Tag: Motley Fool

National Australia Bank Ltd (ASX: NAB) shares are in focus this week with the S&P/ASX 200 Index (ASX: XJO) bank share scheduled to release its full-year result for FY22. With the report being so close, would it be worthwhile to buy NAB shares?

NAB is expected to release its result on 9 November 2022.

It will tell investors about various financial measures including the (cash) net profit after tax (NPAT), its lending profitability margins, its costs, the arrears of its loan book, its bad debt provisioning, the dividend, the outlook and even more areas.

Is the NAB share price a buy?

According to reporting by The Australian, the broker Morgan Stanley thinks that NAB will report “another clean result” and generate cash profit of $7.2 billion.

The broker expects the FY22 second-half profit, before provisions, to be $5.5 billion, while the cash profit (excluding notable items) could be $3.7 billion. This compares to consensus estimates of $5.3 billion and $3.6 billion respectively.

Morgan Stanley analyst Richard Wiles said:

We expect quite a clean result, but we think investors will be disappointed if earnings don’t come in above consensus.

The outlook for the first half of FY23 should be positive, but we’ll be watching for differences versus peers in the size of mortgage headwinds, deposit tailwinds and mix impacts.

The broker rating on NAB is equal-weight, which is like a hold. Morgan Stanley’s price target on NAB, which is where it thinks the NAB share price will be in 12 months, is $29.60. That implies a possible 8% fall over the next year.

Based on Morgan Stanley estimates, NAB is valued at 15 times FY22’s estimated earnings with a FY22 grossed-up dividend yield of 6.7%.

What do other brokers think?

Morgans currently has a hold rating on the business, with a price target of $30.30. That implies a possible fall of approximately 5%. This broker thinks that the NAB share price is valued at 14 times FY23’s estimated earnings, with a possible grossed-up dividend yield of 6.9%.

Citi rates NAB shares as a buy, with a price target of $32.75. This implies a slight rise for the ASX bank share. It’s expecting an attractive increase in the lending profit margin (the net interest margin (NIM)).

On Citi’s numbers, the NAB share price is valued at 15 times FY22’s estimated earnings with a potential grossed-up dividend yield of 6.7%.

My view on whether to buy at this NAB share price

NAB shares have risen 6.5% over the past month and are up close to 12% since 3 October 2022.

I do think that NAB is now one of the best banks to own on the ASX. Short-term profitability is headed up thanks to rising interest rates. But, I’m keeping in mind that loan arrears could worsen if some households are unable to absorb the cost of the higher interest rates. Investing is a long-term activity, so I think we can’t ignore what could be happening by the start of FY24.

I’d be happy to wait to see the result before buying NAB shares.

The post Are NAB shares a buy ahead of this week’s results? appeared first on The Motley Fool Australia.

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More reading

• Brokers name 2 ASX 200 dividend shares to buy
• How much could I expect to make in a year if I bought $5,000 of NAB shares right now?
• Is Bendigo Bank the best bet for dividends out of all the ASX 200 bank shares?
• 3 ‘bullish’ ASX shares to buy as FOMO grips the market: expert
• If you invested $1,000 in NAB shares 5 years ago, here’s how much you’d have today

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

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If you’re looking for dividend shares to buy, then Morgans has you covered.

Listed below are two of the best ASX dividend shares to buy this month according to its analysts. Here’s what they are saying:

Dalrymple Bay Infrastructure Ltd (ASX: DBI)

Morgans is a fan of this coal terminal operator and is expecting some big dividend yields from its shares in the coming years. The broker currently has an add rating and $2.67 price target on the company’s shares.

It commented:

DBI holds the 99 year lease to the 85 Mtpa Dalrymple Bay Coal Terminal, of which c.80% of throughput is metallurgical coal (used in steelmaking). DBCT offers the cheapest export route-to-market for users within its Bowen Basin catchment region. DBCT is fully contracted from 2023 to 2028. In the current low interest rate environment, income-oriented investors will be attracted to DBI’s high cash yield and commitment to 1-2% [now 3% to 7%] pa DPS growth.

Its analysts are forecasting dividends per share of ~20 cents in FY 2022 and ~21 cents in FY 2023. Based on the latest Dalrymple Bay Infrastructure share price of $2.48, this will mean yields of 8% and 8.5%, respectively.

Macquarie Group Ltd (ASX: MQG)

Morgans thinks that this investment bank could be a top option for income investors. It currently has an add rating and $214.30 price target on its shares.

The broker likes Macquarie due to its exposure to long term structural growth markets. It commented:

We continue to like MQG’s exposure to long-term structural growth areas such as infrastructure and renewables. The company also stands to benefit from recent market volatility through its trading businesses, while it continues to gain market share in Australian mortgages.

In respect to dividends, the broker is expecting partially franked dividends of $7.05 per share in FY 2023 and $7.36 per share in FY 2024. Based on the current Macquarie share price of $170.37, this implies yields of 4.1% and 4.3%, respectively.

The post Top broker names 2 ASX dividend shares to buy now appeared first on The Motley Fool Australia.

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More reading

• Top brokers name 3 ASX shares to buy next week
• Morgans names 3 of the best ASX 200 shares to buy in November
• Would you like to bag the latest Macquarie dividend? Read this
• 4 ASX 200 shares trading ex-dividend next week
• Broker tips Macquarie share price to rise 25%

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended 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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The Westpac Banking Corp (ASX: WBC) share price will be one to watch on Monday.

This follows the release of Australia’s oldest bank’s full year results for FY 2022.

Westpac share price on watch following FY 2022 results

• Statutory net profit up 4% to $5,694 million
• Cash earnings down 1% to $5,276 million
• Fully franked final dividend of 64 cents per share
• FY 2022 dividend up 6% to $1.25 per share
• Net interest margin (NIM) down 17 basis points to 1.87%
• Costs down 19% excluding notable items

What happened in FY 2022?

For the 12 months ended 30 September, Westpac reported a 1% decline in cash earnings to $5,276 million. This was driven by weakness in the consumer and business segments, which offset growth in New Zealand and the institutional business.

Westpac Consumer reported an 11% decline in cash earnings to $3,291 million due to a lower NIM and higher impairment charges. Net loans increased 3% or $11.9 billion thanks largely to owner-occupied mortgages. Deposits increased $14.2 billion or 5% and expenses were down 4% from FY 2021. Positively, over the second half, core earnings were 10% higher.

Westpac Business posted a 15% decline in cash earnings to $918 million or 7% excluding notable items. Expenses were down 15% year over year.

Westpac Institutional Bank reported a $1.2 billion increase in cash earnings. This was due to their being no notable items in FY 2022. Excluding notable items from the previous year, cash earnings were up 50% thanks to a 16% reduction in expenses, a 20% increase in net interest income, and lower impairments.

In New Zealand, Westpac posted a 15% increase in cash earnings to $1,165 million. Excluding notable items, such as the gain on sale of NZ Life Insurance, cash earnings were down 2% year over year. Core earnings rose 6% over the second half.

The Specialist Businesses segment reported a cash earnings loss of $723 million. This was driven largely by the $1.1 billion loss on the sale of the Australian Life Insurance business.

Despite posting an overall decline in cash earnings for the year, that didn’t stop the Westpac Board from declaring a fully franked full year dividend of $1.25 per share, up 6% on FY 2021.

How does this compare to expectations?

The good news for the Westpac share price today is that this result appears to have come in ahead of expectations.

According to a note out of Goldman Sachs, its analysts were expecting a 4% decline in cash earnings (before one-offs) to $5,140 million and a full year dividend of $1.23 per share.

Management commentary

Westpac CEO Peter King was pleased with the result. He said:

In 2022, we’ve delivered a solid financial result and made steady progress on our strategic priorities. We’ve built positive momentum and positioned the company for the future. I’m pleased with our overall performance. We sharpened our focus on core banking, reduced costs, and improved service to customers.

Westpac returned to growth in our key segments of Australian mortgages and business lending. In the second half, our banking divisions delivered strong growth in core earnings on the back of good cost and margin management. Our balance sheet is in good shape across capital, liquidity and asset quality and we’ve determined a final, fully franked ordinary dividend of 64 cents per share.

Outlook

Mr King appears positive on the bank’s future and is expecting further cost reductions. He explained:

After the work of the past two years, Westpac is now a simpler, stronger bank. We’re continuing to get our costs down, we’re simplifying our operations and our program of co-locating branches in similar locations is removing duplication. At the same time, we are investing in the right places, such as the launch of our digital mortgage and new personal finance management tools in the Westpac app.

Our year-on-year results are solid and over the past six months in particular we have demonstrated momentum, with core earnings (ex-notable items) up 12% and our net interest income up 7%. Margins increased 5bps in the second half to 1.90% but they remain below historical levels.

Finally, Mr King spoke about the elephant in the room – inflation. Here’s what he had to say:

In Australia, consumer spending is resilient but as higher rates bite, we expect the heat to come out of the economy and inflation pressures to ease. Small business is one sector we are watching closely as consumption slows. Housing prices have fallen in recent months and this will continue into 2023. Credit growth is expected to ease. GDP growth will slow and unemployment will rise.

These will be necessary outcomes if we are to lower inflation. The economy remains robust and Westpac is well positioned to handle the road ahead. Our own portfolio is in good shape going into 2023.

The post Westpac share price on watch following FY22 results appeared first on The Motley Fool Australia.

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More reading

• 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?
• The Westpac share price soared 17% in October, what’s next?

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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“Never get between a politician and a bucket of money” goes the old saying.

But the person who said that had obviously never met some people in the finance industry.

Such is the sheer size, scale and scope of the money game – with trillions sloshing around just ripe for having a tiny portion sliced off for an enterprising money manager – it puts politics to shame.

And here’s the thing – you don’t even have to break the law to do it.

A $1 billion fund charging 1% per annum in management fees? That’s a cool $10m just for turning up.

A $100 billion fund… yep, that’d be a billion dollars in fees.

True, not every fund is that big – or charges that much – but it neatly illustrates the issue, doesn’t it?

It sure as hell highlights both the incentives and the opportunities.

Now, before the angry letters (people still send those, right?) start, let me clear up two things:

First, yes, The Motley Fool charges fees. We’re a for-profit company. I think we’ve created far more long-term value for our members than we’ve charged in fees, but we do charge fees. So am I biting the hand that feeds me? Nah, because if members don’t like it they leave – I have no issue in highlighting fees as an issue, and if it costs us a few members, so be it.

And second, some of the investment advisors and fund managers earn every cent of those fees. Not all, but some.

I have no issue with people being paid fairly for the value they create.

But my broader point is that a lot of people are making a lot of money from being middlemen and -women in the finance game.

And my more specific point?

People in this industry are very incentivised to find new ways to get just a little more of your hard-earned cash.

There is no better example than the explosion of exchange-traded funds (ETFs).

Once the bastion of boring, low-fee, index-based managed funds (think Vanguard’s ASX 300 index fund), the ETF world has been overrun by fund managers finding new ways of repackaging share portfolios and selling them to you and me.

In fact, as long ago as 2017, according to Bloomberg, there were more US indices than there were individual listed companies!

Inmates running the asylum? Kinda sounds like it, doesn’t it?

And here’s how it works.

While those ETF managers aren’t allowed to give you advice, they can describe their products in particular ways to appeal to investors.

And – while they may not say it (and, more generously, may not even realise it) – they’re relying on the halo effect of being an ETF in the process.

So long have we been told that ETFs were good things (the low-cost, index-based type, that is), that when other ETFs come along, they get to trade off that reputation.

ETF implies (relative) safety. Diversification. Lower risk.

Tell that to the investors in the ASX ‘BEAR’ ETF, who’ve lost 38% over the past 5 years, while the All Ords is up 17%.

Again, to be 100% crystal clear, I’m not suggesting that the provider of the BEAR ETF (Betashares) is making those claims, or even implying them. They’re doing nothing wrong.

But the investor who thinks that ETF is the same as a plain-vanilla index ETF is in for a rude shock.

(Betashares actually goes out of its way to explain that the ETF “…seeks to generate returns that are negatively correlated to the returns of the Australian sharemarket.”)

That ETF is actually relatively tame (at least for those who understand what they’re getting).

There are double- and triple-leveraged ETFs.

There are ETFs that invite investors to take a punt on a particular industry or commodity.

And their supporters would (correctly) say they’re not making anyone buy them. In fact, they’re not providing advice at all – just creating a product and letting people use them as they see fit.

But how many people should?

How many really understand the underlying characteristics of the ETF they’re buying, including the fees and likely performance?

Or are they just thinking ‘[Insert cool/trendy/interesting/hot Industry here] is going to be big, so buying the ETF is the most logical step’?

Worse, how many think ‘It’s safer because it’s diversified’, or ‘It must be okay, otherwise they wouldn’t sell it’?

And how many ETFs do we really need on an exchange?

More than the number of companies?

Doesn’t that just sound, a little, like the real winners are the ETF sellers?

It gets worse.

One of our marketing team recently shared with me the absolute extreme of the genre – the ‘single stock ETF’.

Huh?

If you can just buy the shares, why is there an ETF?

Well, because the ETF loads up with leverage, so that when you win, you win big.

(Oh, and fees for the ‘product manufacturer’ – a term that, for a change, is a euphemism that actually does tell you what’s going on!)

Sound good?

But what about when you lose?

Should investors really be taking leveraged bets on a single share?

Nope.

Not with my money and not with your money.

Some will say it’s just a product, like any other product, and people can make their own choices.

Yep.

And the Royal Commission found no one doing anything wrong, huh? Buyer beware?

Nope.

Someone, somewhere, realised that there are people who would, if offered the chance, take silly risks on leveraged, high-fee, single-stock ETFs.

And so, rather than warning against it… they decided to take advantage of it.

Hey, it’s a free country, right? And a free world?

I guess.

But I reckon we already have enough rubbish finance products… we really don’t need leveraged, single-stock ETFs!

Now, this is where I turn awkwardly towards telling you about a brand new Motley Fool service, which covers ETFs!

Awkward, in the sense that once I try this deft left-foot step, I’m worried that some readers will think everything above is just a set-up for a sales pitch!

It’s not, by the way – I was truly flabbergasted when I found out about those ETFs!

But it’s not, for another couple of reasons.

First. If you’re a member of any service provided by Motley Fool Australia, you’re going to get a nice surprise on Monday morning!

(Hint: You’re getting it for free! Was that more than a hint? Oops…)

Second, if you’re not yet a Motley Fool member, the service we’re launching today (Monday) morning is both our first ETF product and the lowest-price service we’ve ever launched here in Australia!

By a long way.

It’s been something of a passion product for me. I’ve been fortunate enough to launch a few of those in the last decade, and I’m every bit as proud of this as I was of my role in launching our income-first product, Everlasting Income, and our capstone service, Motley Fool Platinum.

Anyway…

If you’re a member of one of our services, check your inbox tomorrow morning.

If you’re yet to join and you want to know more about the new ETF service, click here to be on the mailing list when we launch!

I’m pretty excited about it.

And, for the love of God, stay away from leveraged single-stock ETFs!

Fool on!

The post They’ve got to be ETFing kidding! appeared first on The Motley Fool Australia.

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More reading

• ‘Fertile ground’: Fundie reveals where to find the best ASX shares right now
• 5 things to watch on the ASX 200 on Monday
• Why did the Novonix share price jump 50% in October?
• Could this help or hurt the Endeavour share price?
• Morgan Stanley tips how to pick the market bottom, but should you wait to buy ASX shares?

Motley Fool contributor Scott Phillips 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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Ask A Fund Manager

The Motley Fool chats with the best in the industry so that you can get an insight into how the professionals think. In this edition, Maple-Brown Abbott portfolio manager Phillip Hudak explains how the coming period will be far more challenging for ASX shares than the preceding decade, but there are pockets of opportunities.

Investment style

The Motley Fool: How would you describe your fund to a potential client?

Phillip Hudak: My name is Phillip Hudak and I’m co-portfolio manager for the MBA Australian Small Companies Fund. The fund is an all-weather Australian small-cap strategy that is designed to outperform in most market environments. 

We define ourselves by our earnings drives share prices philosophy. We go where the earnings go and are happy to invest in resources, in industrials and not bucketed into any particular or specific investment style like value or growth — and this is particularly important in the current market environments.

We focus on companies with improving fundamentals, all the way through to the upgrade cycle. We are looking to construct a portfolio of undervalued Australian small-cap companies that have idiosyncratic exposures.

MF: Fantastic. And it’s a new product, isn’t it? It only opened a couple of months ago?

PH: Yes. It was launched in June of this year. However, the investment philosophy and the investment process is identical to our previous employer, which has over a nine-year track record.

MF: So the big question on everyone’s lips right now is where do you reckon the market might be heading? How’s the state of play now and where it is going?

PH: I’m not a macro person and don’t make market predictions. I’d rather focus on stock-specific factors. However, what is clear is the future market environment is going to be more challenging for investors than what we’ve seen in the past. Economic and business models that relied on cheap debt and low cost inputs typically flourished in a non-inflationary environment and it looks like that period may be ending. 

The current geopolitical tensions, and I suppose hangover from COVID, have suggested that globalisation and cheap inputs may be a thing of the past. There’s no question that lead indicators imply softening inflation. However, tightening financial conditions continue to be required to contain the inflation genie, which is currently happening at the expense of some market dislocations that are happening here domestically.

The key question for investors is what will be the impact on companies of high interest rates and rising living costs? Is Australia just behind the rest of the world or are we still “the lucky country”? The sectors that the market has been most worried about, including domestic cyclicals, appear so far to be more resilient than market expectations so far. However, it is clear that market expectations for financial year 2023 are too elevated and expect those to continue to pull back. 

The key challenges for investors is whether or not companies invested have adequate moats, defensive earning streams and/or levers to pull to offset these emerging input costs and financial pressures that are emerging in the Australian marketplace.

Australian small caps have experienced significant multiple de-rates so far this calendar year to date, and have almost been indiscriminate across many stocks and valuations are definitely looking more attractive. We see upside risk for select companies with sustainable business models that have strong medium term outlooks. 

In summary, there is the potential for more challenging sort of market conditions for investors and the expectations that investors will need to rely more on alpha sources to achieve overall return objectives with the Australian small-caps market continuing to be a fertile ground for return duration.

MF: For a new investor who’s joined you in the last couple of months, it’s a pretty reasonable time to get into the market, isn’t it?

PH: Oh definitely. And particularly with small caps, given the breadth and depth of opportunities available, you’re able to actually find good, sound investment ideas that are able to grow earnings irrespective of the market environment which we’re currently in.

The post ‘Fertile ground’: Fundie reveals where to find the best ASX shares right now appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Monday
• Why did the Novonix share price jump 50% in October?
• Could this help or hurt the Endeavour share price?
• 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

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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On Friday, the S&P/ASX 200 Index (ASX: XJO) finished the week with a decent gain. The benchmark index rose 0.5% to 6,892.5 points.

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

ASX 200 expected to jump

The Australian share market looks set to start the week strongly after a good session on Wall Street on Friday night. According to the latest SPI futures, the ASX 200 is expected to open the day 91 points or 1.3% higher this morning. On Wall Street, the Dow Jones was up 1.3%, the S&P 500 rose 1.35%, and the NASDAQ climbed 1.3%. The latest US jobs data sparked hopes that the Federal Reserve could slow its rate hikes.

Oil prices jump

Energy shares such as Santos Ltd (ASX: STO) and Woodside Energy Group Ltd (ASX: WDS) could have a great start to the week after oil prices charged higher on Friday night. According to Bloomberg, the WTI crude oil price was up 5% to US$92.61 a barrel and the Brent crude oil price rose 4.1% to US$98.57 a barrel. News that China could soon get rid of its COVID zero policy boosted oil and other commodity prices.

Westpac full year results

The Westpac Banking Corp (ASX: WBC) share price will be on watch on Monday when the banking giant releases its full year results. According to a note out of Goldman Sachs, its analysts expect Westpac to report a 10.3% decline in total revenue to $18,866 million and a 4% decline in cash earnings (before one-offs) to $5,140 million. A full year dividend of $1.23 per share is expected, up from $1.18 per share in FY 2021. Goldman is forecasting a net interest margin of 1.85% in FY 2022 and an improvement to 1.96% in FY 2023.

ANZ shares go ex-dividend

The Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price could have a subdued start to the week. That’s because this big four bank’s shares are due to trade ex-dividend on Monday. Eligible shareholders can look forward to receiving ANZ’s fully franked 74 cents per share dividend next month on 15 December.

Gold price rises

Gold miners including Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) could have a good start to the week after the gold price rose strongly on Friday. According to CNBC, the spot gold price was up 2.8% to US$1,676.6 an ounce during the session. Hopes that the US Fed could slow its rate hikes boosted the precious metal.

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

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More reading

• Morgans names 2 more of the best ASX shares to buy in November
• Hotels, hurt feelings, and HR hassles, but Fortescue’s biggest shareholder still got richer this week
• Is there any good news in sight for the gold price and ASX 200 gold shares?
• Is the Vanguard Australian Shares ETF fighting off inflation?
• How did Pendal shares fare today amid takeover talk and an earnings update?

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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The Novonix Ltd (ASX: NVX) share price was in sensational form in October.

During the month, the battery materials and technology company’s shares jumped a massive 52%.

This was many times greater than the strong 6% gain recorded by the ASX 200 index over the same period.

Why did the Novonix share price rocket higher?

The main driver of this gain was the release of an announcement which revealed that Novonix could receive some major government funding.

According to the release, Novonix’s Anode Materials division was selected to enter negotiations to receive US$150 million (A$240 million) in grant funding from the US Department of Energy (DOE). Under the terms of the grant, the government funds must be at least matched by the recipient.

If successful, these funds would be dedicated to the construction of a 30,000 tonnes per annum (tpa) US manufacturing facility, including site selection, plant layout, and engineering design with capability for additional expansion.

Novonix’s co-founder and CEO, Dr Chris Burns, believes this would be a big boost to its aim of accelerating the domestic battery supply chain. He said:

We are proud to have been selected to negotiate this funding in recognition of our readiness to accelerate the domestic battery supply chain and meet growing global demand from the electric vehicle and stationary grid storage markets.

Can its shares keep rising?

Despite its stellar gains, the team at Morgans sees value in the Novonix share price at the current level. Though, only for investors with a higher tolerance for risk.

It currently has a speculative add rating and $3.11 price target. This compares to the latest Novonix share price of $2.60, implying potential upside of 20% over the next 12 months.

The post Why did the Novonix share price jump 50% in October? appeared first on The Motley Fool Australia.

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More reading

• Why is the Novonix share price gaining today?
• Why is the Novonix share price tanking 5% today?
• A major shareholder sold off most of its Novonix shares last week. What’s happening?
• Novonix shares go for a swim after burning through $25 million
• Why $6.5b Argo Investments is backing these ASX 200 lithium 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 Endeavour Group Ltd (ASX: EDV) share price has seen plenty of volatility over 2022. It’s actually up slightly over the year, but the company is down close to 17% since mid-August.

This is the business that was separated out of Woolworths Group Ltd (ASX: WOW). Endeavour has poker machines, hotels, and liquor retailers in its portfolio.

Government regulation and changes to the gambling industry could have an impact on Endeavour shares.

So, it’s important that investors know about what the New South Wales government is proposing.

Cashless gambling card on the cards?

The NSW government’s Racing Minister Kevin Anderson had introduced legislation to parliament according to reporting by the ABC, and various other media outlets.

The Crime Commission’s report into money laundering in pubs and clubs found that “dirty money was being funnelled through the gaming rooms of suburban pubs and clubs and recommended a cashless gaming card”.

Crossbench MP Alex Greenwich “planned to introduce an amendment to the legislation so it would include a cashless gaming card to address problem gambling and money laundering”, according to the ABC.

The original legislation didn’t have a proposal for a cashless gaming card.

There has reportedly been opposition in the industry to cashless cards, as well as from some within the government.

Greenwich was quoted by the ABC:

NSW is the gambling harm capital of the world, and clubs have become mini casinos where money laundering is rife.

Urgent action is needed, and that includes a transition to cashless cards in all gaming venues in NSW.

The ABC reported that it understands the plan is for the response to the commission’s report to be produced ahead of the March election, but won’t be in time to make legislative changes.

One particular measure would allow gamblers to set a ‘spending limit’ and “create a paper trail for criminals if they deposit the proceeds of crime into a bank account”.

NSW Crime Commissioner Michael Barnes suggested that the card should be mandatory.

The ABC reported that the Australian Hotels Association of NSW (AHA NSW) said the introduction of mandatory cashless gaming cards would be “unjustified overreach”, because the NCC found the use of poker machines to wash money was not widespread.

A three-month trial of a cashless gaming system was launched in Newcastle in October.

What does this mean for Endeavour?

According to reporting by NABTrade, the broker Jefferies said that if cashless gambling cards are implemented by the NSW government then the implications would be “impossible to estimate”.

Jefferies said cashless cards could increase Endeavour’s revenue because they are associated with increased expenditure.

The broker estimates that NSW accounts for around a fifth of Endeavour’s hotel earnings before interest and tax (EBIT).

It’s rated as a buy, with a price target of $8.20. However, a cashless card with pre-commitment and low default loss limits could have “material implications” for revenue and earnings. A change to regulations could also mean other states change their laws as well.

Endeavour share price snapshot

Over the last month, Endeavour shares are down around 2.5%. They are also down around 2% over the past 12 months but are up by a similar amount this year to date.

The post Could this help or hurt the Endeavour share price? appeared first on The Motley Fool Australia.

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More reading

• Why is the Endeavour share price having such a great start to the week?
• Why Endeavour shares could offer access to an ‘attractive asset’: expert

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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This year has been a difficult one for many investment markets, including the ASX share market.

What’s the best time to buy during this volatility? If we had a crystal ball, that’d make it obvious where the bottom of the decline is.

Some readers may have heard of the phrase about trying to catch a falling knife. Something that has fallen by 50% from $1 to 50 cents could easily fall another 20% to 40 cents. Just because something has fallen heavily doesn’t mean it can’t keep falling.

One investment expert has shared a couple of tips on how to identify when we could have reached the bottom.

Are we there yet?

Lisa Shalett is the chief investment officer of wealth management at Morgan Stanley.

She believes that we are “not quite” at the bottom. Morgan Stanley’s global investment committee believes this latest bounce is “temporary, driven by technical factors, and that the bear-market bottom is still to come”.

Shalett pointed out that the decline in valuations we’re seeing is because of central banks increasing interest rates, rather than an economic crisis. This matters, in her opinion, because monetary policy was able to be used as an antidote to prior bear markets like the COVID-19 crash and the GFC.

This type of bear market tends to be “more prolonged”.

What could help drive a recovery for the (ASX) share market?

There were “at least two” necessary conditions for reaching the bottom.

Shalett explained:

First, inflation needs to reach a viable peak. We may reach that soon. Although uncertainty remains, we see solid indications of both softer demand and more supply, suggesting that inflation is poised to decelerate in the months ahead.

Importantly, while peak inflation, and in turn, peak policy rates, may be sufficient to bring the bond market to a bottom, that likely won’t be the case for stocks.

Stocks may need to fall farther, based on a sober assessment of year-ahead corporate earnings potential.

In other words, overly optimistic stock investors and Wall Street analysts must realistically factor in the potential depth and breadth of an economic slowdown and the consequent hit to employment and consumer demand. That forecast reset has just begun, yet the 2023­–2024 earnings picture is still far from clear.

Where are the opportunities?

Shalett said that investors should “remain patient” and avoid chasing index-level bear market rallies.

She suggested that businesses in healthcare, financials, energy, industrials and defensive, which have above-average dividend yields, could be promising.

However, investors might be missing out on opportunities by waiting too long, as the Motley Fool’s Bruce Jackson pointed out. He also warned about the folly of trying to predict when news stories (macro factors) are going to impact the share market, and thinking that can inform people about when to “jump in and out of the market”.

Jackson wrote:

Would your macro “analysis” have told you to jump back into stocks on October 1st, in advance of the big rally for that month?

And would your analysis now tell you to stay in, get in, get out or something in between?

I’d suggest it’s a futile exercise at best, and likely a sub-optimal investing strategy.

If you invest in the stock market, you should make it a lifelong endeavour, not something you jump into and out of depending on your mood, the market’s mood, or the macro environment.

In other words, if an investor sees an opportunity with an ASX share, it may be worth jumping on it. That bargain may not always be there. Plus, time in the market beats timing the market.

For me, a name like Wesfarmers Ltd (ASX: WES) could be something to like, with its diversified business operations, good dividend yield, investing in new areas for growth (lithium and healthcare) and its 25% decline this year.

The post Morgan Stanley tips how to pick the market bottom, but should you wait to buy ASX shares? appeared first on The Motley Fool Australia.

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More reading

• Experts name 2 ASX 200 dividend shares to buy next week
• Should you buy the dip in the Wesfarmers share price?
• Up 6% in October, is this factor why the Wesfarmers share price performed?
• Amazon stock just tanked. Could this be a canary in the coal mine for ASX 200 retail shares?
• Why I think the Wesfarmers share price is a buy after this week’s AGM

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 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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It’s been a rough year for markets worldwide, and while the ASX has held up better than others, the downturn has likely left plenty of quality dividend shares trading for cheap prices. That’s good news for those looking to build passive income.

Of course, as with any investment, there are risks involved with holding shares.

But if I was about to retire, I’d be hunting for cheap ASX shares offering dividends right now.

Why I would invest in cheap ASX dividend shares for retirement

Investing in ASX dividend shares is a relatively reliable way to build a passive income, particularly if they can be found in the bargain bin.

Finding value ASX shares that also pay dividends can sometimes be a hard ask. However, they can provide both capital and dividend returns for a comparatively low initial investment when they are found.

Most ASX dividend shares pay shareholders twice a year, though some provide quarterly offerings.

Dividends generally represent a portion of a company’s profits for a particular period. Thus, they tend to grow alongside a business.

That means dividend shares can be a hedge against inflation.

It also means that, if I were about to retire, I would want to buy shares in companies that not only pay dividends, but also have plenty of room to grow.

That way, I could sit back and enjoy receiving regular payouts without worrying about actively managing my portfolio.

Here’s how I would search for cheap ASX dividend shares to help fund my lifestyle in retirement.

How I would seek out value dividend stocks

I would start by searching for cheap ASX dividend shares in sectors known to be undervalued that also boast clear future growth prospects.

From there, it would be wise to consider which shares I truly believe represent quality businesses.

Whether a business is ‘good quality’ is very subjective. However, quality companies generally boast strong balance sheets, a competitive edge, and a loyal customer base. That way, they’re likely to make the most of the good times and push through tough times.

I would also focus on de-risking my portfolio as much as possible. And by de-risking, I mean diversifying. Diversification is one of the most reliable ways to protect a portfolio from downturns in individual sectors or companies.

Finally, I would look for shares paying consistent dividends with sustainable yields.

Investing in cheap ASX dividend shares for retirement often means buying shares to hold for many years and decades. Therefore, it’s likely a green flag if a company has been paying decent dividends for years or decades gone by.

Additionally, while it might be tempting to buy shares with gigantic dividend yields, it’s worth remembering that such yields are hard to sustain in the long term.

The post Almost ready to retire? I’d buy cheap ASX dividend shares for passive income appeared first on The Motley Fool Australia.

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More reading

• Experts name 2 ASX 200 dividend shares to buy next week
• 3 reasons to tell yourself it’s okay to make financial mistakes in 2023
• Analysts name the ASX growth shares to buy
• Can you actually retire a millionaire with ETFs alone?
• Top brokers name 3 ASX shares to buy next 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 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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