Tag: Motley Fool

Quality ASX shares going for cheap — that’s what everyone wants, right?

Yet it’s easier said than done to pick a portfolio full of those.

If it were easy, everyone would do it and be rich.

The reality is that no one, not even experts who invest for a living, knows for certain what their share purchases will do.

However, we can manage the risk by looking for certain traits.

Does management have a long track record of growing the company? How dominant is the business in its field and how strong are its rivals? Are there external factors that are favourable for the future? Is it profitable and have manageable debt?

Let’s check out three cheap ASX shares that tick a lot of these boxes:

These ASX shares are down despite beating expectations

Johns Lyng Group Ltd (ASX: JLG) has been a long-time favourite among professional investors, but it has taken an almost 13% haircut over the past fortnight.

The analysts at QVG Capital explained the negative reaction was in response to the half-year results.

“Johns Lyng actually beat earnings expectations and increased full year guidance,” they said in a memo to clients.

“Unfortunately, the devil was in the detail and the detail showed the US business didn’t grow in the half.”

The US market is seen as one of the big drivers of growth for Johns Lyng, so investors punished it for the lack of progress.

But with earnings still growing, the QVG team is sticking by the insurance repairer, retaining the largest investment in the fund.

Reassuringly, nine out of 11 analysts are still rating Johns Lyng shares as buy, according to broking platform CMC Invest.

A dominant position in its field

After showing off boom numbers in January, Resmed CDI (ASX: RMD) shares have deflated more than 7%.

One reason for the dip might be that the stock went ex-dividend in early February.

Regardless, the share price is now at a nice discount for those willing to buy for the long run.

Even after last year’s dramas about the threat of Ozempic on ResMed’s addressable market, the stock has risen more than 90% over the past five years.

The company is the dominant player in the sleep apnoea treatment industry, and its nearest competitor Koninklijke Philips NV (AMS: PHIA) is still dealing with the consequences of a safety recall on its products.

On CMC Invest right now, 19 out of 26 analysts recommend ResMed as a buy.

Cheap ASX shares for the electrification of fossil fuel engines

For something a bit different, Global X Battery Tech & Lithium ETF (ASX: ACDC) seems cheap at the moment.

Of course, ASX lithium shares, like all mining stocks, are liable to be very volatile and cyclical.

But with an exchange-traded fund (ETF) such as this, one can invest in the whole sector as a theme.

And this is a theme that seems to have irresistible tailwinds in the long run.

After the global lithium carbonate price reached almost 600,000 CNY per tonne in late 2022, it was all a bit of a disaster in 2023. Now it’s hovering just above 108,000 CNY per tonne.

With demand set to grow for years as the world seeks to reduce its carbon emissions, it seems like the lithium price will likely be higher in 10 years time, especially from the current depression.

The share price for the Global X Battery Tech & Lithium ETF itself is about 16% down from June last year, so is trading at a decent discount.

The post 3 reliable ASX shares you can buy at a discount appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Morgans names more of the best ASX 200 shares to buy in March
• 2 classic ASX 200 shares you can buy for cheap now to hold for years
• Seeking retirement income from ASX bank shares at 52-week highs? What I’d buy instead
• 3 excellent ASX ETFs to buy in March

Motley Fool contributor Tony Yoo has positions in Johns Lyng Group and ResMed. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Global X Battery Tech & Lithium ETF, Johns Lyng Group, and ResMed. The Motley Fool Australia has positions in and has recommended ResMed. The Motley Fool Australia has recommended Global X Battery Tech & Lithium ETF and Johns Lyng Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Most ASX dividend stocks only pay passive income investors cash twice per year.

That tends to be a month or so after announcing their half-year results (the interim dividend). And again a month or so following their full-year results (the final dividend).

Indeed, if you’ve run your slide rule over the companies making quarterly payouts you’ll have found that list isn’t overly large.

But there are a few quality, high-yielding ASX dividend stocks to consider if you’re after a more regular passive income stream.

Which brings us to…

Reliable quarterly passive income from this ASX REIT

If you invest for passive income, you may be familiar with Rural Funds Group (ASX: RFF).

The real estate investment trust (REIT) holds and leases agricultural equipment and land, including cattle ranches, vineyards and cropping acreage.

And it has a long and growing track record of paying quarterly dividends.

Rural Funds reported its half year results on 23 February.

Highlights included a 19.5% year-on-year increase in earnings, which reached $71 million over the six months. That boost was spurred by a $4.6 million increase in property revenue, which came in at $42 million. Asset revaluations also helped increase Rural Funds earnings.

On the passive income front, the REIT declared an unfranked dividend of 2.9 cents per share.

The stock trades ex-dividend on 27 March, so there’s still time to grab that quarterly payout. Eligible investors can then expect to see that passive income hit their bank accounts on 30 April.

The last three quarterly dividend distributions all came out to 2.9 cents per share as well. That equates to a full-year payout of 11.6 cents per share.

At Thursday’s closing price of $2.13 per share, this works out to a dividend yield (partly trailing, partly pending) of 5.5%.

Looking ahead, Rural Funds forecast FY 2024 quarterly dividend payments will remain largely in line with the past quarters.

And the REIT aims to increase its passive income payouts each year from here.

Rural Funds notes that it targeted “distribution growth of 4% per annum by owning and improving farms that are leased to good counterparties”.

The Rural Funds share price is down 2% over 12 months and up 5% over the past six months.

The post Want passive income? This high-yielding ASX dividend stock pays cash every quarter appeared first on The Motley Fool Australia.

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More reading

• Seeking retirement income from ASX bank shares at 52-week highs? What I’d buy instead
• The ASX shares I’m buying for a stress-free retirement
• Invest $10,000 in these buy-rated ASX dividend shares with 5%+ yields
• 3 ASX shares to buy and hold forever
• Retirees: Here’s how to boost your pension in 2024

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

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

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More reading

• Is the Liontown share price ready for next week’s numbers?
• 3 ASX All Ords shares rocketing over 10% today
• Morgans names more of the best ASX 200 shares to buy in March
• 5 things to watch on the ASX 200 on Thursday
• Would Warren Buffett buy ASX shares in a raging bull market?

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 positions in and has recommended Johns Lyng Group, Megaport, and ResMed. The Motley Fool Australia has positions in and has recommended ResMed. The Motley Fool Australia has recommended Johns Lyng Group and Megaport. 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 Australian share market has a large amount of ASX dividend shares to choose from right now.

But which ones could be buys for investors in March?

Two that brokers are feeling particularly positive about at the moment are listed below.

Here’s what sort of dividend yields and capital gains you can expect from them:

Centuria Industrial REIT (ASX: CIP)

The first ASX 200 dividend share that could be a buy in March according to analysts is Centuria Industrial.

Centuria Industrial is Australia’s largest domestic pure play industrial property investment company. Its portfolio includes 88 high-quality, fit-for-purpose industrial assets worth a collective $3.8 billion. Management notes that the assets are situated in key in-fill locations and close to key infrastructure.

The team at UBS rates the company highly and responded positively to its recent half-year results last month. It has a buy rating and $3.71 price target on its shares.

The broker also continues to expect some attractive yields from its shares. It is forecasting Centuria Industrial to pay dividends per share of 16 cents in both FY 2024 and in FY 2025. Based on the current Centuria Industrial share price of $3.38, this represents yields of 4.7% in both years.

Super Retail Group Ltd (ASX: SUL)

Another ASX 200 dividend share that has been rated as a buy is Super Retail.

It is the retail conglomerate behind popular brands BCF, Macpac, Rebel, and Super Cheap Auto.

Goldman Sachs is feeling very positive about the retailer and has a $17.80 price target on its shares.

In response to Super Retail’s half-year results, its analysts said “we believe the 1H24 result was high quality and the strategic growth plan is intact. Specifically, core to our Buy thesis.”

As for dividends, the broker is forecasting fully franked dividends per share of 67 cents in FY 2024 and then 73 cents in FY 2025. Based on the latest Super Retail share price of $14.84, this will mean good yields of 4.5% and 4.9%, respectively.

The post Brokers name 2 ASX 200 dividend shares to buy appeared first on The Motley Fool Australia.

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More reading

• Why did Super Retail shares drop after going ex-dividend?
• 5 things to watch on the ASX 200 on Wednesday
• Move quickly if you want to receive the Super Retail dividend
• Seeking retirement income from ASX bank shares at 52-week highs? What I’d buy instead
• If I were entering retirement tomorrow, I’d buy these ASX shares

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

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Commonwealth Bank of Australia (ASX: CBA) shares have continued their positive run on Thursday and reached a new 52-week high.

Unfortunately, almost every major broker believes this leaves the banking giant’s shares in overvalued territory.

In light of this, if you’re looking for ASX bank stocks to buy, then you may be better off looking beyond CBA and the rest of the big four.

One option to consider, according to analysts at Goldman Sachs, is Judo Capital Holdings Ltd (ASX: JDO).

Is it an ASX bank stock to buy?

This morning, Goldman has reiterated its buy rating on Judo Capital’s shares with a $1.66 price target.

Based on where the ASX bank stock is currently trading, this implies potential upside of 30% for investors over the next 12 months.

The broker believes the market is being too pessimistic with Judo’s margin potential and is undervaluing the company. It said:

We think the market’s skepticism around the at-scale NIM focuses on the lending spread assumption of mid-4%, given the 1H24 spread was <4%. However, our comfort around this assumption stems from: i) historically, its lending spread has generally been in the mid-4%, ii) JDO’s Dec-23 quarterly average new lending spread was 4.64%, and iii) its lending spread on its A$1.0 bn pipeline was c. 4.5%.

It then adds:

Our analysis suggests that, with the stock currently trading 26% below our TP, the market is implying very little recovery in the 1H24 back-book lending spread, despite the material improvement JDO experienced in both the front book and pipeline lending spreads through the half. Coupled with i) JDO continuing to demonstrate strong volume growth such that despite NIM pressures, we expect net interest income will still grow, and ii) a macro environment that we think will remain relatively supportive of commercial asset quality, we reiterate our Buy recommendation.

The post Forget CBA and buy this ASX bank stock for big returns appeared first on The Motley Fool Australia.

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More reading

• Why are the big 4 ASX 200 bank shares leaping to new 52-week highs today
• CBA share price marching higher amid ‘difficult news’
• Is the blistering rally in ASX 200 bank shares overdone?
• An 8% yield on CBA shares? Here’s how these passive income investors achieved it!
• Investing in an ASX share portfolio for lifelong passive income!

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 Goldman Sachs Group and Judo Capital. 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 fairly pleasant day for the ASX share market and the All Ordinaries Index (ASX: XAO) so far this Thursday. At present, the All Ords is up 0.24% to just over 8,000 points. But let’s talk about one ASX All Ords stock that had some big news to tell investors this morning.

GQG Partners Inc (ASX: GQG) is a US-based asset management company that has made quite a splash since its 2021 stock market debut. GQG shares have risen by almost 70% since November alone, but are still offering a trailing dividend yield of over 6% at current prices, as my Fool colleague documented last month.

Today, this ASX All Ords stock has had a wonderful time on the markets. The GQG share price is currently up a decent 1.83% at $2.22, but rose as high as $2.33 at market open this morning. That was a gain worth 6.88% at the time.

Today’s moves follow some big ASX news this All Ords stock shared with investors this morning before market open.

Why did this ASX All Ords stock jump 7% this morning?

That big ASX news was the latest funds under management (FUM) update for GQG Partners. And it was an impressive document to go through.

GQG revealed that its FUM grew by $10.5 billion over just the month of January 2024. Yep, GQG reported a total FUM of US$127 billion as of 31 January. But as of 29 February, the company had US$137.5 billion under its belt.

That’s a growth rate of 8.27% for just one month alone. This figure includes both net inflows and gains from the markets themselves.

The All Ords stock also stated that over the first two months of 2024, the company enjoyed net inflows of US$3 billion.

Every one of GQG’s divisions – International Equity, Global Equity, Emerging Markets Equity and U.S. Equity – grew by at least US$2 billion over the month.

However, it was GQG’s largest division in International Equity that had the highest inflows at US$3.7 billion.

It seems ASX All Ords investors loved what GQG had to say today. Let’s see what the company reports in its next monthly FUM update.

The post Up 7%: This All Ords stock reported some big ASX news today appeared first on The Motley Fool Australia.

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More reading

• Cash kings: 2 top ASX dividend shares that pay quarterly
• With a P/E ratio of 15, is this ASX All Ords share price too low to ignore?
• Seeking retirement income from ASX bank shares at 52-week highs? What I’d buy instead
• This ASX All Ords stock is predicted to pay a 9% dividend yield in 2025!
• Up 21% in a month: Can GQG shares climb even higher?

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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Only eight days stand between investors and the latest half-year results from Liontown Resources Ltd (ASX: LTR). The share price will undoubtedly be in focus as the market gets a deeper peek into how the lithium project developer is tracking.

The company is slated to release its first-half report on 15 March. It’ll be a high-stakes day for shareholders.

But before that day comes, what can we expect to see from the roaring lithium name?

Preview before the big day

Unlike many other companies who have reported this earnings season, Liontown is in its pre-revenue phase. That means the pressure is off the lithium hopeful to deliver specific revenue or net profit after tax (NPAT).

Instead, the focus will likely be on construction progress at its Kathleen Valley project, funding, and any insight into expectations surrounding production.

On 26 February, Liontown Resources presented at the BMO global metals, mining and critical minerals conference. In its presentation, the company reiterated it was on track for first production in mid-2024 — which is only around four months away now.

Regarding funding, $517 million in cash sat at the bank as of 31 December 2024. Management expects this pool of cash to cover all construction activities needed to reach revenue generation from the Kathleen project.

Furthermore, Liontown said it was ‘advancing on a range of funding options to support ramp-up’ last month. It was noted that an update would be provided on this by the end of the March 2024 quarter. That might mean investors could get additional information on future funding arrangements in this report.

What about lithium’s effect on the Liontown share price

Much of the ASX lithium sector has been dragged from pillar to post in a bruising stoush. Investors’ conviction is being tested as more producers decide to adjust their output amid weak prices.

The price and profit of a commodity are closely linked to the prosperity of a resource company. So, it goes without saying that when the outlook shifts negatively for a material — such as lithium — so too does its associated companies.

As my colleague, James Mickleboro, shared yesterday — analysts at Goldman Sachs estimate further weakness from current lithium prices in 2025. As a result, those jumbo profits once witnessed might become a distant memory.

Ultimately this doesn’t bode well for the Liontown share price. As a result, shareholders will look for more promising signs when the company reports next week.

The post Is the Liontown share price ready for next week’s numbers? appeared first on The Motley Fool Australia.

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More reading

• Why Coles, Liontown, Lovisa, and Wildcat shares are dropping today
• Why are ASX lithium shares like Pilbara Minerals crashing on Tuesday?
• Why the 2024 outlook for these rebounding ASX 200 lithium shares looks ‘better than market expectations’
• Here’s the latest lithium price forecast through to 2027
• 3 ASX lithium shares with huge upside to buy in March

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 positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The DroneShield Ltd (ASX: DRO) share price is tanking today, down 15.11% to 59 cents per share.

In fact, the defence technology business has lost 36% of its market capitalisation in six trading days.

This represents a dramatic change after an impressive 56% upward sweep between 1 January and last Wednesday, when the ASX stock traded at a new all-time high.

What’s gone wrong?

Let’s take a look at the news affecting the Droneshield share price over the past six days.

What’s driving the DroneShield share price down?

The DroneShield share price closed at a new record high of 93 cents last Wednesday, 28 February.

That was the day the company released its full-year results for FY23 and an investor presentation.

The company revealed an inaugural profit after tax of $9.3 million, up from a $900,000 loss in FY22.

ASX investors were impressed, and the Droneshield share price lifted 22.4% to its new peak.

Then on Thursday, the ASX small-cap stock plunged 25.8% to 69 cents per share. This was despite no news from the company.

That same day, the S&P/ASX Small Ordinaries Index (ASX: XSO) lifted 1.02%.

This indicates some investors may have celebrated the record high with some profit-taking.

On Friday, we learned that Droneshield would be added to the S&P/ASX All Ordinaries Index (ASX: XAO) in the S&P Dow Jones Indices quarterly rebalance.

This will take effect on 18 March.

Being added to an index like the ASX All Ords or ASX 200 is usually a good thing, as it prompts many passive index funds to automatically buy more stock to match the rebalanced weighting.

About twice the average volume of Droneshield shares were traded that day, but the price remained steady at 69 cents.

On Monday, the Droneshield share price dropped by 10.14% to 62 cents, then recovered completely on Tuesday back to 69 cents.

The next piece of news hit yesterday.

Directors sell millions of Droneshield shares

There was a series of notices published yesterday pertaining to Droneshield directors selling a stack of shares. We’re talking millions of them.

They were sold between 29 February (the day after the record high) and 5 March.

The biggest sell-off came from managing director Oleg Vornik, who sold more than 10 million Droneshield shares for just over $7 million.

The company explained that 4,450,000 were loan-funded shares issued previously as part of the Incentive Option Plan.

Droneshield also said $1,597,500 of the proceeds represented the loan repayment, and therefore cash receipts for the company.

Vornik retains 15,000,000 unlisted and unvested performance options, vesting if certain performance milestones are met, each exercisable at $0.00 per option, expiring on 19 January 2029.

Droneshield said:

The sale of shares represents 41.07% of the total Director’s holding on a fully diluted basis.

A substantive reason for the sale is to realise liquidity on some of his holdings, following a number of years of being involved with the Company.

Investors don’t typically like seeing directors sell shares, but the Droneshield share price lifted 1.45% to 70 cents anyway.

But today, it’s tanking by more than 15% on no news at all.

By comparison, the ASX Small Ords is up 2.8%.

Should you buy the dip?

This is one of those situations where nothing fundamentally bad has happened to make the stock dive by 36% over the past six days. And it’s the sort of scenario that long-term investors love!

This is because it enables them to pick up more stock at a lower price. It’s called buying the dip, and it’s a great way of dollar-cost averaging to achieve a lower average price for your entire Droneshield holdings.

But before you buy, are you missing anything?

Not according to broker Bell Potter.

On Tuesday, the broker announced it was upgrading its rating on Droneshield to buy specifically due to the share price drop.

The broker reckons the Droneshield share price can get to 90 cents within the next 12 months.

Based on today’s price, this represents a potential 52% upside for investors who buy the Droneshield dip today.

The post DroneShield share price down 36% in 6 days. Should you buy the dip? appeared first on The Motley Fool Australia.

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More reading

• Why DroneShield, Magellan, Platinum, and Zip shares are rising today
• Why DroneShield, Healius, Newmont, and Paragon Care shares are pushing higher
• Why this leading broker just upgraded DroneShield shares
• Why Australian Finance Group, Chalice, DroneShield, and ResMed are sinking today
• Why is the high-flying DroneShield share price crashing 20% today?

Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended DroneShield. 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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Challenger Ltd (ASX: CGF) shares are proving to be an appealing pick for dividends.

This business is the largest annuity provider in Australia, allowing retirees to turn capital into a guaranteed source of income.

Regaining its dividend status

The company has increased its dividend each year since the COVID-19 cut in 2020.

COVID-19 saw a lot of businesses cut their payouts, but Challenger has recovered well from that difficult year.

The Challenger FY24 first-half result saw the business grow its interim dividend by 8% to 13 cents per share.

That result, being the first six months of FY24, saw normalised net profit before tax (NPBT) growth of 16% to $290 million, while assets under management (AUM) grew by 18% to $117 billion.

Annuity sales are seeing strong growth – life sales amounted to $5.3 billion, with “very strong” lifetime annuity sales of $1.1 billion – up 190%. There were new business annuity sales of $1.9 billion, up 19%.

The projections on Commsec suggest the dividends can continue to grow in FY24 (25.1 cents per share), FY25 (27 cents per share) and FY26 (29 cents per share).

That means the grossed-up dividend yield could be 5.3% in FY24, 5.7% in FY25 and 6.1% in FY26.

Can growth continue?

We can’t know for sure what’s going to happen, particularly with an ASX financial share like Challenger that can be impacted by market crashes.

However, the higher interest rate environment is improving the appeal of annuities as they now offer stronger returns. Challenger’s products are attracting a lot of fund inflows.

In the FY24 first-half result, it reaffirmed its FY24 normalised net profit before tax guidance, which is now expected to be in the top half of its $555 million to $605 million guidance range.

If its group AUM keeps increasing, then this gives the company the potential to earn stronger underlying profit.

Ageing demographics and growing superannuation balances are pleasing tailwinds to help Challenger’s annuity sales in the future.

According to the estimate on Commsec, the Challenger share price is valued at under 13 times FY24’s estimated earnings.

Dividends aren’t guaranteed, but the ASX dividend share is building an appealing payout history.

The post Are Challenger shares becoming a top ASX dividend pick? appeared first on The Motley Fool Australia.

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More reading

• 7 ASX 200 shares with ex-dividend dates next week
• Here are the top 10 ASX 200 shares today
• Why Challenger, Hansen, JB Hi-Fi, and Temple & Webster shares are surging today
• Challenger share price rockets 10% on half-year earnings

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Challenger. 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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Is it too late to buy Washington H. Soul Pattinson and Co Ltd (ASX: SOL), or Soul Patts for short, stock in March of 2024? Good question.

ASX shares and the S&P/ASX 200 Index (ASX: XJO) have been on a tear over the past few months. But over the last year, the gains have been more muted. Since the start of November, the ASX 200 has added a compelling 14.2% to its value. But over the past 12 months, the gain stands at 5.2% today.

In contrast, Soul Patts stock is up a whopping 23.13% since this time last year. Yep, one year ago, you could have bought this ASX 200 investing house for $28.68 a share. But today, those same shares are trading for $35.31 each at present.

As regular readers might know, Soul Patts is one of my favourite ASX investments. It’s currently a major constituent of my portfolio, and I’ve been lucky to own these shares for many years now.

But thanks to this, the average price that I bought this company at is a lot lower than what it is today. That’s great and all, but it does raise the question: Is it too late to buy or add Soul Patts shares now that they’re 23% more expensive than a year ago?

Is it too late to buy Soul Patts shares in 2024?

This is a difficult question to answer, thanks to the unique nature of how this company turns a profit. Soul Patts is not your regular ASX 200 stock. Rather than owning and running a single business, Soul Patts instead owns a vast portfolio of other shares and assets, which it manages on behalf of its shareholders.

Last month, we did a deep dive into this portfolio, so if you’re curious about how it’s made up, make sure to check that out.

But this fact makes it difficult to come up with a compelling valuation for the business ourselves, in turn meaning it is hard to determine whether the company is relatively cheap or expensive at any given share price.

I must admit, the recent run up in the Soul Patts stock price has made me more reluctant than usual to add to my existing position of late. After all, the company’s portfolio has averaged a return of 12.5% per annum for the 20 years to 31 July 2023. So the past year’s return is well above average.

However, if you don’t already own a decent chunk of this quality company, I’ll defer to the legendary Warren Buffett. Buffett once said, “It’s far better to buy a wonderful company at a fair price, than a fair company at a wonderful price”.

Soul Patts shares are certainly not at a wonderful price right now. At least in my view. But I think this wonderful company is still at a valuation that makes a long-term investment worthwhile.

The post Is it too late to buy Soul Patts stock? appeared first on The Motley Fool Australia.

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More reading

• 5 ASX shares to buy for an effortless path to financial freedom
• 2 ASX shares I’ve been buying!
• Seeking retirement income from ASX bank shares at 52-week highs? What I’d buy instead
• If I were entering retirement tomorrow, I’d buy these ASX shares
• The ASX shares I’m buying for a stress-free retirement

Motley Fool contributor Sebastian Bowen has positions in Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Washington H. Soul Pattinson and Company 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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