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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, Forager Funds Management portfolio manager Alex Shevelev picks the ASX stock that would allow him to put his feet up for years.

The ASX share for a comfortable night’s sleep

The Motley Fool: If the market closed tomorrow for four years, which stock would you want to hold?

Alex Shevelev: Well, no surprise, RPMGlobal Holdings Ltd (ASX: RUL).

[Here are Shevelev’s comments on RPM Global from earlier in the interview:]

The company’s given guidance for the current financial year of profits tripling. And that’s quite conservative guidance by a management team who we regard as top notch. And that guidance actually assumes that the new revenue additions, which are an important metric for RPM, will be below last year. But the business looks to be tracking better than that.

We, in fact, got an AGM update just this morning that confirms that the business is doing a good job continuing to sign on its subscription revenue. And all of that is trading at about 17 times earnings next year. That earnings stream is high quality and will continue to grow over time. 

Now, it’s been an interesting space, as well, for corporate attention. Two of their larger competitors have recently been taken out. Those two transactions imply for RPM… more than double the current share price. This is a business that can garner a lot of attention from potential bidders over time.

We’ve talked about very low churn revenue there. You’ve got to focus on operating leverage from here on in. Great management team, plenty of skin in the game and it may well be given all the corporate activity in the space that the business wouldn’t be around in four years in any case.

MF: Fair enough. There’s been a lot of private equity interest in especially tech companies this year.

AS: That’s right.

MF: Are they bargain hunting? Is that what they’re doing?

AS: Well, I think for a lot of private equity firms, they’re sitting on quite a lot of capital and they’re seeing some attractive bargains in this space from companies that actually have some pretty strong underpinnings, but that have been dramatically sold down by the listed markets. 

Those companies have been spending a lot on research and development, sales and marketing to try to scale up. But there is a way to run those businesses more efficiently. A lot of those companies are doing that in the listed space already, but the private equity firms see the opportunity to purchase those businesses and do the same in the unlisted space.

The post The ASX share I’d hold onto for dear life: fund manager appeared first on The Motley Fool Australia.

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More reading

• Fundie reveals 3 ‘top notch’ ASX shares to buy right now
• This embattled ASX All Ords mining share is gearing up to be a FY23 winner: fundie

Motley Fool contributor Tony Yoo has positions in RPMGlobal Holdings. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended RPMGlobal Holdings. The Motley Fool Australia has recommended RPMGlobal Holdings. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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On Wednesday, the S&P/ASX 200 Index (ASX: XJO) continued its winning streak with a small gain. The benchmark index rose 0.15% to 6,986.7 points.

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

ASX 200 expected to fall

The Australian share market looks set to fall on Thursday following a poor night on Wall Street after the US Federal Reserve made a 0.75% increase to rates. According to the latest SPI futures, the ASX 200 is expected to open the day 82 points or 1.2% lower this morning. In late trade in the United States, the Dow Jones is down 1.2%, the S&P 500 has fallen 2.1% and the NASDAQ has tumbled 2.8%.

Oil prices rise

Energy producers including Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) could have a good day after oil prices rose on Wednesday night. According to Bloomberg, the WTI crude oil price is up 1.5% to US$89.73 a barrel and the Brent crude oil price is up 1.45% to US$96.01 a barrel. A drop in US crude stockpiles boosted prices.

Woolworths Q1 update

The Woolworths Group Ltd (ASX: WOW) share price will be on watch today when the retail giant releases its first quarter sales update. According to a note out of Goldman Sachs, its analysts are expecting the company to have performed better than rival Coles Group Ltd (ASX: COL) and are forecasting first quarter Australian Supermarket same store sales growth of 3%.

Domino’s rated neutral

The Domino’s Pizza Enterprises Ltd (ASX: DMP) share price is fully valued according to analysts at Goldman Sachs. In response to the pizza chain operator’s trading update just before the market close yesterday, Goldman has retained its neutral rating with a $60.00 price target. It commented: “FY23 NPAT excluding ~A$7mn FX headwinds is expected to be above FY22 A$165mn but will be below if including FX impact. This is below Factset Consensus FY23 NPAT forecast of A$179mn and GS forecasts of FY23 A$170mn.”

Gold price edges lower

Gold miners Evolution Mining Ltd (ASX: EVN) and Regis Resources Limited (ASX: RRL) could have a subdued day after the gold price edged lower overnight. According to CNBC, the spot gold price is down 0.2% to US$1,646.4 an ounce. The gold price fell after the US Federal Reserve raised rates by 0.75%.

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

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More reading

• Domino’s share price sinks 5% on AGM update
• Here are the top 10 ASX 200 shares today
• A2 Milk share price climbs amid legal stoush
• Here are the 3 most traded ASX 200 shares on Wednesday
• What’s boosting the Lynas share price on Wednesday?

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 Dominos Pizza Enterprises 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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Looking for blue chip shares to buy? If you are, check out the ASX 200 shares listed below that have recently been named as buys and tipped to have meaningful upside potential.

Here’s what you need to know about these ASX blue chip shares:

CSL Limited (ASX: CSL)

CSL could be a blue chip ASX 200 share to buy. It is of course one of the world’s leading biotechnology companies, comprising the CSL Behring, CSL Vifor, and Seqirus businesses.

While trading conditions have been tough over the last couple of years due to plasma collection headwinds, everything is largely back to normal now and CSL’s outlook is becoming increasingly positive. Particularly given the recent blockbuster acquisition of Vifor Pharma, which makes up the CSL Vifor business. This has added to the company’s world class product portfolio and burgeoning research and development pipeline.

Citi remains very positive on CSL and currently has a buy rating and $340.00 price target on its shares. This compares favourably to the latest CSL share price of $282.71.

Treasury Wine Estates Ltd (ASX: TWE)

Another blue chip ASX 200 share that could be a buy is Treasury Wine.

It is the wine giant behind popular brands including 19 Crimes, Wolf Blass, and Penfolds.

Much like CSL, the last couple of years have been difficult for Treasury Wine, but for very different reasons. After the company was effectively kicked out of the lucrative China market, it was forced to find a new destination for these wines. The good news is that this has been successful and the company is back on track again.

In fact, the team at Morgans believe the company is not only back on track, but back on course to deliver strong earnings growth in the coming years.

In light of this, the broker sees plenty of value in its shares at the current level. Morgans has an add rating and $15.71 price target on the company’s shares. This compares to the latest Treasury Wine share price of $12.99.

The post Here’s why brokers rate these blue chip ASX 200 shares as buys appeared first on The Motley Fool Australia.

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More reading

• Top brokers name 3 ASX shares to buy today
• Why is the CSL share price falling on Wednesday?
• Top ASX shares to buy in November 2022
• Did the CSL share price fall or rise in October?
• Bell Potter names 9 ‘champion’ ASX 200 shares to buy for the next five years

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 CSL Ltd. 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 to invest in exchange traded funds (ETFs), then it could be worth considering the two listed below.

These ETFs are popular with investors and it isn’t hard to see why. Here’s what you need to know about them:

BetaShares Global Cybersecurity ETF (ASX: HACK)

The first ASX ETF for investors to consider is the BetaShares Global Cybersecurity ETF.

As you might have guessed from its name, this ETF gives investors access to the leading players in the global cybersecurity sector.

The recent Optus and Medibank Private Ltd (ASX: MPL) cyberattacks shows just how important cybersecurity is for businesses and consumers. With sensitive information being accessed by hackers, both companies are facing major reputational damage, as well as potential penalties and compensation.

This bodes well for cybersecurity companies included in the fund. This includes high quality companies such as Accenture, Cloudflare, Crowdstrike, Okta, and Palo Alto Networks.

VanEck Vectors Video Gaming and eSports ETF (ASX: ESPO)

Another ETF that could be a top option for investors is the VanEck Vectors Video Gaming and eSports ETF. This popular ETF gives investors exposure to the biggest players in video game development, hardware, and esports.

The video game industry certainly is a great place to be right now. It is currently benefiting from an estimated 2.7 billion+ gamers globally, which is more than active Apple phones and Netflix subscriptions combined.

This is driving increasing revenue in the industry, much to the delight of the companies included in the fund such as graphics processing unit developer Nvidia and gaming giants Electronic Arts, Nintendo, Roblox, Take-Two, and Tencent.

The good news is that the industry is expected continue its growth for some time to come. According to Statista, revenue in the video games segment is projected to reach US$208.60 billion in 2022 and then grow almost 8% per annum to US$304.70 billion by 2027.

The post 2 high quality ETFs for ASX investors in November appeared first on The Motley Fool Australia.

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More reading

• 2 excellent ETFs for ASX investors in November
• 3 excellent ETFs for ASX investors to buy today
• 5 things I look at when buying an ASX ETF
• How are ASX cybersecurity shares faring amid all these hacks?
• 2 top notch ASX shares for beginners

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 BETA CYBER ETF UNITS. The Motley Fool Australia has positions in and has recommended BETA CYBER ETF UNITS. The Motley Fool Australia has recommended VanEck Vectors ETF Trust – VanEck Vectors Video Gaming and eSports ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The AVZ Minerals Ltd (ASX: AVZ) share price remained frozen at 78 cents today after the company requested an extension to its voluntary trading halt, last extended on Monday.

The ASX lithium share has asked for a voluntary suspension until the start of trade on 15 November 2022, or earlier if an announcement is made.

The company is involved in proceedings regarding its mining and exploration rights for the Manono lithium and tin project located in the Democratic Republic of Congo (DRC) in central Africa.

The reason for the latest extension is that “the subject of the initial trading halt request remains incomplete”. This refers to its previous voluntary trading halt extension request dated 10 October.

Indeed, the halt has been extended multiple times as the company attempts to finalise an ownership dispute with China’s Jin Cheng Mining, which claims to own a portion of the Manono lithium and tin project.

AVZ has denied the claim, leading to a protracted arbitration proceeding between the two companies.

A second company has also made a claim to Manono, this time coming from Dathomir Mining Resources. A DRC tribunal granted Dathomir’s request to suspend the sale of a 15% stake in Manono to AVZ, which makes the ongoing ownership dispute all the more complicated.

AVZ issues company updates

While all these disputes are going on, AVZ posted a number of company updates to the market on Monday, including its quarterly activities report.

One highlight is that an International Chamber of Commerce arbitrator has been appointed to hear proceedings in the Jin Cheng Mining dispute. A case management conference is due to be held between the two companies.

AVZ also said it’s having “high-level discussions” with DRC officials regarding its mining and exploration rights in the country.

Its update also included initial results from its Roche Dure drilling program. The drill holes were said to have uncovered “high-grade spodumene lithium mineralisation including 226.8m @ 1.67% Li2O & 307 ppm Sn and 226.8m @ 1.67@ Li2O”.

The post The trading halt on AVZ Minerals shares has been extended again. Here’s the latest 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
• AVZ share price remains on ice following legal update
• Waiting for AVZ shares to resume trading this week? Don’t hold your breath
• AVZ Minerals shares are scheduled to resume trading next week. Here’s what to watch

Motley Fool contributor Matthew Farley 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 BrainChip Holdings Ltd (ASX: BRN) share price finished the session on Wednesday near flat at 65.5 cents.

This followed a dramatic morning that saw the BrainChip share price pop then drop within the space of 75 minutes immediately after the market open.

The semiconductor company’s shares opened at 65.5 cents and quickly climbed to an intraday day of 67.5 cents. That was a 3.8% bump on the previous closing price.

Then just as dramatically, the share price fell to an intraday low of 63.5 cents by about 11:15am. That was a 2.3% drop on yesterday’s close.

There is no price-sensitive news from the tech company today.

BrainChip issues 7.5 million new shares for employees

In a cleansing notice published by the ASX this morning, BrainChip said:

BRN today issued 7,500,000 fully paid ordinary shares (Shares) to the Trustee of the Brainchip Long Term Incentive Plan Trust for the purposes of administering the Long Term Incentive Plan.

The Shares were issued without disclosure to investors in accordance with Part 6D of the Corporations Act.

BrainChip now has about 1.73 billion shares on issue, as well as about 100 million unquoted securities.

What’s happening with the BrainChip share price?

The share issue follows a horror month for the BrainChip share price.

As my Fool colleague James reported, the stock lost a quarter of its value in October.

Most of the fall came after the company released its Q3 FY22 update last Thursday.

That update revealed that the company generated cash receipts of just US$118,000 during the three months to 30 September. That’s a decrease of US$1.1 million on the receipts generated in Q2 FY22.

The BrainChip share price is down 18% in the year to date.

BrainChip not the only one issuing new ASX shares today

Core Lithium Ltd (ASX: CXO) also issued a stack of new ordinary shares today — 870,872 to be exact.

According to the cleansing notice, 700,000 shares are for employees who exercise their unquoted performance rights for nil consideration.

A further 170,872 shares were issued at 45 cents per share for investors who have exercised unquoted options.

The post Why did the BrainChip share price pop then drop today? appeared first on The Motley Fool Australia.

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More reading

• Why did the BrainChip share price lose a quarter of its value in October?
• These were the worst-performing ASX 200 shares in October
• Why Brainchip, Bubs, EML, and Fortescue shares are falling today
• Here were the 3 most heavily traded ASX 200 shares on Friday
• Why Brainchip, Calix, Fortescue, and ResMed shares are sinking

Motley Fool contributor Bronwyn Allen 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 Domino’s Pizza Enterprises Ltd (ASX: DMP) share price was out of form on Wednesday.

A late collapse saw the pizza chain operator’s shares end the day over 5% lower at $60.01.

Why did the Domino’s share price take a tumble?

Investors were selling down the Domino’s share price after the company released its annual general meeting update just before the market close.

According to the update, trading conditions have been tough so far in FY 2023, which has led to network sales falling 1.8% year to date. On a same store sales basis, sales are down 1% over the prior corresponding period.

One positive, though, is that the company’s sales have improved in October, with sales up 1.6% month to date. In addition, management continues to expect to be back within its 3% to 6% sales growth target by the end of the year.

What about its earnings?

Things have been equally challenging on the bottom line for Domino’s due to inflationary pressures, high energy prices, and foreign exchange headwinds.

As a result, excluding the latter, management only expects “to deliver NPAT growth in FY23.”

Though, this isn’t stopping the company from expanding its network. In fact, the company “intends to set a new record for network expansion this Financial Year, with organic growth and three newly acquired markets to beat the FY16 record of 484 stores.”

‘A challenging short-term outlook’

Domino’s CEO and managing director, Don Meij, commented:

We understand inflation, particularly high energy prices in Europe, are making customers consider every purchase – our answer to this is delivering a high-quality product at an affordable price. Customers have options, as they always have, and we believe we have an unrivalled ability to provide them choice and value; from inflation-busting offers for those looking for a meal for one, through to bundled offers for families and friends.

Some of our smaller competitors are under pressure in our markets, as they do not benefit from the same strategy and purchasing power, which means there is an increasing opportunity for smaller infill acquisition opportunities in our existing markets, in addition to possible market share gain.

This is a challenging short-term outlook for our business, but our confidence in the medium- to long-term is built on strong unit economics, allowing an expansion of our network to the benefit of customers, franchisees and shareholders.

The post Domino’s share price sinks 5% on AGM update appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Wednesday
• These were the best-performing ASX 200 shares in October
• Here are the 10 most shorted ASX shares
• Brokers name 3 ASX shares to buy today
• 22 high-yield ASX dividend shares Wilsons is targeting

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 Dominos Pizza Enterprises 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 S&P/ASX 200 Index (ASX: XJO) spent a third consecutive day in the green on Wednesday. The index gained 0.14% to close at 6,986.7 points. That marks its highest close in seven weeks.

That’s despite a dire night on Wall Street. The Dow Jones Industrial Average Index (DJX: .DJI) slipped 0.2% overnight while the S&P 500 Index (SP: .INX) fell 0.4% and the Nasdaq Composite Index (NASDAQ: .IXIC) dumped 0.9%.

Back home, the S&P/ASX 200 Materials Index (ASX: XMJ) led the way, gaining 1.1% amid rising commodity prices.

All major base metals lifted, with nickel posting an 8.3% surge. Meanwhile, gold futures rose 0.5% to US$1,649.70 an ounce and iron ore futures increased 2.9% to US$80.03 a tonne.

The S&P/ASX 200 Energy Index (ASX: XEJ) also jumped 1.1% on the back of higher oil prices.

The Brent crude oil price gained 2% to US$94.65 a barrel while the US Nymex crude oil price lifted 2.1% to US$88.37 a barrel.

All in all, five of the ASX 200’s 11 sectors closed higher today. But which share outperformed all others? Keep reading to find out.

Top 10 ASX 200 shares countdown

The Coronado Global Resources Ltd (ASX: CRN) share price took out today’s top spot despite no news having been released by the company.

Though, it has now gained nearly 13% since it released its latest quarterly earnings, complete with a special dividend, on Monday.

Today’s biggest gains were made by these shares:

ASX-listed company	Share price	Price change
Coronado Global Resources Ltd (ASX: CRN)	$2.10	8.81%
Perpetual Limited (ASX: PPT)	$26.90	5.53%
Lake Resources N.L. (ASX: LKE)	$1.115	5.19%
Ramelius Resources Limited (ASX: RMS)	$0.815	5.16%
Imugene Limited (ASX: IMU)	$0.205	5.13%
Whitehaven Coal Ltd (ASX: WHC)	$9.53	4.15%
Sandfire Resources Ltd (ASX: SFR)	$3.77	4.14%
BlueScope Steel Limited (ASX: BSL)	$16.82	4.08%
Alumina Limited (ASX: AWC)	$1.455	3.93%
Champion Iron Ltd (ASX: CIA)	$4.97	3.11%

Our top 10 shares countdown is a recurring end-of-day summary to let you know which companies were making big moves on the day. Check in at Fool.com.au after the weekday market closes to see which stocks make the countdown.

The post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.

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More reading

• Why Atlantic Lithium, Coronado Global, Lake Resources, and Rio Tinto are charging higher
• A2 Milk share price climbs amid legal stoush
• Here are the 3 most traded ASX 200 shares on Wednesday
• What’s boosting the Lynas share price on Wednesday?
• Why did the IAG share price just hit a new 52-week high?

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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Looking for dividend shares to buy? Listed below are two ASX dividend shares that brokers rate as buys.

Here’s why they are bullish on these dividend shares:

Adairs Ltd (ASX: ADH)

According to analysts at Goldman Sachs, Adairs could be an ASX dividend share to buy right now.

Goldman believes the furniture and homewares retailer’s shares have been oversold, particularly given the resilience of its business. It also feels that the market is too bearish on Adairs’ chances of achieving guidance this year.

It explained:

We view the re-affirmed guidance as a key positive for ADH, and we believe the market is pricing in EBIT that is 11-21% below the guidance range, and 12% below GSe. We view the core Adairs business as resilient in the current environment and do not believe the c.40% discount to discretionary retail peers is justified.

In light of this share price weakness, the broker is forecasting some very generous fully franked dividend yields in the near term. Its analysts expect dividends per share of 17 cents in FY 2023 and 20 cents in FY 2024. Based on the latest Adairs share price of $2.20, this will mean yields of 7.7% and 9.1%, respectively.

Goldman Sachs currently has a buy rating and $2.65 price target on the company’s shares.

QBE Insurance Group Ltd (ASX: QBE)

Over at Morgans, its analysts are tipping insurance giant QBE as an ASX dividend share to buy.

The broker is feeling positive about the company due to rising premiums and cost reductions. It explained:

With strong rate increases still flowing through QBE’s insurance book, and further cost-out benefits to come, we expect QBE’s earnings profile to improve strongly over the next few years. The stock also has a robust balance sheet and remains relatively inexpensive overall trading on ~9.1x FY23F PE

In respect to dividends, Morgans expects a 41.5 cents per share dividend in FY 2022 and then a 76.5 cents per share dividend in FY 2023. Based on the latest QBE share price of $12.58, this equates to yields of 3.3% and 6.1%, respectively.

The broker also sees plenty of upside for QBE’s shares. Morgans currently has an add rating and $14.93 price target on its shares.

The post Analysts says income investors should buy these ASX dividend shares in November appeared first on The Motley Fool Australia.

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More reading

• Why I’d grab today’s cheap ASX shares before it’s too late
• Brokers name 2 ASX dividend shares to buy
• How I’d build a portfolio by investing in top ASX shares now
• Goldman Sachs says these are the ASX dividend shares to buy
• Morgans names the ASX 200 dividend shares to buy

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

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The sell-off that share markets have seen in 2022 could be a great time to go hunting for cheap ASX shares.

Some businesses aren’t necessarily better value just because they fall 5% or 10%. The prospects for short-term profitability could have noticeably reduced.

But, when a share price has declined by 30%, 50% or even more, I think it’s worth considering whether that is an opportunity for investors.

A share price is meant to represent the long-term value of a business, not just what happens in the next three or 12 months. Depending on the business, I think it’s unlikely that the long-term value of the company has reduced by that much.

As a bonus, if we can find businesses that could pay sizeable dividends, the low price-to-earnings (p/e) ratio could mean that investors are rewarded in the short term. I don’t believe that economic conditions will always look this uncertain.

However, I think it’s worth saying that investors should try to avoid businesses with dangerous amounts of debt.

When a business falls in value, it means that a recovery can be stronger in percentage terms for new investors. What I mean by that is, for example, if a company falls by 50% then a recovery back to its former price would be a rise of 100%. It’s hard to know which ones will recover significantly without a crystal ball. But, looking at their business plans can help.

These are some of the examples that I’d look at.

Adairs Ltd (ASX: ADH)

Adairs is a business that sells homewares and furniture.

First, let’s look at how cheap it may be and the expected dividend. The Adairs share price has fallen by 45% this year. According to Commsec, Adairs is now valued at 8x FY23’s estimated earnings. The FY23 grossed-up dividend yield could be 11.6%. I think those two statistics make it a cheap ASX share.

While it’s quite possible that households are going to reduce their discretionary spending on some items that Adairs sells, I think it can continue to generate good enough profits to keep the dividends flowing to shareholders during this period.

I like the company’s plans to upsize some stores to the more profitable larger format. The focus on improving efficiencies, growing its store network, and working on e-commerce sales also seems smart.

Accent Group Ltd (ASX: AX1)

Let’s again start by having a look at how much damage has been done this year. The Accent share price has dropped by 37% since the start of 2022. Not as much as Adairs, but still a hefty drop.

Accent is a business that sells a wide variety of shoe brands. Some brands it owns, whereas others it is the distributor for. While shoes aren’t exactly the most defensive industry, we do all need shoes, so I think there will still be enough demand for the company to stay profitable and keep paying good dividends.

According to Commsec, the Accent share price is valued at 13x FY23’s estimated earnings with a potential grossed-up dividend yield of 8.7%. I think these numbers make Accent a cheap ASX share.

But, even though the economy is going through a bit of a rough time, I like that the business is laying the groundwork for the next phase of growth.

Like Adairs, it is also trying to grow its online sales and improve its profit margins. But, the key part of the plan that I like the most about Accent is that it is opening dozens of new stores. This enables Accent to benefit from growing scale. It also means that FY23 will see a full year’s sales contribution from stores opened in FY22, and that stores opened in FY23 can partly contribute to the year, as well as boost the sales and earnings next year.

The post Why I’d grab today’s cheap ASX shares before it’s too late appeared first on The Motley Fool Australia.

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More reading

• Analysts says income investors should buy these ASX dividend shares in November
• Brokers name 2 ASX dividend shares to buy with big yields
• Brokers name 2 ASX dividend shares to buy
• How I’d build a portfolio by investing in top ASX shares now
• Goldman Sachs says these are the ASX dividend shares to buy

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 ADAIRS FPO. The Motley Fool Australia has positions in and has recommended ADAIRS FPO. The Motley Fool Australia has recommended Accent 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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