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The Commonwealth Bank of Australia (ASX: CBA) share price is inching ahead on Monday. Meanwhile, shares in Telstra Corporation Ltd (ASX: TLS) are failing to get the same treatment.

You might point out: CBA and Telstra are two companies operating in two distinctly different markets — the former, banking and the latter, communications. However, a move made by Australia’s largest bank could be blurring those lines.

In light of news this morning, CBA shares have retaken their position trading above $100 apiece. At the time of writing, the CBA share price is 1.22% ahead at $100.49.

Is CBA trying to eat Telstra’s lunch?

In a media release this morning, CBA unveiled that it will now provide discounted 4G and 5G mobile SIM plans via a telecom partner.

According to the release, Australia’s major bank will buddy up with More, a national network services provider with its head office in South Melbourne. According to the company’s website, the telecom company appears to differentiate itself from other mobile virtual network operators (MVNOs), partly with its ESG focus.

The partnership between More and CBA will allow the bank’s customers to secure 30% off mobile SIM plans for the first 12 months. Additionally, continuing customers will maintain a 10% discount indefinitely after the first year.

Does this mean that CBA is waging war on Telstra’s turf? Well, not exactly, but inadvertently, sort of…

It appears the initiative is being used to further entice people to become CBA customers. Though, the network offering is not operated by ASX-listed CBA.

Furthermore, More is not a telecommunications company with its own infrastructure. Instead, it piggybacks on Telstra’s mobile network. That means Telstra has a degree of control over what More could offer to its customers.

Nevertheless, if CBA’s discounts incentivise people to choose More over Telstra, then — to an extent — it would make the two foes.

Why the move from an ASX bank share like CBA?

CBA’s decision to offer discount mobile plans follows research showing more Aussies are looking at ways to save money right now.

It probably doesn’t come as a surprise — during multi-decade high rates of inflation and rising interest rates — that 45% of Australians are seeking cheaper mobile plans. In addition, 60% of those surveyed by CBA would change their plan if they were able to get a better deal.

Ultimately, CBA is still an ASX-listed bank. Though, with a tightening property market, we could see more moves for customer acquisition.

The CBA share price is down 1.9% since the start of the year. Whereas, Telstra shares have tumbled 8.8% on the ASX over the same period.

The post Has CBA just become a new competitor to Telstra? appeared first on The Motley Fool Australia.

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More reading

• Own CBA shares? This expert says you ‘may want to consider cashing in some gains’
• Telstra shares: Buy, hold, or fold?
• Analysts say these top ASX dividend shares are buys right now
• Warren Buffett has been buying up big on dividend stocks. Should you?
• ASX dividend shares or distribution shares? Is there even a difference?

Motley Fool contributor Mitchell Lawler has positions in Commonwealth Bank of Australia. 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 Telstra Corporation 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 Fortescue Metals Group Ltd (ASX: FMG) share price is in the green today.

The mining giant’s share price is up 2.35% and currently fetching $16.75. For perspective, the S&P/ASX 200 Index (ASX: XJO) is up 1.67% at the time of writing.

Let’s examine why the Fortescue share price is having such a good run today.

Iron ore prices lift

Fortescue is not the only ASX iron ore share rising today. BHP Group Ltd (ASX: BHP) shares is currently trading 2.78% higher today, while Rio Tinto Limited (ASX: RIO) shares are up 1.67%.

This follows the iron ore price climb in global markets on Friday. In a research note, ANZ head of economics David Plank said:

Iron ore futures edged higher on Friday, although this wasn’t enough to offset losses earlier in the week. Sentiment remains bearish as worries mount over the outlook for steel demand.

We expect steel demand in China to fall 3.5% this year, with only a marginal gain in 2023. This should keep iron ore prices under pressure.

The iron ore November futures contract is currently up 1.79% on the Singapore Exchange.

Meanwhile, Goldman Sachs analysts have recently reaffirmed a sell rating on Fortescue shares with a $13.40 price target. Analysts are predicting Fortescue’s capital expenditure to increase. Goldman said:

Overall, we forecast FMG’s capex to increase from ~US$3.2bn in FY23 to ~US$4bn by FY26 on mine and haul truck replacement and decarbonisation spend, but see upside risk to our estimate.

However, as my Foolish colleague Tristan noted recently, Fortescue is making progress on its green hydrogen projects. He predicts this could bode well for the Fortescue share price in the future.

Share price snapshot

Fortescue shares have risen 18% in the past 12 months, while they are down 12% year to date.

In comparison, the S&P/ASX 200 (ASX: XJO) has fallen 8% in the past year.

Fortescue has a market capitalisation of about $52 billion based on the current share price.

The post Why is the Fortescue share price surging today? appeared first on The Motley Fool Australia.

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More reading

• Why is the BHP share price leaping 4% on Monday?
• Why I’m not worried about Fortescue’s $9.6 billion decarbonisation plans smashing my dividends
• ASX dividend shares or distribution shares? Is there even a difference?
• Brokers name 3 ASX shares to buy today
• Broker says Rio Tinto share price is trading at a discount

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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This week has started out strong for ASX lithium fans, with some of the market’s favourite lithium stocks leaping higher.

Indeed, these four have gained more than 10% at the time of writing. And there’s been exciting news from many of the winners.

For comparison, the S&P/ASX 200 Index (ASX: XJO) is up 1.64% right now while the All Ordinaries Index (ASX: XAO) has lifted 1.66%.

So, what’s driving these ASX lithium shares to outperform on Monday? Keep reading to find out.

Why are these ASX lithium shares soaring more than 10%?

The first ASX lithium share to be posting a gain of more than 10% on Monday is Neometals Ltd (ASX: NMT).

The sustainability-focused battery mineral producer has developed a process to recover lithium from spent batteries. However, today’s news from the company regards its Vanadium Recovery Project.

Finland has granted the project an environmental permit. The permit will allow the company to produce around 9,000 tonnes of vanadium pentoxide per annum from steel making by-product, slag.

The Neometals share price is currently up 11.14% at $1.167.

It’s joined in the green by shares in Vulcan Energy Resources Ltd (ASX: VUL) – the company behind the Zero Carbon Lithium Project.

It revealed its sorption pilot plant has produced its highest-grade lithium hydroxide to date this morning, exceeding best-on-market battery grades. It also provided an optimistic update on its definitive feasibility study, due to be released next year.

The Vulcan Energy share price is up 11.92% right now, trading at $6.76.

The Galan Lithium Ltd (ASX: GLN) share price is also having a great day, surging 17.32% out of a trading halt to reach $1.49 at the time of writing.

The lithium explorer announced its Hombre Muerto West Project’s mineral resource estimate has exploded to 5.8 million tonnes of lithium carbonate equivalent at 866 milligrams per litre lithium.

Finally, the Piedmont Lithium Inc (ASX: PLL) share price is leaping 10% to 93.5 cents today.

That’s despite the company’s silence. Though, it follows a similar gain posted by its NASDAQ listing overnight.

The post 4 ASX lithium shares surging more than 10% today appeared first on The Motley Fool Australia.

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More reading

• Galan Lithium share price rockets 28% on ‘game changing’ update
• Vulcan share price rockets 12% on lithium update
• Which ASX All Ords shares avoided a sell-off during the last recession?
• Guess which ASX lithium company is the biggest holder of Sayona Mining shares?
• Why Challenger, Novonix, Piedmont Lithium, and Woodside shares are racing higher

Motley Fool contributor Brooke Cooper has positions in Vulcan Energy Resources 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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

Bitcoin (CRYPTO: BTC) as a payment option could be going mainstream faster than you may think. Speaking at Yahoo Finance’s All Markets Summit, Suresh Kumar, the global chief technology officer of Walmart (NYSE: WMT), discussed some of the ways the giant retailer is planning to make crypto a key part of its future payments strategy, both for physical and virtual goods. As Kumar noted, “Crypto will become an important part of how customers transact.” 

Bitcoin, as the most popular crypto for payments, would stand to benefit the most. If a huge retailer like Walmart is really going all-in on crypto, that would be a tremendous validation point and would certainly be a bullish indicator for Bitcoin.

The metaverse and crypto

So what’s driving this newfound support for crypto as a payment option? One major factor has been Walmart’s embrace of the metaverse. As Kumar pointed out, Walmart customers are getting inspired to buy and discover new products as a result of all the time they are spending in virtual worlds. Once they are part of these virtual worlds, they are looking to pay for virtual goods, such as new merchandise for an online avatar. And that’s where cryptocurrencies like Bitcoin enter the picture.

Walmart has been stepping up its support of the metaverse recently. In September, it introduced Walmart Land and Walmart’s Universe of Play on Roblox, a popular metaverse gaming platform. Walmart was obviously intrigued by all the time customers were spending on the platform. As of June 30, Roblox boasted 52.2 million daily active users, 11.3 billion engagement hours, 12 million creators, and 32 million different experiences. 

Social media and crypto

Walmart also suggested that the new ways people are using social media has forced the company to rethink the payment options it should offer customers. For example, Walmart livestream events on social media have turned out to be a great way for customers to learn about new products and see how they are used in real life. While you are watching these events, you might want to buy products featured in them, and crypto is being explored as a frictionless way for customers to pay for these goods online. Walmart has experimented with shoppable livestream events on several different platforms, including Twitter, TikTok, and YouTube.   

Social media is also blurring the line between e-commerce and crypto, especially when it comes to non-fungible tokens (NFTs). Customers who purchase NFTs via online marketplaces now want to showcase these NFTs on social media. In response to that need, Facebook and Instagram (from Meta Platforms) now make it possible to connect your virtual wallet holding these NFTs with your social media accounts. Again, your virtual wallet holding these NFTs may also hold cryptocurrencies, so as Kumar noted in his presentation, crypto is really in the middle of things that customers like to do.

Caveats about Walmart and crypto

Of course, the big caveat here is that Kumar only specifically mentioned the metaverse and social media. For now, Walmart seems to be in the learning phase of how to make crypto part of its metaverse and social media strategy. He mentioned that crypto could lead to a “disruption in payment options,” but did not suggest that Walmart stores would suddenly start accepting Bitcoin. So some of the headlines that you might be seeing across social media may be somewhat misleading.

For Bitcoin, obviously, the biggest validation would come if Walmart eventually made paying with Bitcoin a key part of both its online and in-store experience. Right now, though, Walmart does not accept payment in cryptocurrency. Walmart has been long-rumored to be looking at Bitcoin as a payment option, but nothing official has been announced.

Obviously, it’s exciting news that a major retail giant like Walmart is getting more involved with the metaverse and cryptocurrencies. People often like to point to Walmart’s patent filings for NFTs and crypto tokens, as well as the company’s recent embrace of in-store Bitcoin ATM machines, as proof that the company is close to getting really serious. If and when Walmart goes all-in on crypto, that could be a screaming buy signal for Bitcoin.  

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

The post If this US retail giant is serious about crypto, Bitcoin might soar appeared first on The Motley Fool Australia.

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More reading

• Why the Bitcoin price could soar in the coming years
• Could the next bull run be coming for the Bitcoin price?
• How has the Bitcoin price responded to the network’s latest hiccup?
• Crypto surges: Is now the time to buy Bitcoin and Ethereum?
• I’ve already made 158% on Bitcoin. Here’s why I keep holding

Dominic Basulto has positions in Bitcoin. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Bitcoin, Meta Platforms, Inc., Roblox Corporation, Twitter, and Walmart Inc. The Motley Fool Australia owns and has recommended Bitcoin. The Motley Fool Australia has recommended Meta Platforms, Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.   

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

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The Allkem Ltd (ASX: AKE) share price has started the week in a positive fashion.

In afternoon trade, the lithium miner’s shares are up 2% to $14.97.

This means the Allkem share price is now up 34% since the start of the year.

Can the Allkem share price keep rising?

The good news for investors is that one leading broker believes the Allkem share price can keep rising.

According to a note out of Bell Potter, its analysts have retained their buy rating with a slightly trimmed price target of $19.45.

This implies potential upside of 30% for investors over the next 12 months from current levels.

Why is the broker bullish?

Bell Potter was relatively pleased with Allkem’s performance during the first quarter. And while it notes that the Olaroz Stage Two expansion is behind schedule, it has only resulted in a modest decrease to its earnings estimates.

Commenting on the quarterly performance, the broker said:

September 2022 quarter lithium carbonate production of 3.3kt (BP est. 3.3kt) and sales of 3.7kt (BP est. 3.3kt). Unit costs were US$4,563/t (BP est. US$4,782/t) and realised prices US$40,317/t (BP est. $46,900/t). AKE now expect first production from the Stage 2 expansion in Q2 2023 (previously Q4 2022) and that total capex will be US$425m (up 12%). AKE held 1H FY23 price guidance of $47,000/t for Olaroz lithium carbonate.

Overall, Bell Potter remains very positive on the company’s outlook and believes it is well-placed to generate significant free cash flow thanks to a combination of strong prices and production growth.

We expect AKE’s cash generation to lift substantially into 2023 with ongoing strength in lithium demand, commodity prices and production growth. AKE is aiming to maintain 10% share of supply in a global lithium market experiencing unprecedented growth; it has a portfolio of growth projects, balance sheet strength and cash flow from existing projects to achieve this target. AKE’s portfolio is also diversified across lithium commodity type, mode of production, asset location and end-user country.

The post Broker says the Allkem share price can rise another 30% appeared first on The Motley Fool Australia.

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More reading

• Why Allkem, Bowen Coking Coal, Pantoro, and Redbubble are dropping today
• Brokers name 5 ASX lithium shares to buy now
• Allkem share price tumbles on quarterly update
• 5 things to watch on the ASX 200 on Friday
• Here are the top 10 ASX 200 shares today

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

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Alongside the S&P/ASX 200 Index (ASX: XJO), the Commonwealth Bank of Australia (ASX: CBA) share price is having a cracker of a Monday so far this session. At present, CBA shares have gained a solid 1.28%, putting the largest ASX bank back over $100 a share.

That’s not quite as enthusiastic as the gains of the broader market at 1.7%. But it’s certainly not a move to turn one’s nose up at. CommBank shares are now up a robust 7.3% over the past month. However, CBA is pretty flat over the year to date, having notched up a loss of around 2% since the start of the year.

So what should investors do with their shares today, considering all of this?

Well, one expert reckons it might be time to do some pruning.

ASX expert says CBA is a sell

Jabin Hallihan, from ASX broker Morgans, recently penned some recommendations in an article for The Bull. He told investors that it might be time to consider doing some selling if they owned Commonwealth Bank shares.

CBA was amongst the ASX shares that Hallihan rated as a sell.

Here’s some of what he had to say on the banking giant:

On financial metrics, we believe the CBA is expensive compared to local and international peers. The share price was partially driven higher by an on-market buy-back. Our 12-month price target is $77. Investors may want to consider cashing in some gains.

Unfortunately for investors, many ASX brokers share similar sentiments. Perhaps the most positive right now is JP Morgan. As my Fool colleague Monica covered earlier this month, JP Morgan has a neutral rating on CBA shares. It commented that:

….we struggle to see CBA underperforming peers meaningfully as it offers the best leverage to rising rates and has the most defensive loan book, in our view.

However, it still views CBA as its least preferred major bank share.

Morgan Stanley is less excited again. It currently has a 12-month share price target of just $85.50.

Perhaps not what investors want to hear right now. But we shall see who’s right in time.

At present, the current CBA share price gives this ASX banking giant a market capitalisation of around $170 billion, with a dividend yield of 3.83%.

The post Own CBA shares? This expert says you ‘may want to consider cashing in some gains’ appeared first on The Motley Fool Australia.

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More reading

• Telstra shares: Buy, hold, or fold?
• Why is the BHP share price leaping 4% on Monday?
• Galan Lithium share price rockets 28% on ‘game changing’ update
• If I’d invested $1,000 in BrainChip shares a year ago, would I be happy right now?
• Why I’m not worried about Fortescue’s $9.6 billion decarbonisation plans smashing my dividends

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 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, Alphinity Investment Management portfolio manager Elfreda Jonker reveals which ASX shares she’ll happily sleep on for years to come.

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?

Elfreda Jonker: I know the last time when we chatted, I think we talked about Goodman Group (ASX: GMG) being one and I guess that’s probably still one, but I’ll give you another one today.

And that’s Metcash Limited (ASX: MTS).

So that’s quite probably a little bit more controversial to hold for four years, but really it’s a consumer staple company. Predominantly they do grocery, liquor, and [a] hardware wholesale business. It’s in the consumer staples space, which is generally speaking the more defensive side of the market. 

Effectively, why we like it is they’ve got these three verticals. The largest one is the food business. So they’ve got a really big IGA network, really benefited from that through COVID, but have actually managed to maintain that market share post-COVID as well. So they really have spent a lot of money improving those stores. The next leg is really they’re the largest independent liquor supplier in Australia, which is quite a relatively defensive business and that continues to do well.

Then the third vertical leg, which is the one we’re actually the most excited about, is that hardware business — particularly a business called Total Tools that they bought, which is definitely exposed to the construction environment and can be a little bit more cyclical. 

But the way Metcash has structured the business is that I think they’ve been very clear in driving a number of different growth strategies. They will be spending a lot of money and, particularly in this environment, we think it is a business that they can leverage a lot from higher food inflation. They’ve got a relatively fixed cost base. So anything that they can do in order to boost that top line of theirs, either through price or volume, is really, really positive for them if they can manage to maintain those costs. 

We think, overall, it’s a solid company, high-quality business model, and a very strong management team. We really rate the new CEO Doug Jones. And if you look at the balance sheet, it’s strong enough to really help drive this big cap-ex spend that they really want to do now. 

At the same time, we don’t see it as being super, super expensive. It’s definitely not, it’s trading on a forward PE ratio of 13 times and the five-year average is around 14. So it’s pretty much in line with the long term average, but we do think that you can still see nice earnings upgrades coming through over the next number of years given the strategies that they’ve put in place. 

That’s one that we would hold for the next four years. Let’s hope that it doesn’t come to that!

The post The ‘controversial’ ASX 200 share to stash for 4 years: expert appeared first on The Motley Fool Australia.

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More reading

• 2 ASX dividend shares with big yields I’d buy for income
• 3 ASX 200 shares I’d pounce on when the clouds clear: expert
• Top brokers name 3 ASX shares to buy next week
• Analysts say these beaten down blue chip ASX 200 shares can rise 50%
• Could buying Woolworths shares help ‘recession-proof’ your ASX portfolio?

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 recommended Metcash 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 Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price is underperforming on Monday.

In early afternoon trade, the banking giant’s shares are trading flat at $25.55.

This compares to a 1.75% gain by the ASX 200 index this afternoon.

It also means that the ANZ share price is underperforming the rest of the big four banks, which are all up around 1% on Monday.

Why is the ANZ share price underperforming?

The softness in the ANZ share price today has been driven by the release of an update on the bank’s full year results after the market close on Friday.

According to the release, the company is expecting its second half statutory and cash profit to be impacted by a number of large/notable items.

In total, these notable items will result in an after tax charge of $113 million, which is the equivalent to ~2 basis points of CET1 capital at level 2.

What are the charges?

Management advised that these charges include a customer remediation charge of $43 million after tax.

While ANZ highlights that its remediation program is approaching completion, the charge in the half relates to revisions to a small number of customer remediation provisions and remediation program costs.

There is also a restructuring charge of $37 million after tax and an after tax charge of $33 million comprising the impact of business divestments or closures during the period, lease modifications, and merger and acquisition related costs.

Investors won’t have long to see what these charges mean for its results. ANZ is scheduled to release its FY 2022 results later this week on Thursday morning.

The post Why is the ANZ share price underperforming other ASX 200 banks today? appeared first on The Motley Fool Australia.

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More reading

• Is the ANZ share price a buy ahead of next week’s full-year results?
• ASX dividend shares ‘likely to remain attractive’ despite rising bank deposit rates: expert
• Own ANZ shares? Here’s what to expect from the bank’s FY22 results next week
• What’s driving the ANZ share price today?
• Top broker says ‘we struggle to see CBA underperforming peers’. Here’s why

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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It’s been a rough few decades for the share price of Telstra Corporation Ltd (ASX: TLS) – which is currently trading under the name Telstra Group Ltd and ticker code TLSDA.

The company is in the middle of a restructuring operation, shaking up its business right down to its ASX listing, as The Motley Fool’s Sebastian reports.  

The move comes after the stock dumped around 50% of its value over 23 years. It’s fallen from around $9 per share in 1999 to trade at $3.795 today.

That’s also 10% lower than it was at the start of 2022. Meanwhile, the S&P/ASX 200 Index (ASX: XJO) has also fallen around 10% year to date.

So, with the stock having tumbled recently and a restructuring operation in progress, is now a good time to buy Telstra shares? Let’s see what experts think.

Is now a good time to buy Telstra shares?

Many experts are optimistic about the Telstra share price going forward. Though, not all would go so far as to rate it a buy.

Top broker Goldman Sachs, for one, has a neutral rating on the telecommunications giant. But it has slapped Telstra shares with a $4.40 price target, representing a potential 15% upside.

Bell Potter Securities advisor Chris Watt has also tipped the telco as a hold, noting its earnings are resilient. Watt said, courtesy of The Bull:

The future sale of its infrastructure assets is the next key catalyst in determining the strategic direction of the business going forward.

Telstra’s restructure will see the business split into four pillars: ServeCo, InfraCo Fixed, Amplitel, and Telstra International.

Back in August, the company’s chief financial officer Vicki Brady said the restructure will give the company the option to monetise the InfraCo business. Though, no sale has been decided upon.

JP Morgan believes selling a 49% stake in the asset could reap between $12 billion and $17 billion of after-tax profit, the Australian Financial Review reports.

Under such circumstances, $10.5 billion to $15.5 billion could be returned to shareholders, most likely through buybacks, the broker reportedly said. Such buybacks could, in turn, boost the telco’s dividends by 9%.

Speaking of dividends, Morgans is tipping Telstra to pay out 16.5 cents per share this financial year and next, my Fool colleague James reports.

That’s in line with the company’s financial year 2022 full-year offering. Though, that included three cents per share of special dividends.

Morgans is particularly bullish on Telstra shares, slapping the stock with an add rating and a $4.60 price target. That represents a potential 21% upside.

The post Telstra shares: Buy, hold, or fold? appeared first on The Motley Fool Australia.

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JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. 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 positions in and has recommended Goldman Sachs and JPMorgan Chase. The Motley Fool Australia has positions in and has recommended Telstra Corporation 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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

Unless your portfolio consists only of energy companies, if you look at the 2022 performance of your stocks, the majority are likely down. Since the start of the year, the three major indexes — S&P 500, Nasdaq Composite, and Dow Jones — are down over 23%, 32%, and 16%, respectively (as of October 20).

On one end, bear markets and down periods can present great opportunities for those with time on their side. On the other end, the drop in prices can present a lot of value traps. A value trap is a stock trading at a low price that looks like a good deal but is a bad investment. That’s why it’s important not to take a stock’s value at face value. Instead, use these metrics.

Price-to-earnings ratio

As an investor, the sooner you learn that cheap isn’t always a good value, the better. A $500 stock could be undervalued, and a $5 stock overpriced. For example, if a penny stock were priced at $5, it would be considered absurdly high by almost all standards. However, if a stock like Booking Holdings were priced at $500 instead of its current price around $1,775, it might be the deal of the century right now.

You don’t want to buy lots of shares because they’re “cheap,” only to be investing in a failing business. Instead of looking at price alone, investors can use the price-to-earnings (P/E) ratio to help determine whether a stock is undervalued or overvalued. You can find a company’s P/E ratio by dividing its current stock price by its earnings per share (EPS). A company’s P/E ratio tells you how much you’re paying for each $1 of its earnings.

To determine a stock’s value, you can’t look at its P/E ratio by itself; you need to compare it to similar companies in its industry. Some industries have naturally low P/E ratios (like banking), and some have naturally high P/E ratios (like biotechnology). So it can be misleading to compare companies across industries. If you compare similar companies and notice a company’s P/E ratio is lower than the others, it could mean it’s undervalued and vice versa.

Payout ratio

When a company declares its dividend for the year, it does so as a dollar amount per share. Because of this, a stock’s dividend yield — found by dividing its yearly dividend by its current stock price — can often fluctuate. For example, if a company’s yearly dividend is $2 and its stock price is $100, its dividend yield would be 2%. If the stock price dropped to $50, the dividend yield would be 4%.  

With prices dropping, dividend yields are naturally increasing, leading to dividend traps. A dividend trap is a company with a too-good-to-be-true dividend yield that’s unsustainable and likely doesn’t warrant the investment.

Instead of just looking at a company’s dividend yield, you should look at its payout ratio, which lets you know how much of its earnings it’s paying out in dividends. You can find the payout ratio by dividing a company’s yearly dividend by its EPS. Generally, you can find these numbers on your brokerage platform (the easier route) or within a company’s financial statements.

If a company’s payout ratio is more than 100%, it’s paying out more than it’s bringing in. Which, needless to say, isn’t a good thing. A “good” payout ratio is also relative to the industry, but between roughly 30% and 50% is a good starting point. Too low, and it’s not quite as shareholder-friendly. Too high, and it could mean it’s unsustainable or a company isn’t reinvesting enough back into the business.

Use this time to your advantage

With many companies trading at low prices we haven’t seen in quite some time, now could be a chance for investors to go discount shopping and grab shares of some great companies. However, it’s still important to focus on the fundamentals and not be lured in by low prices or high dividend yields. A low price doesn’t mean much if the price goes lower, and a high dividend yield doesn’t mean much if you lose way more in value than you earn in payouts.

A couple of extra steps can go a long way.  

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

The post Don’t take a stock’s value at face value — Use these metrics instead appeared first on The Motley Fool Australia.

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

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

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