Stock Pick

Tag: Motley Fool

  • 3 ASX 200 dividend shares with the highest yields in Q1

    A male investor wearing a white shirt and blue suit jacket sits at his desk looking at his laptop with his hands to his chin, waiting in anticipation.A male investor wearing a white shirt and blue suit jacket sits at his desk looking at his laptop with his hands to his chin, waiting in anticipation.

    The market is chugging along beautifully today with the S&P/ASX 200 Index (ASX: XJO) up 1.9%. But over the first quarter of FY23, the benchmark index moved lower by 1%. And it’s down 11% year to date.

    During turbulent times on the market, as we’ve had this year, investors often turn their attention to ASX 200 dividend shares because capital gains are likely to be lower for now.

    Below we canvas the three ASX 200 shares that offered the best dividend yields in Q1 FY23.

    Magellan Financial Group Ltd (ASX: MFG)

    Magellan is a fund manager that makes money by looking after other people’s money. They invest their clients’ funds and charge fees based on the amount invested and each investment’s performance.

    According to S&P Capital IQ data, Magellan had the highest dividend yield in Q1 FY23 of the ASX 200. It was 15.9% as of 30 September. A 15%-plus dividend yield sounds amazing, right? But there’s a deeper story here, which is why investors must do their research before buying a dividend share (or any share, for that matter).

    What’s happened here is that the Magellan share price has absolutely cratered in 2022. The company is earning less money because investors have been withdrawing funds. So, Magellan is paying less money out in dividends, but the yield still looks great because of the severely weakened share price.

    Tabcorp Holdings Limited (ASX: TAH)

    Tabcorp is a wagering and media and gaming service business. It used to do lotteries as well before demerging that segment in May 2022, which resulted in the formation of Lottery Corporation Ltd (ASX: TLC). Most Aussies would know Tabcorp through its TAB brand both online and in venues.

    The data shows Tabcorp had a dividend yield of 13.9% in Q1 FY23. If you’re thinking of investing for dividends, something to check out here would be how the demerger might impact future dividends.

    The trailing dividend would include part of the lotteries segment’s earnings, which are no longer relevant for future payouts. But the Tabcorp share price has also tanked in 2022, so maybe the yield is sustainable.

    South32 Ltd (ASX: S32)

    The data shows South32 had a dividend yield of 13.3% in Q1 FY23.

    South32 is a mining company with assets producing aluminium, manganese, coal, zinc, silver, and nickel.

    With commodity prices going off in 2022, it’s no surprise to see the dividend yield at such a strong level. However, dividend investors must be mindful that commodity prices can go up and down.

    A higher commodity price means the company makes more on the stuff it digs out of the ground, while costs remain roughly the same. That means more profit to distribute to shareholders. And vice versa.

    So, if you’re buying South32 shares today for the long term (long-term investing is what we advocate here at The Fool), don’t expect today’s dividends to necessarily be the same tomorrow.

    The post 3 ASX 200 dividend shares with the highest yields in Q1 appeared first on The Motley Fool Australia.

    More reading

    Motley Fool contributor Bronwyn Allen has positions in Magellan Financial Group. 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.

    from The Motley Fool Australia https://ift.tt/RVO7DP4

  • Brokers name 3 ASX shares to buy today

    A white and black clock with the words Time to Buy in blue lettering representing the views of two experts who say it's time to buy these ASX shares

    A white and black clock with the words Time to Buy in blue lettering representing the views of two experts who say it's time to buy these ASX shares

    It has been another busy week for Australia’s top brokers. This has led to the release of a large number of broker notes.

    Three broker buy ratings that you might want to know more about are summarised below. Here’s why brokers think these ASX shares are in the buy zone:

    Jumbo Interactive Ltd (ASX: JIN)

    According to a note out of Goldman Sachs, its analysts have initiated coverage on this lottery ticket seller’s shares with a buy rating and $15.30 price target. Goldman likes Jumbo due to its strong growth outlook driven partly by its Powered by Jumbo business. It believes this side of the business is well-placed to grow its market share at home and overseas. All in all, Goldman is forecasting earnings growth ahead of consensus estimates in the coming years. The Jumbo share price is trading at $12.18 today.

    Mineral Resources Limited (ASX: MIN)

    A note out of Citi reveals that its analysts have retained their buy rating and lifted their price target on this mining and mining services company’s shares to $86.00. Citi recently attended a presentation relating to Mineral Resources’ Mt Marion and Wodgina lithium operations. Following the presentation, the broker remains very bullish and is expecting these lithium operations to generate over three-quarters of its earnings in FY 2023. The Mineral Resources share price is fetching $70.48 on Friday.

    Qantas Airways Limited (ASX: QAN)

    Analysts at UBS have retained their buy rating and lifted their price target on this airline operator’s shares to $7.20. This follows the release of the company’s first half update, which revealed materially stronger than expected earnings. The good news is that UBS believes that FY 2024 could be even stronger, which could bode well for the company’s shares. The Qantas share price is trading at $5.83 this afternoon.

    The post Brokers name 3 ASX shares to buy today appeared first on The Motley Fool Australia.

    More reading

    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 Jumbo Interactive Limited. The Motley Fool Australia has recommended Jumbo Interactive Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

    from The Motley Fool Australia https://ift.tt/VNocH62

  • How the US stock market shrugged off high inflation — For now

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

    graph depicting inflation with the word written in the middle

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

    The stock market initially reacted as one might have expected after the Consumer Price Index rose more than projected in September, with market benchmarks opening sharply lower. However, investors somehow found a silver lining in the numbers, and by the end of the day, the S&P 500 (SNPINDEX: ^GSPC) and Dow Jones Industrial Average (DJINDICES: ^DJI) were up between 2.5% and 3%, while the Nasdaq Composite (NASDAQINDEX: ^IXIC) settled for a slightly smaller rise.

    Index Daily Percentage Change Daily Point Change
    Dow +2.83% +828
    S&P 500 +2.60% +93
    Nasdaq +2.23% +232

    Data source: Yahoo! Finance.

    The turnaround came as a surprise to many investors, who figured that news that inflation was stronger and more persistent than originally believed might lead to further losses. A closer look at the inflation report seems to confirm the potential negative effects on the broader economy, but that still leaves the simple fact that one-day moves in the market are highly unpredictable. Below, you can learn more about the factors affecting the financial markets on Thursday and what they mean going forward.

    Inflation stays high

    The Consumer Price Index rose 0.4% in September, bringing its year-over-year rise to 8.2%. The monthly number was higher than expected, although the year-over-year figure was down slightly from where it was as of August.

    Although the 0.4% rise was less than the CPI has experienced in several months earlier this year, many market participants were surprised because the number included a sizable downward effect from falling energy prices. The CPI’s energy subindex fell 2.1%, with even larger drops in gasoline prices getting offset in part by more expensive natural gas and electricity costs.

    The main problem came from other key items. The food index, which is also volatile, continued its recent ascent, climbing 0.8% from August to September. That brought year-over-year food price increases to 11.2%, with food for home use seeing an even steeper 13% rise in prices.

    Meanwhile, the core CPI, which excludes both food and energy, was up 0.6% for the month and 6.6% from where it was a year ago. Sizable gains in costs of transportation and medical care services were most notable, as was the 0.7% rise in shelter costs. Used car prices declined, but new vehicle prices kept rising to move up 9.4% from where they were 12 months ago.

    A counterintuitive rise

    Given ongoing inflationary pressures, it’d be natural to expect the stock market to keep dropping. But in evaluating a one-day move, it’s important to understand that there are always multiple factors in play that can lead to counterintuitive results.

    One thing to remember is that stock markets had already seen huge declines over the past month and a half, which arguably indicates that investors were prepared for inflation not to calm down the way some had hoped. After a beginning-of-month rally that tried to regain some lost ground from a terrible September, the S&P 500 finished Wednesday slightly below where it had started the month. Coming on the heels of a more than 9% drop the previous month, a daily rise of nearly 3% still means that the large-cap index is down more than 7% from where it finished the month of August.

    In addition, stocks have tracked bond market movements fairly closely, and bond investors seemed more comfortable with the high inflation report than one would have expected. After spiking above 4%, the 10-year Treasury finished the day yielding less than 3.95%, up just four-hundredths of a percentage point.

    Today’s big jump doesn’t mean that the bear market is guaranteed to be over, and short-term movements could carry stocks lower in the days and weeks to come. Yet it does serve as a key reminder that markets won’t behave the way you necessarily expect in the short run, and you can often find yourself drawing the wrong conclusion even when news events work out the way you expect. 

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

    The post How the US stock market shrugged off high inflation — For now appeared first on The Motley Fool Australia.

    More reading

    Dan Caplinger 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.

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

    from The Motley Fool Australia https://ift.tt/lHGqSZ2

  • Why is the AGL share price getting hammered this week?

    Oil miner holding a laptop and mobile phone looks at his phone and sees the falling oil price and falling Woodside share priceOil miner holding a laptop and mobile phone looks at his phone and sees the falling oil price and falling Woodside share price

    It’s been a rough week for the AGL Energy Limited (ASX: AGL) share price.

    Its struggles came amid expectations the company’s upcoming annual general meeting (AGM) – to be held on 15 November – could evolve into a showdown between it and its major shareholder.

    The AGL board, headed by chair Patricia McKenzie, has recommended shareholders appoint just one of the four potential directors nominated by Atlassian Corporation (NASDAQ: TEAM) billionaire Mike Cannon-Brookes.

    The AGL share price is $6.85 at the time of writing. That’s 2.09% higher than its previous close but 3.65% lower than it was at last Friday’s close.

    For comparison, the S&P/ASX 200 Index (ASX: XJO) is up 1.9% today and largely flat week-on-week. The energy retailer’s home sector, the S&P/ASX 200 Utilities Index (ASX: XUJ), has also dumped 2.6% in that time.

    Let’s take a look at what might’ve weighed on the 185-year-old company’s shares this week.

    AGL share price tumbles amid AGM latest

    A last-minute turn-around from the AGL share price hasn’t been enough to claw back its losses. The stock tumbled earlier this week as what could be a battle between the AGL board and Cannon-Brookes’ Grok Ventures appeared to heat up.

    McKenzie appeared at the Australian Financial Review‘s (AFR’s) Energy & Climate Summit on Monday with a clear message, the masthead reported:

    We have to continue to have an independent board that represents 100% of the shareholders, and 88% of those are not Grok.

    AGL chair Patricia McKenzie, courtesy of the AFR.

    The billionaire’s investment vehicle previously nominated four candidates for the company’s board. Of those, the company recommends shareholders vote to elect one; former Tesla Inc (NASDAQ: TSLA) director Mark Twidell.

    Meanwhile, it recommends investors vote against the appointment of Dr Kerry Schott, John Pollaers, and Christine Holman.

    “It’s a crucial vote coming up for the composition of the board to ensure that we have an independent board that is going to take that approach moving forward,” McKenzie reportedly said.

    Grok responded after the board rebuffed the majority of its candidates on Friday.

    It said Schott, Pollaers, Holman, and Twidell have no alignment with Grok. That is, other than their agreement that the energy transition needs to occur quickly with AGL among its leaders. The venture continued:

    It’s yet another poor decision that doesn’t seem to be rooted in logical business decisions and certainly ignores the threats and opportunities facing AGL.

    Grok will be engaging directly with AGL’s 150,000 shareholders in the lead up to the AGM to explain the merits of looking to fresh faces to provide a broader mix of skills and experience – as well as additional capabilities to undertake the monumental amount of work required by the board.

    McKenzie reportedly told the submit the company will also be approaching shareholders and proxy advisors ahead of the meeting.

    History repeating?

    Last Friday, McKenzie labelled Grok’s nomination of four candidates “unusual” for a non-controlling shareholder.

    The venture put together an 11.28% stake in the company earlier this year. It used that stake to steer its successful campaign against AGL’s planned demerger.

    Those invested in AGL shares will likely remember the price the company paid for the scrapped split. It came to the tune of $125 million, a CEO, and a chair.

    After this week’s buzz, there’s little doubt the focus will be on AGL – and its share price – next month.

    The post Why is the AGL share price getting hammered this week? appeared first on The Motley Fool Australia.

    More reading

    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 Atlassian and 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.

    from The Motley Fool Australia https://ift.tt/uLTd10c

  • Why is the Santos share price outperforming the ASX 200 today

    An oil miner with his thumbs up.An oil miner with his thumbs up.

    The Santos Ltd (ASX: STO) share price is having a top run on Friday.

    Santos shares are 4.62% in the green and currently trading at $7.815. For perspective, the S&P/ASX 200 (ASX: XJO) is up 1.88% today.

    Let’s take a look at why the Santos share price is rising today.

    Oil prices storm higher

    Santos is a major oil and gas producer. The Woodside Energy Group Ltd (ASX: WDS) share price is also up 4% today, while Beach Energy Ltd (ASX: BPT) shares are soaring 5.76%. The S&P/ASX 200 Energy Index (ASX: XEJ) is 4% in the green.

    Energy shares including Santos are rising after oil prices lifted overnight.

    Brent crude oil jumped 2.29% to $94.57 a barrel. US Energy Information data revealed distillate stockpiles including heating oil fell by 4.9 million barrels a day in the week ending 7 October, Reuters reported. Price Futures Group analyst Phil Flynn, quoted by the publication, said:

    The most disturbing part of the (EIA) report is that distilling inventories are so far below average.

    The market is looking at the big picture, as opposed to the short-term demand numbers that were impacted by the storm.

    Meanwhile European natural gas swung widely overnight following a hoax threat to the Norwegian Ormen Lange natural gas field. However, benchmark futures dropped 4% after grid operator Shell Plc clarified there was no disruption to gas transport, Bloomberg reported. Oxford Institute for Energy Studies senior research fellow Katja Yafimava told the publication:

    Any incident — serious or not so serious — that could potentially result in disruption of either production or transport facilities used for supplies of non-Russian gas to Europe is bound to make the market more and more nervous.

    Volatility is the new normal.

    Santos share price snapshot

    The Santos share price has gained 6% in the past year, while it is soaring 24% year to date.

    For perspective, the ASX 200 has shed 7% in the past year.

    Santos has a market capitalisation of more than $26 billion based on the current share price.

    The post Why is the Santos share price outperforming the ASX 200 today appeared first on The Motley Fool Australia.

    More reading

    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.

    from The Motley Fool Australia https://ift.tt/aiN9v5Q

  • Is Pilbara Minerals the most profitable ASX lithium share?

    A beautiful ocean vista is shown with a woman whose back is to the camera holding her arms up in triumph as she stands at the top of a rock feeling thrilled that ASX 200 shares are reaching multi-year high prices todayA beautiful ocean vista is shown with a woman whose back is to the camera holding her arms up in triumph as she stands at the top of a rock feeling thrilled that ASX 200 shares are reaching multi-year high prices today

    Shares in Pilbara Minerals Ltd (ASX: PLS) are among a select few that have delivered handsome gains so far this year.

    Soaring lithium demand has helped push prices for the material to record levels. In turn, producing mining companies have enjoyed supersized earnings in the most recent financial year.

    Pilbara Minerals is one ASX-listed lithium share that has cashed in on the recent demand. However, is it the crème de la crème when it comes to profitability?

    Here’s a closer look at how this lithium heavyweight shapes up on the bottom line.

    Pitting Pilbara Minerals against its peers

    The importance of profitability is generally uncontested. Without it, companies fail to provide any form of return to shareholders.

    In fact, even the great Warren Buffett has been quoted as saying, “Look for companies with high-profit margins.”

    The illustrious investor believes the earnings margin indicates whether the company has a competitive advantage over its peers.

    For Pilbara Minerals shares, the numbers paint a rosy picture. For 12 months ending 30 June 2022, the company raked in $1.19 billion in revenue. This represented a 577% increase in Pilbara’s prior full-year revenue.

    Most of this substantial revenue increase was attributable to increased realised prices for its spodumene concentrate. That meant profits similarly swelled to record levels for the company, hitting $561.8 million during the period.

    To make this comparable to other ASX lithium shares, we need to determine the net profit margin.

    Fortunately, that is as simple as dividing the earnings by the revenue, which gives us 47.2%. In other words, for every dollar that Pilbara Minerals made in revenue, it retained 47.2 cents after expenses.

    It turns out this is the highest profit margin for a lithium producer on the ASX. Making an investment in Pilbara Minerals shares an investment in the most profitable name in the game.

    For reference, the next closest names are Allkem Ltd (ASX: AKE) and IGO Ltd (ASX: IGO) with profit margins of 39.7% and 36.7% respectively.

    Can it continue?

    As noted above, Pilbara Minerals’ profit margin is heavily dependent on where the lithium price goes from here.

    Given the company operates in what is referred to as a ‘price takers’ industry, as opposed to a ‘price maker’, there is a risk the succulent profits will incentivise more operators to get in on the action. All else equal, this would put downward pressure on the price of lithium due to supply and demand dynamics.

    Yet, analysts at Citi suspect elevated lithium prices are here to stay. The team there is projecting demand to double every two to three years over the ensuing decade.

    Whichever way it pans out, future Pilbara Minerals share price returns will likely depend on whether the company’s projects hold a competitive advantage to maintain those juicy margins.

    The company currently trades on a price-to-earnings (P/E) ratio of 28 times.

    The post Is Pilbara Minerals the most profitable ASX lithium share? appeared first on The Motley Fool Australia.

    More reading

    Motley Fool contributor Mitchell Lawler 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.

    from The Motley Fool Australia https://ift.tt/CyetS2x

  • Guess which ASX All Ordinaries share is rocketing 30% this week?

    A young woman holds her hand to her mouth in surprise as she reads something on her laptop.

    A young woman holds her hand to her mouth in surprise as she reads something on her laptop.The Cettire Ltd (ASX: CTT) share price has continued its strong run and is racing higher again on Friday.

    In afternoon trade, the online luxury fashion retailer’s shares are up 12% to $1.18.

    This means the Cettire share price is now up 30% this week despite a sizeable decline on Monday.

    Why is the Cettire share price rocketing higher this week?

    There have been a couple of catalysts for the impressive rise by the Cettire share price this week.

    The first is the rebounding All Ordinaries index after investor sentiment improved greatly. This has seen a number of beaten down All Ords shares pushing higher this week.

    But the main catalyst has been the release of the company’s first quarter update earlier this week.

    That update showed that rising living costs and global recession concerns haven’t impacted the sale of luxury goods on Cettire’s online platform.

    How is Cettire performing?

    According to the release, Cettire’s first quarter gross revenue increased 62% over the prior corresponding period to $84.4 million.

    This was underpinned by the year over year doubling of its active customers to 287,626 and improvements in repeat customer spending.

    Also getting investors excited was news that the company was profitable at an operating level during the quarter. Cettire reported adjusted EBITDA of $5.5 million, on a delivered margin greater than 20%. This was supported by a reduction in its marketing investment as a percentage of sales revenue to low double-digits.

    Looking ahead, the company’s CEO, Dean Mintz, stated that the “demand environment remains health.” In light of this, he revealed that he has “confidence in our Q2 outlook.”

    Judging by the Cettire share price reaction, it appears as though investors share this confidence. Though, time will tell what happens in this uncertain economic environment.

    The post Guess which ASX All Ordinaries share is rocketing 30% this week? appeared first on The Motley Fool Australia.

    More reading

    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 Cettire Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

    from The Motley Fool Australia https://ift.tt/beUqagj

  • Expert forecast: Here’s where UBS says the ASX 200 will finish the year

    A woman looks quizzical as she looks at a graph of the share market.

    A woman looks quizzical as she looks at a graph of the share market.The S&P/ASX 200 Index (ASX: XJO) is soaring on Friday, up 1.8% in early afternoon trade to 6,760 points.

    The strong run higher on the ASX 200 today follows in the footsteps of the US market. The S&P 500 Index (SP: .INX) finished yesterday (overnight Aussie time) up 2.6%.

    This came despite a hot US September inflation print, as bearishly positioned options traders, caught on the wrong side of the trend, scrambled to cover their short positions.

    That’s today’s price action.

    So, what can ASX 200 investors expect by the end of 2022?

    Here’s where UBS says the ASX 200 will finish the year

    Despite today’s sizeable gains, the ASX 200 remains down 10.9% so far in 2022.

    But in potentially good news for investors, broker UBS believes the worst of the sell-off is over. UBS analysts believe the benchmark index will end the year higher from here, with an Aussie recession looking unlikely.

    According to UBS equity strategist, Richard Schellbach (quoted by The Australian):

    Domestic cyclicals have been notable underperformers, with sectors exposed to the local consumer or housing down about 30% year to date. Given we do not expect a recession to play out in Australia, these moves seem overly pessimistic, and present an opportunity to buy into some high quality businesses with solid medium-term prospects.

    Schellbach pointed to strong demand for the products produced by ASX 200 and smaller listed companies as likely to support the market in the months ahead.

    “Despite gloomy press headlines, and continued challenges from supply chain constraints, input cost pressures, and more recently labour market shortages, the reality is that the end-demand which ASX business are seeing is firm,” he said.

    UBS has a year-end target of 7,000 points for the ASX 200. That implies a lift of 3.5% from the current level.

    Of course, not all stocks are created equal. Should the benchmark gain 3.5% by the end of 2022, some shares will see a much larger lift while some will see their share prices slide.

    Happy investing!

    The post Expert forecast: Here’s where UBS says the ASX 200 will finish the year appeared first on The Motley Fool Australia.

    More reading

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

    from The Motley Fool Australia https://ift.tt/KRwNmGW

  • Own Coles shares? Here’s what to expect from the supermarket giant’s Q1 update

    A young boy pushing his friend in a shopping trolley race along the road.

    A young boy pushing his friend in a shopping trolley race along the road.

    The Coles Group Ltd (ASX: COL) share price is having a strong finish to the week.

    In afternoon trade, the supermarket giant’s shares are up 2% to $16.57.

    Can the Coles share price keep rising?

    Whether or not the Coles share price keeps rising from here could depend on a couple of things.

    One is the performance of the ASX 200 index and the other is the company’s first quarter update later this month.

    In respect to the latter, let’s take a look to see what the market is expecting from Coles during the quarter.

    What is expected from Coles during the first quarter?

    According to a note out of Goldman Sachs, its analysts expect a decent update from Coles this month.

    However, it has warned that there are signs that cost of living pressures have led to consumers shifting to value options. This could have an impact on Coles, which has the biggest customer cross-over with discounters such as Aldi.

    Goldman explained:

    Our recent conversations with industry suppliers suggest that volumes are still holding up strongly (a positive surprise) and trading into Christmas will likely be resilient. However, there are increasing signs in value shift (as an example canned foods are having a strong growth YoY) and it is expected that it will become increasingly obvious in FY2H23 as consumers feel the increasing pinch of higher cost of living. Interestingly, cross-shopping data between the different supermarkets suggest that COL has the highest cross-shopping with discounters such as Aldi.

    Nevertheless, the broker is still expecting Coles to report Supermarket same store sales growth of 2.5% for the first quarter and then 4.3% for the first half. This is then expected to ease to 3.4% in the second half and 3.8% for FY 2023.

    The company’s Liquor operations aren’t expected to fare as well, with Goldman forecasting a 1% decline in same store sales during the first quarter. It then expects an improvement to flat same store sales for the first half and 0.5% growth for FY 2023.

    The post Own Coles shares? Here’s what to expect from the supermarket giant’s Q1 update appeared first on The Motley Fool Australia.

    More reading

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

    from The Motley Fool Australia https://ift.tt/tHzIa51

  • Stock markets are starting to reflect that ‘inflation is now under control’: economist

    A businessman keeps calm in the face of inflation

    A businessman keeps calm in the face of inflation

    Stock markets the world over haven’t reacted well to the sudden re-emergence of inflation in 2022.

    That’s because fast-rising consumer and producer prices have seen central banks resort to aggressive interest rate hikes.

    The Reserve Bank of Australia has hiked rates from an all-time low of 0.10% to the current 2.60%. While the US Federal Reserve has been even more hawkish, raising rates to the current 3.25%.

    How have stock markets reacted to the inflation-busting rate rises?

    As we said, not well.

    The S&P/ASX 200 Index (ASX: XJO) is down 11.1% year-to-date, following a strong run in 2021.

    And in the US, the S&P 500 Index (INDEXSP: .INX) has tumbled 23.5%.

    But something strange just happened.

    What’s happening with the ASX 200 and US markets?

    As we reported here, the S&P 500 closed up 2.6% yesterday, surging 5.1% higher after opening sharply lower.

    And the ASX 200 is following suit today, up 1.7% during the lunch hour.

    Why is that strange?

    Because the September inflation figures released out of the US yesterday still revealed prices in the world’s largest economy were rising at the fastest rate in 40 years. That, in turn, would indicate investors can expect more aggressive rate rises from the US Fed, which has classically been a headwind for stock markets.

    Some analysts suggest yesterday’s rally in US stock markets and the big boost on the ASX 200 could be due to over-leveraged, bearish options traders getting caught on the wrong side of the trend and forced to cover their shorts.

    But economist Peter Esho, co-founder of Wealthi, has a different take.

    Are stock markets starting to indicate inflation is under control?

    Commenting on the stock market rally in the face of inflation, Esho said (courtesy of The Australian Financial Review):

    We think that there is a growing consensus in markets that inflation is now under control and as recent interest rates start to flow through into the economy over the next year, inflation will be brought back under control.

    Inflation was in line with expectations, but that’s not to say there weren’t positive glimpses in there. Composition is very important and we know from past history that it takes time for prices to stop rising.

    Esho said higher interest rates don’t have an immediate impact on inflation.

    “Monetary policy and rising rates have a 12-18 month lag, so we will only start to see rate rises take effect in the next few months before their full force being felt next year,” he said.

    In potentially good news for stock markets, he added, “Bottom line: We think the RBA read things perfectly when they raised by only 25 basis points in October, balancing inflationary pressure with the need to maintain financial stability.”

    The post Stock markets are starting to reflect that ‘inflation is now under control’: economist appeared first on The Motley Fool Australia.

    More reading

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

    from The Motley Fool Australia https://ift.tt/ha2z5cT