent energy shortages, Beijing is looking to secure its energy system by adding 270GW of thermal capacity through 2025.

Approximately 197GW of capacity is currently under construction. The expansion could derail its plan to reach peak emissions by 2030.

On the flip side, European demand remains strong heading into winter. Commenting on the outlook overall, Hynes and Kumari said:

Coal faces upward pressure from strong European demand, though increasing domestic production in China could weigh on prices ahead of the peak heading demand season.

Whitehaven reported a record average coal price of $581 a tonne in the September quarter, up from $514 per tonne in the third quarter. However, the company’s managed run-of-mine (ROM) production fell 37% compared to the June quarter.

New Hope Corporation announced an on-market share buyback of up to $300 million last week. The company said:

The Board and Management consider that the company’s current share price does not accurately reflect the underlying value of the company’s assets and the buy-back represents an opportunity to enhance the value of the remaining shares on issue, as well as providing an opportunity to improve the liquidity of the stock.

Share price snapshot

New Hope shares have climbed 2% in the past month, while Whitehaven Coal shares have jumped 9%.

For perspective, the ASX 200 index (ASX: XJO) has climbed 1% in the last month.

The post Could China be about to rain on the ASX 200 coal share parade? appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Here are the top 10 ASX 200 shares today
• New Hope share price jumps on $300m buyback plans
• Why A2 Milk, New Hope, Perpetual, and Talga shares are charging higher
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Monica O’Shea 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 Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price is having a tough start to the week.

In morning trade, the banking giant’s shares are down almost 4% to $24.54.

Why is the ANZ share price falling?

The good news for shareholders is that the weakness in the ANZ share price has nothing to do with a broker downgrade or a trading update.

Instead, today’s decline is almost entirely attributable to the bank’s shares trading ex-dividend this morning for its latest dividend.

When a share trades ex-dividend, it means that the rights to an upcoming dividend payment are now settled and will remain with shareholders that owned them at the close of play the previous trading session.

As a result, anyone buying shares today, will be buying shares without the rights to the dividend and they will remain with the seller. And given that you wouldn’t want to pay for something you won’t receive, the ANZ share price has dropped to reflect this.

The ANZ dividend

Last month, ANZ released its full year results for FY 2022. For the 12 months ended 30 September, ANZ reported a 16% increase in statutory profit after tax to $7,119 million and a 5% lift in cash profit from continuing operations to $6,515 million.

This allowed the ANZ board to declare a fully franked final dividend of 74 cents per share, bringing its full year dividend to 146 cents per share. This was up from 142 cents per share in FY 2021.

Based on the ANZ share price at Friday’s close, that final dividend equated to a yield of almost 3%. Eligible shareholders can now look forward to receiving this dividend next month on 15 December.

The post Why is the ANZ share price sinking 4% today? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Monday
• Brokers name 3 ASX shares to buy today
• 4 ASX 200 shares trading ex-dividend next week
• Hoping to bank the latest ANZ dividend? Read this
• Is Bendigo Bank the best bet for dividends out of all the ASX 200 bank shares?

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 Medibank Private Ltd (ASX: MPL) share price is up 1.06% in early trade following an update from the S&P/ASX 200 Index (ASX: XJO) health insurer on the October data breach.

Medibank shares were placed in a trading halt for two days at the company’s request on 13 October after news broke that customer medical data may have been hacked.

The initial fears proved founded, and the company again requested a trading halt later in October. When it resumed trading on 26 October, the Medibank share price closed down 18.1% on the day after the insurer revealed “significant amounts” of medical-related data from all of its customers may have been compromised.

Here’s what the company reported today.

What’s the latest response to the Medibank hack?

The Medibank share price is in the green after the company reiterated that it was taking “decisive action” related to the October cybercrime to protect its customers.

CEO David Koczkar also offered another “unreserved apology” to the impacted customers, saying the company understands the stress the data breach is causing them.

Medibank also reported it would not make any ransom payments to the criminal behind the hack.

Commenting on the company’s decision not to pay the ransom, Koczkar said:

Based on the extensive advice we have received from cybercrime experts, we believe there is only a limited chance paying a ransom would ensure the return of our customers’ data and prevent it from being published.

In fact, paying could have the opposite effect and encourage the criminal to directly extort our customers, and there is a strong chance that paying puts more people in harm’s way by making Australia a bigger target.

At this stage of the investigation, Medibank believes the hacker accessed the name, date of birth, address, phone number and email address of roughly 9.7 million current and former customers and some of their authorised representatives.

“We will continue to support all people who have been impacted by this crime through our Cyber Response Support Program,” Koczkar said. “This includes mental health and wellbeing support, identity protection and financial hardship measures.”

The Medibank share price may also be getting some reprieve after the insurer said it had not detected any additional “suspicious activity” in its systems since the 12 October breach. It is continuing to work closely with the Australian Cyber Security Centre and the Australian Federal Police on the matter.

Medibank advised all former and current customers to remain vigilant with any online communications and transactions.

How has the Medibank share price tracked in 2022?

The Medibank share price was in the green for the calendar year until the fallout from the cyber-attack saw investors hitting the sell button. As of this morning, Medibank shares are down 18% in 2022, compared to a 9% loss posted by the ASX 200.

The post Medibank share price lifts on cyberattack ransom update appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• ‘Close to bottom’: Expert names 3 bargain ASX shares to buy right now
• Here are the 3 most traded ASX 200 shares on Wednesday
• Could the Medibank share price be on the road to recovery?
• Why did the IAG share price just hit a new 52-week high?

Motley Fool contributor Bernd Struben 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 Pilbara Minerals Ltd (ASX: PLS) share price has been one of the best performers in the S&P/ASX 200 Index (ASX: XJO) over the past year. It has only been the ASX coal shares that have significantly outperformed this ASX lithium share.

In just 12 months, Pilbara Minerals shares have gone up by 118%. More than doubling one’s money in a year, amid all the volatility, has been a great result for shareholders.

But, you might think that the company is now expensive after going up so much in a relatively short amount of time.

There are many different ways to value a business. But, one of the easiest ways to compare businesses is by looking at the price/earnings (P/E) ratio. This shows what multiple of the earnings the share price is currently valued at.

Not only can we use the last financial year to work out the valuation of a business, but if we can use the estimated earnings for the current/next financial year, then we can hopefully get a good insight into what the market is truly pricing a business at, including expectations.

What is the P/E ratio of the ASX lithium share?

Before I get to the valuation of the ASX lithium share, I’ll show some other P/E ratios to put it in perspective.

Businesses like ASX 200 bank shares are usually priced at a fairly low multiple of their earnings. Some sectors usually have a low P/E ratio if they are expected to grow slowly, have large balance sheets and/or if their earnings are expected to be (at best) volatile/uncertain.

I’ll use the profit projections from Commsec to demonstrate some other valuations.

National Australia Bank Ltd (ASX: NAB) shares are valued at 13 times FY23’s estimated earnings.

Commonwealth Bank of Australia (ASX: CBA) shares are valued at 18 times FY23’s estimated earnings.

Wesfarmers Ltd (ASX: WES) shares are valued at 24 times FY23’s estimated earnings.

CSL Limited (ASX: CSL) shares are valued at 34 times FY23’s estimated earnings.

WiseTech Global Ltd (ASX: WTC) shares are valued at 76 times FY23’s estimated earnings.

What about the Pilbara Minerals share price?

According to estimates on Commsec, the ASX lithium share is priced at 7.6 times FY23’s estimated earnings. In other words, it is valued at under 8 times its projected earnings for the 2023 financial year.

By using that metric, it makes it seem like the miner is the cheapest business out of all the ones that I’ve mentioned.

Is the Pilbara Minerals share price cheap?

Some, perhaps many, investors wouldn’t say it’s cheap.

At the moment, the miner is making a lot of cash flow and net profit after tax (NPAT).

But, it’s benefiting from the huge rise in the lithium price.

On 26 October 2021, just over a year ago, the first business announced the result of its third Battery Material Exchange (BMX) auction. It said it sold 10,000 dry metrics tonnes (dmt), with the highest bid being US$2,350 per dmt. This equated to a price of approximately US$2,629 per dmt after accounting for lithia content (and including freight costs).

A year later, on 24 October 2022, the business announced it had sold 5,000 dmt for US$7,255 per dmt. This equated to a price of approximately US$8,000 per dmt after adjusting for lithia content and including freight costs.

It seems almost certain that lithium demand will continue to rise in the coming years as electric vehicle production and battery usage grow.

But, will the lithium price stay elevated? How much more lithium supply is going to come onto the market?

If the lithium price were to stay at this level for a decade, then the Pilbara Minerals share price may look cheap today, particularly as it gets involved in more of the lithium value chain.

But, a low P/E ratio for FY23 alone doesn’t make it cheap. Brokers like UBS and Credit Suisse both have sell ratings on the business, with price targets that imply a drop of at least 40%. They suggest that other large lithium miners, such as Allkem Ltd (ASX: AKE) could be better value.

The post With a forward P/E ratio of 8, is the Pilbara Minerals share price actually cheap? appeared first on The Motley Fool Australia.

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More reading

• Here are the 3 most traded ASX 200 shares on Friday
• Why are ASX lithium shares smashing the market today?
• Here are the 3 most traded ASX 200 shares on Thursday
• Is Pilbara Minerals the hottest stock on the ASX 200 right now?
• Here are the 3 most traded ASX 200 shares on Wednesday

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

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