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  • 3 beaten-up ASX shares this fund manager thinks are ‘compelling’ buys

    A young woman sits at her desk in deep contemplation with her hand to her chin while seriously considering information she is reading on her laptop

    A young woman sits at her desk in deep contemplation with her hand to her chin while seriously considering information she is reading on her laptop

    This year has seen investors sell off a wide array of ASX shares. Yet, amid the sell-off, one fund manager has named some businesses it thinks are opportunities.

    L1 Capital is a fund manager that operates the listed investment company (LIC) L1 Long Short Fund Ltd (ASX: LSF).

    The fund manager thinks the recent market sell-off is presenting some “exceptional opportunities”. At present, its median portfolio investment now has a projected FY23 price/earnings (P/E) ratio of 9.7 times, according to its monthly update for September.

    L1 said:

    While these periods of heightened market volatility can be unnerving, we continue to believe that taking a 2-year view and focusing on enduring investment fundamentals (cash flows, industry structure, management, operating trends and balance sheet) will deliver strong absolute and relative returns.

    We continue to find both safety and value in low P/E stocks with undergeared balance sheets and strong cashflow generation. In contrast, we believe high P/E stocks and ‘expensive defensives’ look crowded, risky and unappealing.

    What are some examples of the ASX shares L1 is talking about?

    The fund manager also outlined some of the companies in its portfolio.

    Here are three of the names the fund manager noted:

    BlueScope Steel Limited (ASX: BSL)

    BlueScope is a steelmaking business in Australia and the US. Steel ‘spreads’ have been falling, but are still “healthy” and starting to “stabilise as the arbitrage on importing steel has now largely been eroded”, according to L1 Capital.

    The fund manager pointed to the positives of BlueScope’s plan to grow its US operations with the company planning a capacity expansion. It also noted the acquisition of the US’s second-largest metal coating/painting company Coil Coatings and the establishment of BlueScope Recycling from its acquisition of the MetalX recycling business.

    The fund manager pointed out that it has a “strong net cash balance sheet”, so its share buyback is expected to continue, as well as investment in the US and Australian businesses.

    L1 said that BlueScope is valued at just six times FY23’s consensus estimated earnings. ‘Consensus’ means the collective average of different expert projections. The fund manager thinks the market is “significantly” undervaluing the business.

    Sandfire Resources Ltd (ASX: SFR)

    L1 pointed out copper prices are under pressure because of a weaker global economic backdrop. That’s despite the physical copper market continuing to remain “tight”. The fund manager attributes the supply issues to ongoing production challenges in Chile, the number one global producer. This ASX share has seen a decline over the past few months. Indeed, the Sandfire Resources share price is down 30% over the last six months.

    In February, Sandfire completed the “transformational” acquisition of the MATSA mine in the south of Spain and is currently developing the Motheo copper mine in Botswana.

    L1 said:

    We believe the commencement of Motheo production in FY24 will deliver a step-change in free cash flow for the company as capital expenditure declines and the operating cash flow from the mine expands. We see compelling value upside in Sandfire with the company currently trading at a discount to the acquisition price of MATSA alone, before factoring in any value for its other mining assets, including Motheo.

    James Hardie Industries plc (ASX: JHX)

    Another pick was this ASX building materials company that also has a big presence in the US. L1 describes it as the US market leader in fibre cement siding.

    The fund manager attributed its recent share price decline to the expectation that US housing demand is going to drop because of higher interest rates.

    Around 65% of the group’s revenue comes from repair and remodelling, while 35% is from new housing.

    L1 is confident in James Hardie’s ability to continue to grow market share “for many years to come”.

    The fund manager said about the ASX share:

    We believe the market correction has provided us the opportunity to invest in a very high-quality company with a decade of structural growth ahead of it at a very attractive valuation. James Hardie currently trades on a FY23 consensus P/E of only ~13x relative to its long-term average of 20x-25x. While we expect US housing starts to be negatively impacted by the steep rise in interest rates, at this valuation, we believe the market is implicitly assuming a ~40% decline in James Hardie earnings. This would be a similar impact to what the company suffered during the GFC, however, the business mix at that time was much more cyclical, with a ~60-65% skew to new housing.

    The post 3 beaten-up ASX shares this fund manager thinks are ‘compelling’ buys appeared first on The Motley Fool Australia.

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    Motley Fool contributor Tristan Harrison has positions in L1 LS FUND FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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  • It was a rocky quarter for Rio Tinto shares. What now?

    A man wearing a shirt, tie and hard hat sits in an office and marks dates in his diary.

    A man wearing a shirt, tie and hard hat sits in an office and marks dates in his diary.

    The Rio Tinto Limited (ASX: RIO) share price has seen plenty of volatility over the last few months.

    Let’s look at how the ASX mining share has performed.

    In the three months to September 2022, the Rio Tinto share price dropped 9%. The S&P/ASX 200 Index (ASX: XJO) only fell by 1.4% over those three months.

    In October to date, Rio Tinto shares have gone up by 3.5%. The ASX 200 has gone up by 4.5% this month.

    What could be next for the ASX mining share?

    Over the last six months, it has declined by around 18%. Why?

    It’s important to remember that the ASX mining share is a (very large) commodity-focused business that relies on selling commodities to customers. Higher revenue because of the resource price should mean more profit, a lower resource price should mean less profit. The Rio Tinto share price can be moved by investors on expectations about its profit.

    The iron ore price has been drifting lower over the last few months – not good news for Rio Tinto shares.

    While Rio Tinto is involved with other commodities, such as copper, its iron ore business has been the crown jewel in terms of generating profit in recent times. So, it seems that investors are expecting lower profitability for Rio Tinto in the shorter term.

    But, the price of the commodity is only one part of the equation. The amount of production is the other main factor. If the price of the commodity stays the same, but Rio Tinto lifts its production by 5%, then the revenue can grow.

    Rio Tinto is scheduled to release its 2022 third-quarter production report on 18 October 2022. Depending on whether the production meets expectations or not, the Rio Tinto share price could react positively or negatively. Only time will tell what the actual numbers are and how the market reacts.

    Is the Rio Tinto share price a buy?

    Different experts have different opinions on the ASX mining share.

    For example, the broker Morgan Stanley has an overweight rating on the business with a price target of $118.50. That implies a possible rise of more than 20% over the next year if the broker is right.

    The broker thinks that it’s a good move by Rio Tinto to expand in lithium because of the expected long-term growth in demand, plus the ASX mining share could expand its presence in the lithium value chain.

    However, then there’s a broker like UBS which is not so optimistic about the short-term future of the Rio Tinto share price. It has a price target of just $90. That implies that the miner could fall by another 7%.

    The post It was a rocky quarter for Rio Tinto shares. What now? appeared first on The Motley Fool Australia.

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    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 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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  • Here are the 10 most shorted ASX shares

    The words short selling in red against a black background

    The words short selling in red against a black background

    At the start of each week, I like to look at ASIC’s short position report to find out which shares are being targeted by short sellers.

    This is because I believe it is well worth keeping a close eye on short interest levels as high levels can sometimes be a sign that something isn’t quite right with a company.

    With that in mind, here are the 10 most shorted shares on the ASX this week according to ASIC:

    • Flight Centre Travel Group Ltd (ASX: FLT) is still the most shorted share on the ASX despite its short interest easing to 14.6%. Concerns over the travel market recovery have been weighing on this travel agent’s shares.
    • Betmakers Technology Group Ltd (ASX: BET) has seen its short interest rise to 14.4%. Short sellers may be targeting this betting technology company due to intense competition in the industry and the lofty multiples its shares trade on.
    • Block Inc (ASX: SQ2) has seen its short interest rise to 11.1%. Concerns over the prospect of a global recession and regulatory pressure in the BNPL industry could be putting pressure on its shares.
    • Lake Resources N.L. (ASX: LKE) has short interest of 10.1%, which is down week on week. Doubts over this lithium developer’s DLE technology appears to be a key reason for the high level of short interest.
    • Megaport Ltd (ASX: MP1) has seen its short interest rise to 10%. This may be due to valuation concerns and ongoing weakness in the tech sector.
    • Magellan Financial Group Ltd (ASX: MFG) has entered the top ten with short interest of 8.3%. This fund manager has been bleeding funds under management this year. Short sellers don’t appear confident this trend will stop.
    • Nanosonics Ltd (ASX: NAN) has short interest of 8.2%, which is up slightly week on week again. Short sellers have been targeting this infection prevention company due to a highly disruptive business model change in the key US market.
    • Domino’s Pizza Enterprises Ltd (ASX: DMP) is a new entry in the top ten with 8.2% of its shares held short. Inflationary pressures have been weighing on the pizza chain operator’s performance this year.
    • Breville Group Ltd (ASX: BRG) has seen its short interest rise to 7.9%. This high level of short interest may have been driven by concerns over what the uncertain economic backdrop could mean for consumer spending.
    • Perpetual Limited (ASX: PPT) has seen its short interest rise to 7.7%. This fund manager’s shares have been hammered this year. Unfortunately, it appears as though short sellers see more pain ahead.

    The post Here are the 10 most shorted ASX shares appeared first on The Motley Fool Australia.

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    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 Betmakers Technology Group Ltd, Block, Inc., MEGAPORT FPO, and Nanosonics Limited. The Motley Fool Australia has positions in and has recommended Block, Inc. and Nanosonics Limited. The Motley Fool Australia has recommended Betmakers Technology Group Ltd, Dominos Pizza Enterprises Limited, Flight Centre Travel Group Limited, and MEGAPORT FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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  • Have Telstra shares been a good investment so far this financial year?

    A man casually dressed looks to the side in a pensive, thoughtful manner with one hand under his chin, holding a mobile phone in his hand while thinking about something.

    A man casually dressed looks to the side in a pensive, thoughtful manner with one hand under his chin, holding a mobile phone in his hand while thinking about something.

    The Telstra Corporation Ltd (ASX: TLS) share price is an interesting one considering the telecommunications business has a reputation for being a defensive ASX share.

    Why could it offer more stability than the S&P/ASX 200 Index (ASX: XJO)? Because its customers pay regularly, such as monthly or quarterly. Relatively consistent revenue can mean fairly consistent net profit after tax (NPAT) and cash flow. That’s the theory anyway.

    Certainly, I think people will keep paying their phone bills over other spending categories.

    So, how has the Telstra share price performed in recent times?

    Recent performance

    Since the beginning of 2022, the Telstra share price has declined by 9% while the ASX 200 has declined by 10.9%. The telco takes the win here, slightly.

    Looking at the performances in the first quarter of FY23, Telstra shares were flat. The ASX 200 dropped by 1.4%. Another win for the telco.

    In October, the Telstra share price is down 0.26%, while the ASX 200 is up 4.5%.

    I’d suggest that much of the movement in share prices we’ve seen for Telstra — and many other ASX shares — could be pinned on inflation and rising interest rates. These two factors spark uncertainty. But, in terms of the telco being defensive, it did manage to provide less downside than the ASX 200.

    What could have affected the Telstra share price?

    Investors usually judge a company by looking at its net profit, growth, and outlook of the business.

    The telco told investors that, on a guidance basis, the underlying earnings before interest, tax, depreciation and amortisation (EBITDA) rose 8.4% to $7.3 billion, underlying earnings per share (EPS) increased 48.5% to 14.4 cents, and free cash flow went up 5.9% to $4 billion. Total income dropped 4.7% to $22 billion.

    A particular highlight was that the mobile business saw EBITDA growth of 21.2%. Meantime, postpaid handheld average revenue per user (ARPU) grew 2.9% with 6.4% mobile services revenue growth. Telstra also added 155,000 net retail postpaid handheld services.

    In FY23, total income is expected to be between $23 billion to $25 billion. Underlying EBITDA is expected to be between $7.8 billion to $8 billion.

    One of the most interesting things to me about the Telstra share price is that the company has announced it’s going to increase prices in line with CPI inflation. Not only can it grow revenue through 5G services, but it can grow its ARPU by increasing its prices. Indeed, it could increase prices each year.

    Brokers rate the Telstra share price as a buy

    A number of brokers rate the telco as a buy.

    For example, Morgan Stanley has an overweight rating on the business, with a price target of $4.60. It thinks that Telstra can benefit from subscribers who move to Telstra after the Optus data hack.

    Morgans rates Telstra shares as add. One of the reasons it’s optimistic is that the telco’s assets may be undervalued. The broker has a price target of $4.60. Telstra shares closed trading on Friday at $3.84 apiece.

    The post Have Telstra shares been a good investment so far this financial year? appeared first on The Motley Fool Australia.

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

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  • Amid the doom and gloom, Pilbara Minerals shares delivered 100% gains in Q1. Here’s why

    a woman wearing full miner's uniform, including a hard hat with lamp, high visibility overalls and vest, smiles in front of mining equipment.

    a woman wearing full miner's uniform, including a hard hat with lamp, high visibility overalls and vest, smiles in front of mining equipment.

    The Pilbara Minerals Ltd (ASX: PLS) share price has been one of the best performers in the S&P/ASX 200 Index (ASX: XJO) over the last few months.

    In the three months to 30 September 2022, the ASX lithium share has seen its share price gain 99%. Between 30 June 2022 to today, it’s up an impressive 137%.

    What’s going on?

    Many ASX shares saw their share prices plummet in the first half of 2022 as markets tried to work out what businesses were worth in this period of high inflation and rising interest rates.

    Inflation can increase company costs and hurt demand. But why do interest rates matter? Billionaire Ray Dalio once said:

    It all comes down to interest rates. As an investor, all you’re doing is putting up a lump sum payment for a future cash flow.

    But while many ASX shares are fairly close to their June lows. The Pilbara Minerals share price has charged higher. For starters, it’s benefiting from the growing demand for electric vehicles.

    I think there are key factors worth noting over the last few months.

    Strong lithium price

    The ASX lithium share has been utilising a digital auction platform called the Battery Material Exchange (BMX) to sell some of its production.

    On 23 June 2022, just before the FY23 first quarter, it auctioned 5,000 dry metric tonnes (dmt) of spodumene concentrate and accepted a price of US$6,350 per dmt.

    On 13 July 2022, it sold 5,000 dmt for a price of US$6,188 per dmt.

    On 2 August 2022, it sold 5,000dmt for US$6,350 per dmt.

    On 20 September 22, it sold 5,000dmt for US$6,988 per dmt.

    Despite all the worries about the global economy, the lithium price has stayed strong in the first few weeks of the FY23 first quarter and then kept growing.

    The commodity price is key for the business because a higher resource price can largely add straight onto its net profit after tax (NPAT) and cash flow. It costs roughly the same to produce the resource, so more revenue for that production is just extra money for the company.

    I think this came through in the company’s FY22 result, which was another positive catalyst for (or supportive of) the Pilbara Minerals share price.

    FY22 report

    The ASX lithium share reported it shipped 361,035 of spodumene concentrate, representing a 28% year-over-year increase.

    Revenue grew by 577% to $1.2 billion. The statutory NPAT jumped to $561.8 million, a huge increase from the FY21 statutory loss of $51.4 million.

    The FY23 outlook was promising. The company has approved expansion to grow production by a further 100,000 tonnes per annum to a combined 640,000 tonnes to 680,000 tonnes per annum. It’s now also progressing towards a final investment decision to expand production to one million tonnes per annum.

    The Pilbara Minerals managing director Dale Henderson said:

    The business is in an enviable position, supplying product into a burgeoning growth market with a clear pathway for further production growth off a performing operating base. Further, chemicals participation with our downstream JV with [South Korean company] POSCO and our midstream project provides another extension of value creation for our shareholders. A very exciting future lies ahead for our business and our shareholders.

    The post Amid the doom and gloom, Pilbara Minerals shares delivered 100% gains in Q1. Here’s why appeared first on The Motley Fool Australia.

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    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 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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  • Why analysts say these ASX 200 dividend shares are buys

    A couple working on a laptop laugh as they discuss their ASX share portfolio.

    A couple working on a laptop laugh as they discuss their ASX share portfolio.

    If you’re looking for additions to your income portfolio, then the two ASX 200 dividend shares listed below could be worth considering.

    Both shares have been rated as buys by analysts and tipped to provide attractive yields in the coming years. Here’s what you need to know:

    Charter Hall Social Infrastructure REIT (ASX: CQE)

    The first ASX 200 dividend share for income investors to look at is the Charter Hall Social Infrastructure REIT.

    This real estate investment trust is focused on investing in social infrastructure properties such as bus depots, government facilities, police and justice services, and childcare centres.

    Analysts at Goldman Sachs are very positive on the company due to its solid outlook, sky high occupancy rate, and long leases. They have put a conviction buy rating and $4.20 price target on its shares.

    The broker is expecting this to underpin growing dividends in the coming years. For example, it is forecasting dividends per share of 17.3 cents in FY 2023 and 18 cents in FY 2024. Based on its current share price of $3.23, this implies yields of 5.35% and 5.6%, respectively.

    QBE Insurance Group Ltd (ASX: QBE)

    Another ASX 200 dividend share that has been tipped as a buy is QBE. It is of course one of the world’s largest insurance companies.

    Analysts at Morgans are very positive on the company due to rising premiums and cost reductions. It recently retained its add rating with a $14.93 price target on its shares.

    Morgans notes that with “strong rate increases still flowing through QBE’s insurance book, investment yields improving and further cost-out benefits to come, we expect QBE’s earnings profile to improve strongly over the next few years.”

    It also expects this to lead to a big increase in dividend payments from next year. Morgans is forecasting a 41.5 cents per share dividend in FY 2022 and then a 76.5 cents per share dividend in FY 2023. Based on the latest QBE share price of $11.73, this equates to yields of 3.5% and 6.5%, respectively

    The post Why analysts say these ASX 200 dividend shares are buys appeared first on The Motley Fool Australia.

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    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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  • Have ASX 200 retail shares been worth buying so far in FY23?

    a woman with lots of shopping bags looks upwards towards the sky as if she is pondering something.

    a woman with lots of shopping bags looks upwards towards the sky as if she is pondering something.

    The S&P/ASX 200 Index (ASX: XJO) retail shares have suffered a sell-off during 2022. But, could FY23 be the year of opportunistic bargain-hunting?

    Let’s have a look at some of the declines we’ve seen so far this calendar year.

    Performance so far this year

    The Wesfarmers Ltd (ASX: WES) share price has fallen by more than 25% this year, though it’s up 6.4% since the end of June 2022.

    The JB Hi-Fi Limited (ASX: JBH) share price is down 17.6% in 2022, but it’s 4.6% higher in FY23.

    The Harvey Norman Holdings Limited (ASX: HVN) share price is down 17.5% for the year yet it has risen 12% from the end of June 2022.

    The Woolworths Group Ltd (ASX: WOW) share price has fallen 13% in 2022 and is down 6.3% in FY23.

    The Premier Investments Ltd (ASX: PMV) share price has fallen 21% in 2021 but it’s up 25% since 30 June 2022.

    How does the ASX 200 Index compare to all of these numbers? In 2022 to date, it’s down by 10.9%. Since 30 June 2022, it’s up by 3%. So, largely, ASX 200 retail shares have performed worse in 2022 but have done better over the past three and a bit months.

    Should investors be looking at ASX 200 retail shares?

    That’s the big question.

    There are plenty of other retailers outside the ASX 200 that have also suffered sizeable falls like Nick Scali Limited (ASX: NCK), Adairs Ltd (ASX: ADH), Universal Store Holdings Ltd (ASX: UNI), Best & Less Group Holdings Ltd (ASX: BST), and Shaver Shop Group Ltd (ASX: SSG).

    Yet every retailer is different. The revenue and net profit after tax (NPAT) growth performance of Wesfarmers is likely to be quite different to JB Hi-Fi’s.

    I also think it’s likely that FY23 and perhaps FY24 won’t show the strength that FY20 and FY21 did. Households may not have as much money to spend in the retail sector because of the impacts of inflation and rising interest rates.

    However, some of these retailers have seen their share prices drop 30%, 50%, or even more.

    Businesses are naturally going to try to find ways to protect and grow their profits. Same-store sales may decline, but retailers can open new stores which might lessen the overall blow. They can also sell more items online. Retailers can expand their ranges and look to grow internationally. They may be able to find ways of being more efficient with costs.

    It’s possible that retail sales may not fall as much as some investors are expecting.

    Another thing that could work in retailers’ favour this year is that many of them could report strong growth in the first half of FY23. Don’t forget, a year ago, a substantial portion of the Australian population was under lockdowns. This also meant that many retail stores faced restrictions.

    Currently, we’re seeing good trading updates from businesses for the first few weeks of FY23. Examples include Wesfarmers, Premier Investments, and Shaver Shop.

    So, in summary, I think that generally, ASX 200 retail shares could be long-term opportunities. However, there could still be plenty of volatility and FY23 may well show sizeable profit declines for a number of them. But I think we may have already seen the worst of the share price pain.

    The post Have ASX 200 retail shares been worth buying so far in FY23? appeared first on The Motley Fool Australia.

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    Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended ADAIRS FPO and Harvey Norman Holdings Ltd. The Motley Fool Australia has positions in and has recommended ADAIRS FPO, Harvey Norman Holdings Ltd., and Wesfarmers Limited. The Motley Fool Australia has recommended JB Hi-Fi Limited and Premier Investments 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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  • 5 things to watch on the ASX 200 on Monday

    An analyst wearing a dark blue shirt and glasses sits at his computer with his chin resting on his hands as he looks at the CBA share price movement today

    An analyst wearing a dark blue shirt and glasses sits at his computer with his chin resting on his hands as he looks at the CBA share price movement today

    On Friday, the S&P/ASX 200 Index (ASX: XJO) finished an improved week with a day in the red. The benchmark index fell 0.8% to 6,762.8 points.

    Will the market be able to bounce back from this on Monday? Here are five things to watch:

    ASX 200 expected to edge higher

    The Australian share market looks set to start the week deep in the red. This follows another selloff on Wall Street on Friday night. According to the latest SPI futures, the ASX 200 is expected to open the day 61 points or 0.9% lower this morning. On Wall Street, the Dow Jones was down 2.1%, the S&P 500 dropped 2.8%, and the NASDAQ tumbled 3.8%. Strong US employment data has given rate hike bets a boost.

    Oil prices jump

    Energy producers such as Santos Ltd (ASX: STO) and Woodside Energy Group Ltd (ASX: WDS) could have a great start to the week after oil prices jumped on Friday night. According to Bloomberg, the WTI crude oil price was up 4.2% to US$92.64 a barrel and the Brent crude oil price rose 3.5% to US$97.92 a barrel. This was an increase of approximately 15% and 10%, respectively, for the week. OPEC’s massive production cut plan was behind the rise.

    Tech shares to fall

    It could be a very difficult day for tech shares such as Block Inc (ASX: SQ2) and Xero Limited (ASX: XRO) on Monday. This follows a selloff on the tech-focused NASDAQ index on Friday night after the release of US employment data. The Block share price on the NYSE ended the session down by over 7%. This doesn’t bode well for its ASX shares today.

    Seek rated as a sell

    The Seek Limited (ASX: SEK) share price could be overvalued according to analysts at Goldman Sachs. This morning the broker has slapped a sell rating and $20.70 price target on the job listings giant’s shares. It said: “[W]e continue to believe that Seek is the most cyclical of our classifieds coverage, with a downturn in volumes likely to drive lower depth adoption.”

    Gold price falls

    Gold miners including Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) could have a subdued start to the week after the gold price dropped on Friday. According to CNBC, the spot gold price was down 0.7% to US$1,709.3 an ounce during the session. Strong US jobs data spurred Fed rate hikes bets and put pressure on gold.

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

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    Motley Fool contributor James Mickleboro has positions in SEEK Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Block, Inc. and Xero. The Motley Fool Australia has positions in and has recommended Block, Inc. and Xero. The Motley Fool Australia has recommended SEEK 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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  • Brokers name 2 growing small cap ASX shares to buy

    Contented looking man leans back in his chair at his desk and smiles.

    Contented looking man leans back in his chair at his desk and smiles.

    If you’re a fan of small cap ASX shares, then you may want to add the two shares listed below to your watch list.

    Here’s what you need to know about these buy-rated small cap ASX shares:

    Readytech Holdings Ltd (ASX: RDY)

    The first ASX small cap share to look at is Readytech. It is an enterprise software provider with a focus on underserved market verticals such as higher education and local government.

    Demand for its sticky software continues to grow and has been underpinning strong recurring revenue growth in recent years.

    This continued in FY 2022, with Readytech reporting revenue of $78.3 million. This was up 16.8% on a like-for-like basis and ahead of its guidance of mid-teens organic growth.

    The good news is that Goldman Sachs is expecting more of the same in the coming years. It is expecting Readytech to “continue to grow mid-teens organically while making accretive acquisitions.”

    In light of its bullish view, Goldman currently has a buy rating and $4.60 price target on its shares.

    Silk Laser Australia Limited (ASX: SLA)

    Another small cap ASX share that has been tipped as a buy by brokers is Silk Laser.

    It is the operator of one of Australia’s largest specialist clinic networks, offering consumers a range of nonsurgical aesthetic products and services. These include laser hair removal, cosmetic injectables (botox etc), skin treatments, body contouring, and skincare products.

    Demand for Silk’s services has been strong in recent years and continued during the pandemic and then in FY 2022. This and recent acquisitions helped the company deliver a 91% increase in sales to $162.7 million.

    And while the current economic environment could be difficult for consumer spending, management remains positive on the future and “expects to continue its growth trajectory in FY23.”

    Wilsons is a fan of the company. The broker currently has an overweight rating and $3.62 price target on its shares.

    The post Brokers name 2 growing small cap ASX shares to buy appeared first on The Motley Fool Australia.

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    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 Readytech Holdings Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended SILK Laser Australia Limited. The Motley Fool Australia has recommended Readytech Holdings Ltd and SILK Laser Australia 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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  • 2 exciting tech ETFs for ASX investors to buy before the market rebounds

    A woman on a green background points a finger at graphic images of molecules, a rocket, light bulbs and scientific symbols as she smiles.

    A woman on a green background points a finger at graphic images of molecules, a rocket, light bulbs and scientific symbols as she smiles.

    If you’re wanting to invest in the tech sector before the market rebounds, then the exchange traded funds (ETFs) listed below could be worth considering.

    Here’s why they could be great options right now:

    BetaShares Asia Technology Tigers ETF (ASX: ASIA)

    The first tech ETF to look at is the BetaShares Asia Technology Tigers ETF. It gives investors easy access to ~50 of the largest technology companies that have their main area of business in Asia.

    These companies, that are known known as Tigers (hence the ETF’s name), include well-known players such as Alibaba, Baidu, Infosys, JD.com, Samsung, and Tencent Holdings. In addition, there are lesser known companies (to Westerners) such as Kuaishou Technology, Meituan Dianping, and Pinduoduo included in the fund that make many Australian tech companies look absolutely tiny.

    Pinduoduo, for example, is an e-commerce platform that connects distributors with consumers directly through an interactive shopping experience. This allows shoppers to team up to buy items in bulk at lower prices. It has an active customer base closing in on 1 billion.

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

    Another tech ETF to consider next week is the VanEck Vectors Video Gaming and eSports ETF. This ETF gives investors exposure to many of the largest companies involved in video game development, eSports, and gaming related hardware and software.

    There are a number of high quality, growing companies that you’ll be owning with the fund. These include game developers Activision Blizzard, Roblox, Take-Two, and Electronic Arts, and graphics processing unit (GPU) developer Nvidia.

    In respect to Roblox, it is the game developer behind the eponymous Roblox online metaverse platform and game creation system. At the last count, Roblox had 52 million daily active users.

    The post 2 exciting tech ETFs for ASX investors to buy before the market rebounds appeared first on The Motley Fool Australia.

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    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 BetaShares Asia Technology Tigers ETF and VanEck Vectors ETF Trust – VanEck Vectors Video Gaming and eSports ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

    from The Motley Fool Australia https://ift.tt/I75stQL