Tag: Motley Fool

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.

Tesla (NASDAQ: TSLA) stock is down 7.2% on Thursday as of 9:52 a.m. ET, following the electric vehicle pioneer’s release of its third-quarter report yesterday.

The stock’s drop is probably largely attributable to the quarter’s revenue coming in a little lighter than Wall Street’s consensus estimate. Given the challenging market conditions in 2022, many investors are reacting more unfavorably to even relatively minor blips in quarterly earnings reports than they did when the market was in a bull mode. 

There was much to like about the report. Adjusted earnings per share (EPS) beat the analyst expectation, and revenue, operating profit, and free cash flow set quarterly records.

The following is an overview of Tesla’s third quarter centered on seven key metrics.

1. Revenue surged 56%

Quarterly revenue grew 56% year over year to $21.45 billion. This result fell short of the $21.96 billion Wall Street consensus estimate.

Revenue growth was primarily driven by increased vehicle deliveries and a higher vehicle average selling price, partially offset by the strengthening of the US dollar relative to other currencies. Tesla’s clean energy and services/other businesses also contributed to growth. 

Segment year-over-year revenue performance was as follows:

• Automotive segment revenue grew 55% to $18.7 billion.
• Energy generation and storage revenue rose 39% to $1.1 billion. Growth was driven by a 66% increase in energy storage capacity deployments to a record 2.1 gigawatt hours (GWh) and a 13% increase in solar power deployments to 94 megawatts (MW).
• Services and other revenue rose 74% to $1.6 billion. Growth was driven by used car and part sales along with a more than threefold increase in paid use of Superchargers.

2. Vehicle production and deliveries grew 54% and 42%, respectively

In Q3, Tesla produced 365,923 vehicles (about 20,000 Model S and X units and 346,000 Model 3 and Y units), up 54% from the year-ago period.

And it delivered 343,830 vehicles (about 19,000 Model S/X and 325,000 Model 3/Y), up 42% year over year.

3. Auto gross margin was 27.9%

In Q3, automotive gross margin (gross profit divided by revenue) based on generally accepted accounting principles (GAAP) was 27.9%. While this is a strong auto gross margin, it was down from 30.5% in the year-ago period. Sequentially, it was flat, as it was also 27.9% in the second quarter. 

4. Operating income rocketed 84%

In Q3, operating income grew 84% year over year to $3.7 billion. Operating margin (operating income divided by revenue) landed at 17.2%, up from 14.6% in the year-ago period. 

5. Adjusted EPS soared 69%

GAAP net income was $3.3 billion, or $0.95 per share, up 98% from the year-ago period. Adjusted for one-time items, net income came in at $3.7 billion, or $1.05 per share, up 69% year over year. This result surpassed the $1 adjusted earnings per share (EPS) that analysts had expected.

6. Operating cash flow jumped 62%

In Q3, cash generated from operations grew 62% year over year to $5.1 billion. Free cash flow skyrocketed 148% to $3.3 billion.

Tesla ended the quarter with $21.1 billion in cash, cash equivalents, and short-term investments, up by $2.2 billion from the prior quarter. 

7. Supercharger stations increased 32%

Tesla continued its solid pace of building out its network of Supercharger stations. It ended the quarter with 4,283 stations, up 32% from the year-ago period. Supercharger connectors grew 33% year over year to 38,883. 

A great quarter with a new revenue source coming soon

Tesla turned in a great quarter. The company recently began production of its all-electric Class 8 truck, the Tesla Semi, at its Gigafactory in Nevada. It plans to begin deliveries to PepsiCo in December. The beverage and food giant reportedly reserved 100 of these trucks soon after Tesla unveiled this vehicle in 2017.

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

The post Tesla stock drops on earnings release: 7 key metrics you should see appeared first on The Motley Fool Australia.

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More reading

• 3 lithium ASX shares to watch after Tesla’s results
• Why is Tesla stock falling if its business is stronger than ever?
• Tough year for leading global growth fund laid bare with brutal fall in tech stocks
• Why Tesla stock was surging at the market open today
• Tesla and Netflix will make or break the Nasdaq this week

Beth McKenna 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 Tesla. 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.

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

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The Westpac Banking Corp (ASX: WBC) share price may be flying this month, but it could be heading even higher.

That’s the view of analysts at Morgans, which have upgraded the banking giant’s shares this week.

What is Morgans saying about the Westpac share price?

According to the note, the broker believes that Westpac could offer the greatest value on a medium term view.

As a result, the broker has upgraded the company’s shares to an add rating with a $26.71 price target.

Based on the current Westpac share price of $23.92, this implies potential upside of almost 12% for investors over the next 12 months.

In addition, the broker is expecting a fully franked 7% dividend yield in FY 2023. If we add this into the equation, the total return stretches to approximately 19%.

Why did the broker upgrade its shares?

Morgans upgraded Westpac after revising its earnings estimates higher to reflect the positive impact of rising interest rates on its net interest margin (NIM).

The broker explained:

Compared to previous forecasts, we downgrade FY22F and upgrade FY23-24F cash EPS, as a result of assuming greater NIM expansion, higher costs, and greater ramp-up in expensing for expected credit losses, partly offset by higher shares on issue. Notable differences to consensus include higher NIM uplift and lower expected credit loss expensing, resulting in a higher dividend forecast.

Another reason to be positive is the potential for share buybacks in the future. While Morgans notes that it wouldn’t be possible right now due to capital constraints, it suspects buybacks could commence from FY 2024.

Buybacks are constrained by APRA’s CET1 capital adequacy requirements. We expect WBC to print a c.11.1% CET1 ratio at FYE-22 vs 10.75% at 3Q22. APRA’s revised framework will apply from 1 January 2023, which includes decreased risk weights applied to loans but higher minimum (equity) capital ratios. Post-implementation, WBC has indicated it will target an operating range for the CET1 capital ratio of 11-11.5%. We assume WBC undertakes c.$5bn of buybacks across FY24-25F, based on surplus capital build.

All in all, the broker feels this makes the Westpac share price great value at the current level.

The post Broker upgrade: Westpac share price tipped to keep rising appeared first on The Motley Fool Australia.

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More reading

• 5 big ASX announcements making news this week
• ASX dividend shares ‘likely to remain attractive’ despite rising bank deposit rates: expert
• Westpac share price offers best value in the sector: Goldman Sachs
• Why Hub24, Sezzle, Telix, and Westpac shares are rising
• Tyro share price on watch as Westpac takeover approach confirmed

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 Pilbara Minerals Ltd (ASX: PLS) share price has skyrocketed since the last day of the 2022 financial year.

Pilbara shares have soared 117% between market close on 30 June and 20 October this year.

So if I had invested in this ASX lithium explorer at the end of June, how would I be doing?

Winning investment

Let’s say I had invested $5,000 in Pilbara Minerals shares after market close on 30 June. Pilbara shares were available for $2.29 at this time.

With this investment, I would have received 2,183 shares in the company with 93 cents left over.

Now, Pilbara shares are trading at $4.97. So my investment would be worth $10,849.51.

So I would have doubled my money and would have the option of banking a $5,849.51 profit.

Now let’s take a look at Pilbara shares at their all-time high on 7 October. Pilbara shares closed at $5.42 this day. My investment would have been worth $11,831.86 at this time.

But would I want to sell my Pilbara Minerals shares? Macquarie has this week retained an outperform rating on Pilbara Minerals shares with a $5.70 price target following its latest digital auction. This implies a 14.7% upside on the current share price.

On the flip side, UBS rates the Pilbara Minerals share price as a sell, my Foolish colleague Tristan reported recently.

Red Leaf Securities CEO John Athanasiou has also recently recommended investors consider “cashing in some gains” on the Pilbara share price.

Pilbara Minerals does not currently pay dividends. However, Credit Suisse analysts are tipping the company to pay a 29 cents per share dividend in FY23. This would equate to a 5.84% dividend yield for investors.

Pilbara Minerals share price snapshot

Pilbara Minerals shares have climbed 55% in the year to date, while they have risen almost 5% in the past month.

For perspective, the S&P/ASX 200 Index (ASX: XJO) has lost almost 10% in the year to date.

Pilbara has a market capitalisation of more than $14.8 billion based on the current share price.

The post If I’d bought $5,000 of Pilbara Minerals shares at the end of June, here’s how much I could bank right now appeared first on The Motley Fool Australia.

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More reading

• 5 big ASX announcements making news this week
• Here are the top 10 ASX 200 shares today
• Top brokers name 3 ASX shares to buy today
• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• Why is the Calix share price frozen on Wednesday? (Hint: it involves Pilbara Minerals)

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 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 CSL Limited (ASX: CSL) share price is out of form this week.

Since the start of the week, the biotherapeutics company’s shares have fallen 3.2% to $271.64.

This is despite the company releasing an update on its new CSL Vifor business earlier this week.

Can the CSL share price bounce back?

The team at Morgans was pleased with what it saw at the company’s presentation earlier this week.

In light of this, it continues to see CSL as a share to buy and has retained its add rating with a trimmed price target of $312.20.

Based on the current CSL share price, this implies potential of 15% for investors over the next 12 months.

What did the broker say?

Morgans notes that the new CSL Vifor business has a strong position across several core therapy areas. It commented:

Vifor offers a leading portfolio across three core therapy areas (Iron deficiency; Dialysis; and Nephrology), with strong brands and a deep pipeline poised to expand the commercial opportunities and support chronic kidney disease patient across the treatment continuum (from preventing kidney damage, to chronic kidney disease treatment, to dialysis treatment to transplant).

The broker was pleased to see that management remains “extremely confident” in the long term growth potential of these therapies. It commented:

Management remains “extremely confident” in its ability to drive long-term sustainable growth by better leveraging a much more diversified product portfolio and deeper pipeline. Notably, management targets >10% revenue growth across Vifor over the medium term and reiterated profit accretion (low-to-mid teens ex-amortisation /one-off costs), including US$75m in cost synergies over the first 3 years.

In light of the above and improving plasma collections, it believes now is the time to buy. It concludes:

While plasma inventories need to be rebuilt over time, strong plasma collections, with ongoing demand across both Behring and Seqirus, coupled with Vifor’s added breadth, portends strong growth and momentum.

The post Here’s what Morgans is saying about the CSL share price appeared first on The Motley Fool Australia.

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More reading

• This ASX 200 share could be 50% higher next year: expert
• Citi says CSL share price is great value amid large iron therapy opportunity
• 2 classic healthcare ASX shares priced to buy now: expert
• 3 ASX 200 shares that turned a $5,000 investment into $1 million
• Why is the CSL share price dropping today?

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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So ASX shares and the S&P/ASX 200 Index (ASX: XJO) aren’t in a market crash. At least not yet.

If we want to get technical, a ‘market crash’ is defined by a (usually rapid) 20% or greater drop from an index’s most recent all-time high. The ASX 200 happened to peak at just over 7,600 points back in August last year.

As of yesterday’s close, the ASX 200 was at a far-lower 6,730 points. Now that is a painful 11.4% drop or so. This puts it in ‘correction’ territory. But not quite a crash. Things would have to get a lot uglier for that to happen.

And they well could. While we Aussie investors have so far dodged a 2022 crash, the Americans haven’t been so lucky. As it currently stands, the flagship US index – the S&P 500 Index (SP: .INX) – is currently a nasty 22.5% or so off its last all-time high.

So the US markets are indeed in crash territory. It’s always possible that our markets follow suit sooner or later (I’m not a harbinger of doom – it’s also equally possible that they don’t).

Most investors fear the dreaded words ‘market crash’. It is understandable to be afraid. Very Afraid.

It’s never fun seeing you’re net worth fall. It can be soul-destroying when your carefully selected investments seemingly spit in your face by plunging in value. That’s especially so if you’ve retired or plan to soon.

Look to Warren Buffett

But a market crash can be a time of great opportunity, and nothing for investors to fear.

The legendary investor Warren Buffett, chair and CEO of Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B), puts it this way:

‘Price is what you pay; value is what you get’. Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.

Another great Buffett quote explaining this rationale is this:

We are going to be buyers of things over time. And if you’re going to be buyers of groceries over time, you like grocery prices to go down. If you’re going to be buying cars over time, you like car prices to go down.

We buy businesses. We buy pieces of businesses: stocks. And we’re going to be much better off if we can buy those things at an attractive price than if we can’t.

The markets, both the American and Australian, have never failed, in all their histories, to recover from a crash to attain a new all-time high. Both markets were at an all-time high just last year.

Nothing in life or investing is ever guaranteed, of course. But if I were a betting man, I wouldn’t put my money in 2022 being an exception to this rule.

Market crashes are nothing to be feared

As AMP economist Shane Oliver recently put it in a Livewire article:

Bouts of volatility are the price we pay for the higher longer-term returns from shares compared to other assets like cash and bonds… So, if we want to grow our wealth, we need exposure to growth assets like shares to make the most of the power of compound interest, but with that comes rough patches every so often…

The key is to look for opportunities pullbacks provide. It’s impossible to time the bottom, but one way to do it is to “average in” over time.

Just look at the National Australia Bank Ltd (ASX: NAB) share price. It got down to just above $13 a share during the COVID market crash of 2020. Yesterday, it closed at $31.89.

That was an opportunity well worth jumping on. The share market is littered with similar cases of quality companies getting thrown out with the bathwater of a market crash. Only to make the bravest investors far richer once the dust settled.

As you can see, a market crash is nothing to be feared for the savvy investor.

The post Buffett: Why a market crash can be an investor’s best friend appeared first on The Motley Fool Australia.

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More reading

• Yes, buy ASX shares now. Don’t wait like everyone else: expert
• 5 things to watch on the ASX 200 on Friday
• Here are the top 10 ASX 200 shares today
• ‘Share market falls are normal’: Here’s how to make the most of them
• Is AGL really an ASX 200 ‘business with huge, huge upside for shareholders’?

Motley Fool contributor Sebastian Bowen has positions in National Australia Bank 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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Are you looking for divided shares to buy? If you are, then take a look at the two listed below that Morgans rates as buys.

Here’s what the broker is saying about these dividend shares:

Dexus Industria REIT (ASX: DXI)

Morgans is a big fan of this industrial property company and has named it as a dividend share to buy with an add rating and $3.25 price target.

The broker likes the company due to its exposure to key industrial markets, which remain robust and have a solid rental growth outlook backed by strong tenant demand. Its analysts also highlight that the company’s development pipeline provides near and medium term upside potential.

It commented:

DXI’s portfolio is valued at $1.76bn and is weighted 79% towards industrial and logistics assets. The weighted average cap rate is 5.1%; WALE 5.9 years; and occupancy 97%. DXI is trading at a discount to NTA, offers an attractive yield with solid underlying portfolio metrics and has near/medium-term growth opportunities via the development pipeline.

As for dividends, Morgans is expecting dividends per share of 16.4 cents in FY 2023 and 16.9 cents in FY 2024. Based on the current Dexus Industria share price of $2.49, this will mean yields of 6.6% and 6.8%, respectively.

Santos Ltd (ASX: STO)

Another ASX dividend share that Morgans is positive on is Santos. The broker currently has an add rating and $9.30 price target on its shares.

Morgans believes that Santos is well-placed for growth in the current environment. It explained:

The resilience of STO’s growth profile and diversified earnings base see it well placed to outperform against a backdrop of a broader sector recovery. While pre-FEED, we see Dorado as likely to provide attractive growth for STO, while its recent acquisition increasing its stake in Darwin LNG has increased our confidence in Barossa’s development. PNG growth meanwhile remains a riskier proposition, with the government adamant it will keep a larger share of economic rents while operator Exxon has significantly deferred growth plans across its global portfolio.

In respect to dividends, the broker is forecasting dividends per share of 22.1 cents in FY 2022 and 29.7 cents in FY 2023. Based on the latest Santos share price of $7.53, this will mean yields of 2.9% and 3.9%, respectively.

The post Broker names the ASX dividend shares to buy now appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Santos share price lifts following US$1 billion quarter
• 5 things to watch on the ASX 200 on Thursday
• Why is the Santos share price getting left behind the ASX 200 today?
• 5 things to watch on the ASX 200 on Tuesday

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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There’s rarely a boring moment on the Aussie bourse, and this week has been no different. Huge announcements from many of the market’s favourite ASX shares have been making news over the last few days.  

We’ve had major news of takeovers, cyberattacks, guidance upgrades, lithium prices, and a whopping $100 million fine.

So, without further ado, these are the ASX announcements you need to know about today.

These ASX shares released major announcements this week

Westpac eyes Tyro Payments

Let’s start with the announcement from big four bank Westpac Banking Corp (ASX: WBC) and tech share Tyro Payments Ltd (ASX: TYR).

The pair revealed they’re in takeover talks on Tuesday after plenty of speculation the fintech could be an acquisition target.

As of today, there’s been no word how much might be on the table for the ASX favourite, or whether a deal will go ahead.

Star slapped with $100 million fine

Speaking of a potentially hefty sum, the Star Entertainment Group Ltd (ASX: SGR) responded to the New South Wales Independent Casino Commission (NICC)’s decision to fine the casino operator $100 million and suspend its gaming licence on Monday.

NICC chief commissioner Philip Crawford said earlier that day:

If it were not for The Star’s change in attitude and our belief that it is in the public interest to protect the thousands of jobs at risk, there might have been a different outcome.

Medibank’s unfurling cyber attack

It was a rough week for Medibank Private Ltd (ASX: MPL) shares. They’ve been in and out of the freezer as the company continually updated the market on a “cyber incident” that became an attack.

The company initially gave assurances no customer data appeared to have been taken.

However, come Thursday, it announced to the ASX it was being held to ransom by hackers. The criminals were threatening to release 200 gigabytes of its customers’ data, including certain medical information.

Origin reveals guidance

Origin Energy Ltd (ASX: ORG) shares have also been in the news after the company finally announced financial year 2023 guidance for its energy markets business.

It expects the segment to bring in between $500 million and $650 million of EBITDA this fiscal year.

The company previously withdrew its outlook due to “material developments in… energy markets”.

Pilbara Minerals’ lithium auction

The final ASX announcement to detail today came from lithium share Pilbara Minerals Ltd (ASX: PLS).

The company accepted a pre-auction offer of US$7,100 dry metric tonnes for its latest shipment of spodumene concentrate. Therefore, the shipment has a total value of more than US$35 million.

The post 5 big ASX announcements making news this week appeared first on The Motley Fool Australia.

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More reading

• 3 ASX shares that are the top buys right now: expert
• ASX dividend shares ‘likely to remain attractive’ despite rising bank deposit rates: expert
• Westpac share price offers best value in the sector: Goldman Sachs
• Medibank shares remain in limbo after customer data hack confirmed
• Medibank share price halted after hackers claim to have taken customer data

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 Tyro Payments. The Motley Fool Australia has recommended Tyro Payments and 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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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 presents three ASX shares that her fund would love to buy now.

Hottest ASX shares

The Motley Fool: What are the three best stock buys right now?

Elfreda Jonker: Yeah, so I’ll talk about three different stocks, all quite diverse to just showcase our ability to invest in a variety of different companies, be it growth, defensive or cyclical. 

The first one is Brambles Limited (ASX: BXB). It’s a supply chain logistics provider of reusable pallets, crates and containers. What we currently see is that globally there’s a pallet shortage and that a lot of the competitors are actually behaving quite rationally, particularly in the US, and this has really helped Brambles to put through material price increases and the structure of their contracts are also improving. 

So what you are seeing on the back of this shortage and the fact that they can push up their prices, you have seen Brambles actually really improving their margins despite also being exposed to a lot of input cost pressure. We also see upside from improved cycle times.

From an overall outlook… free cash flow is expected to improve. As lumber costs normalise we think a lot of these price increases will continue to roll through and we think there’s quite a bit of upside still into 2022 and 2023. We expect to see ongoing earnings upgrades for Brambles. 

It’s also trading relatively cheap on a 16-times versus five-year average of around 20 times. So we quite like the story. We think it’s exposed to some of these international trends that we can benefit from here in Australia particularly given their big exposure to the US. 

The next stock is more on the consumer side, that is Carsales.com Ltd (ASX: CAR). Carsales is a dominant online car trading platform in Australia. They’ve got significant pricing power and an excellent management team in our view. We view Carsales as quite a well-managed business. They’re dominant in their space, they really are getting strong yield improvements both on the dealer side as well as the private side currently. 

As with Brambles, they’re seeing like-for-like nice price increases coming through as well as new car volumes starting to flow through driven by the global shortages. So they are seeing a whole bunch of new products coming in, they’re benefiting from higher volumes as well as higher prices. And I think that, in return, should drive solid margin expansion and we expect that to be ahead of where the market’s currently expecting that to be.

In addition, they’ve also been boosted by their South Korean operations that’s really booming and doing very well. So that’s a key source of earnings upgrades. That’s around 15% of revenues. And also in the medium term, we are quite optimistic about that US acquisition that they’ve made, Trader Interactive. That’s a much less sophisticated business compared to the others. So we think there’s a lot of synergies that they can flow through into that business. 

For us, this is in the shorter term, we see upgrades coming through but also longer term, we see a good business model there that can continue to help grow that business.

MF: Compared to other digital companies, the Carsales share price has been reasonably resilient this year — it’s only dropped about 20%?

EJ: Yes, it’s definitely been very resilient in comparison. Firstly, as a starting point, it doesn’t have as large a valuation as some of these other higher-growth companies. It’s trading at a 25 PE currently versus the long-term average of 28. So that’s a lot more palatable in an environment where [interest] rates are rising, to be in that sort of evaluation rather than these 60-plus companies. So I think that is definitely one reason. Also… they are doing used and new products, it’s definitely I think a little bit more defensive than some of the other business models out there.

The third option is a little bit more on the defensive side — it’s Medibank Private Ltd (ASX: MPL). That’s one of the largest private health insurance companies in Australia and they’re currently benefiting from big market share gains as well as the reshaping of the claims curve. 

Obviously, they’ve been quite a big beneficiary of COVID in that a lot of people did not claim. As a result, they’ve built up a lot of reserves and a very strong balance sheet — it’s really putting them in a very good position to do a lot with that balance sheet. They have been giving back to customers and that’s created a lot of goodwill for customers, but it’s also helped them to smooth out the earnings. 

So that’s what’s creating this quite a defensive pipeline for them and a pipeline of really good strong earnings growth coming through, in combination with an ungeared balance sheet, which is always really helpful for business to help grow the non-insurance part of the business. 

For us, it’s probably one of our highest conviction positions currently in our funds. It might not be one of these great high-growth businesses with huge earnings growth, but in an environment where either the market’s not growing or seeing really small upgrades, even the smaller upgrades that you can get from companies like this that’s consistent and has got a lower risk to it, that’s, in our view, a good position to be in.

MF: The private health insurance industry can become quite political — you’re not too worried about that?

EJ: That’s always, I think, a risk in this space. At this point in time, we think they actually have very good relationships and we are not overly concerned around something that we think is waiting in the wings that could surprise us massively. 

But it is a risk that people need to bear in mind when they do invest in this space and take that into account in the valuation that they’re willing to pay for a company like this.

The post 3 ASX shares that are the top buys right now: expert appeared first on The Motley Fool Australia.

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More reading

• Medibank shares remain in limbo after customer data hack confirmed
• Medibank share price halted after hackers claim to have taken customer data
• Medibank share price halted ahead of new ‘cyber incident’ update
• 5 things to watch on the ASX 200 on Tuesday
• Why Adbri, Costa, Hawsons Iron, and Medibank shares are sinking today

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 carsales.com 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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Unless you are heavily invested in mining stocks, your portfolio is likely looking pretty red by now.

You likely don’t need reminding, but for the record the S&P/ASX 200 Index (ASX: XJO) has fallen 11.3% year to date, S&P 500 Index (SP: .INX) by 23% and the Nasdaq Composite (NASDAQ: .IXIC) has tumbled a painful 32.5%.

The US indices are in a bear market, and ASX shares are not much better excluding the resources sector.

We have all heard ad nauseum from experts that market troughs are the best time to pick up the bargains.

But with interest rates still expected to rise further, even many professional investors are holding fire and waiting with cash in hand.

“I can definitely foresee a situation where markets have another leg lower and go for another 10%, 15% [down],” Medallion Financial managing director Michael Wayne told The Motley Fool last week.

So what do we do? How much lower can ASX shares go?

The answer is to buy now

Fidelity International investment director Tom Stevenson has an easy answer to this.

Don’t worry about it. Buy now.

This is because no one can intentionally time the market perfectly, and his opinion is that it’s better to buy early to be already invested when the trough comes.

“I’d say it’s far better to be early — even though human nature ensures that most of us have a tendency to come late to the party,” he wrote in the UK’s The Telegraph.

“The fear of losing money in the short term, which is the lot of the early investor, is a powerful disincentive to pre-empt the market.”

The idea is that if you wait for the trough to pass, you won’t know it has passed until you’ve seen much of the recovery. That is, the bottom of the market can only be defined in hindsight.

“Many investors just sit on the sidelines watching other people enjoy the recovery,” said Stevenson.

“If you had taken the pain of an initial loss, you would have been in at the bottom and sitting comfortably as the rally gathered pace.”

Why waiting is a mug’s game

Stevenson predicts that by the end of next year investors will look back on the previous 12 months as a period of rapid and significant returns.

Late buyers risk sacrificing much of those gains by sitting out. 

“If you think you are smart enough to time your re-entry back into the market, then by all means sit on your hands for a bit longer,” he said.

“But the early weeks of the pandemic showed how quickly markets can regain lost ground when they get a sniff of recovery and interest rates start to fall again.”

The point is that while a 5% difference in entry price might seem huge now, it will seem insignificant after the recovery rally when you’ve missed out on a 30% gain.

Stevenson took the S&P 500 as an example. It’s sitting around 3,695 points at the moment.

“You won’t care too much if you got in at 3,300 or 3,500 once the US benchmark is back above 4,000 again. You will care if you are still waiting in vain for a better entry point.”

So don’t become scared stiff like everyone else. This is the time to make hay.

“The time to get interested is when everyone else is focused on the grim economic and corporate outlook,” said Stevenson.

“Time to grit your teeth and start to prepare for the upturn. Even if it hurts in the short term.”

The post Yes, buy ASX shares now. Don’t wait like everyone else: expert appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Friday
• Here are the top 10 ASX 200 shares today
• ‘Share market falls are normal’: Here’s how to make the most of them
• Is AGL really an ASX 200 ‘business with huge, huge upside for shareholders’?
• ASX dividend shares ‘likely to remain attractive’ despite rising bank deposit rates: expert

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 Thursday, the S&P/ASX 200 Index (ASX: XJO) was out of form and dropped deep into the red. The benchmark index fell 1% to 6,817.5 points.

Will the market be able to bounce back from this on Friday and end the week on a high? Here are five things to watch:

ASX 200 expected to fall

The Australian share market looks set to end the week in a subdued fashion after a volatile night on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open 20 points or 0.3% lower this morning. In late trade in the United States, the Dow Jones is down 0.5%, the S&P 500 has fallen 1%, and the Nasdaq has dropped 0.85% higher. US markets were up around 1.5% at one stage.

Oil prices rise

Energy producers such as Beach Energy Ltd (ASX: BPT) and Woodside Energy Group Ltd (ASX: WDS) could have a decent finish to the week after oil prices edged higher overnight. According to Bloomberg, the WTI crude oil price is up 0.2% to US$85.71 a barrel and the Brent crude oil price is up 0.2% to US$92.61 a barrel. News that China could ease COVID restrictions boosted prices.

TechnologyOne rated as a buy

The team at Bell Potter remains bullish on the TechnologyOne Ltd (ASX: TNE) share price. This morning the broker has reiterated its buy rating and $14.25 price target on the enterprise software provider. It is expecting a strong full year result next month to get its shares heading higher again.

Allkem quarterly update

The Allkem Ltd (ASX: AKE) share price will be one to watch today when the lithium miner releases its quarterly update. Investors will no doubt be keen to see if lithium prices are continuing to rise. The market may also be looking to see if cost inflation has impacted Allkem’s performance during the quarter.

Gold price edges lower

Gold miners including Newcrest Mining Ltd (ASX: NCM) and St Barbara Ltd (ASX: SBM) could have a poor end to the week after the gold price dropped overnight. According to CNBC, the spot gold price is down 0.1% to US$1,632.70 an ounce. The precious metal dropped after US Treasury yields pushed higher.

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

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More reading

• Here are the top 10 ASX 200 shares today
• Why did ASX 200 gold shares have a meltdown today?
• ‘Share market falls are normal’: Here’s how to make the most of them
• Why Challenger, Novonix, Piedmont Lithium, and Woodside shares are racing higher
• Is AGL really an ASX 200 ‘business with huge, huge upside for shareholders’?

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 recommended TechnologyOne 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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