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3 big tailwinds that could make contrarian investors rich in the bear market
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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

Contrarian investing isn’t for everyone. Most of the time, it’s easier to just buy shares of an index fund rather than develop a unique investing thesis that takes advantage of going against the grain.

But if you know about a few of the market’s tailwinds right now, you’ll be in a much better position to make contrarian bets that have the possibility of large payoffs. Let’s investigate three such tailwinds (as well as a couple of stocks that are likely to benefit from them) so that you’ll have a few actionable ideas about how to make your own contrarian plays this year.

1. Valuations are plummeting

By definition, contrarian investors make bets that are against the market’s consensus. When they make those bets, each dollar they invest gets them a certain amount of value, whether it’s measured by the price-to-earnings (P/E) ratio or the price-to-sales (P/S) ratio or another metric. Thanks to the ongoing bear market, valuations are falling sharply, meaning that investors get more bang for their buck when they buy.

Take a heavily bruised growth stock like Cresco Labs (OTC: CRLBF), for example, a cannabis cultivator whose shares fell by more than 61% so far this year. At the end of the first quarter last year, its P/S ratio was 5.5 whereas now it’s 1.1. Over the last three years, its trailing 12-month revenue grew by 574%, reaching over $865.8 million.

In other words, anyone starting a contrarian position betting that Cresco’s shares are going to appreciate in the long term is getting a lot more revenue for every dollar they spend than they could have previously. And if that thesis is correct, it’ll reward investors who buy the shares now.

2. Bear markets don’t last forever

While it’s more of a fact of life than a tailwind, contrarian investors know that bear markets can’t continue on for eternity. Eventually, market sentiment improves for some reason, and growth returns. But when the market turns, it can be hard to realize in the moment, and timing the market is nearly impossible. And that’s why contrarians are often comfortable with continuing to buy shares even as the market continues to fall.

Then, perhaps years later, the market’s recovery powers outsized returns for those who were daring enough to get in when others were too afraid. Of course, you’ll have much better chances if you focus on companies with some competitive advantage that other investors are undervaluing or disregarding.

3. Innovation isn’t on pause

The final tailwind for contrarians is innovation. Innovation doesn’t stop when a company’s stock falls. Consider Intuitive Surgical (NASDAQ: ISRG), a business that develops robotic surgical suites for use in hospital operating rooms. Its shares are down by 46% over the last 12 months, but at the same time, its research and development (R&D) expenses over the past 12 months total some $767 million.

Sooner or later, its ongoing investments in developing new robotic tools and other high-tech products will likely pay off in the form of new revenue growth. It’s true that investors could opt to stay on the sidelines until those hardware projects are closer to generating income than they are now. But contrarians who are willing to bet today on the company’s technological progress could see superior returns to those who wait. That’s doubly true in markets like Intuitive’s, which are driven by disruptive innovations that steal market share from legacy products.

To be clear, you don’t need to be a contrarian to get the benefit of investing in innovative companies doing their thing. It’s just that contrarians tend to be the ones willing to ignore the short-term share-price movements to focus on what really matters: activities that make businesses more valuable tomorrow than they are today. For Intuitive Surgical, those activities are a perpetual process, and that’s why its innovations are worth betting on, even if its stock might drop through a bear market.

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

The post 3 big tailwinds that could make contrarian investors rich in the bear market appeared first on The Motley Fool Australia.

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Alex Carchidi 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 Cresco Labs Inc. and Intuitive Surgical. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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

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30 September 2022
The Pound, AGL, Volatility, IKEA and Warren’s Wisdom
I’m going to try something different, today.

Rather than writing something that’s my usual length and detail, I’m going to share a few different thoughts about business, investing and the economy.

If you love it, let me know. If you hate it, well… let me know (nicely).

A pounding for the Pound

There is politics, there is ideology, and there is what UK PM Liz Truss and Chancellor of the Exchequer (essentially the UK Treasurer), Kwasi Kwarteng are doing to the UK economy.

Normally, the big end of town would cheer tax cuts for high income earners, but it’s been those self-styled Masters of the Universe who have been quick with their condemnation – not in terms of polls or editorials (though those have been scathing), but they’ve voted with their wallets.

The British Pound plunged, the Bank of England has had no other option but to buy UK government bonds (while other central banks are doing the opposite), and the net result of both is that inflation will likely rise from already staggering levels.

There’s brave. There’s crazy brave. And then there’s the UK government. This probably won’t end well for them.

AGL’s bet on the future of energy

Plenty has been said and written about Mike Cannon-Brookes’ influence at AGL Limited (ASX: AGL). But it came to a head this week, with the company announcing that it would bring forward the shuttering of a Victorian power plant, called ‘Loy Yang A’, that is reportedly the largest polluter and energy producer in the country. It’ll now happen in 2035, a decade earlier than originally planned.

Maybe it’s MCB’s green dream showing through. It’s almost certainly part of the story. But here’s a question for you: If I asked you to spend money, between now and 2035, to produce energy from coal between 2035 and 2045, you’d probably baulk at the request. No-one knows what government policy will be in 13 years. And the forecasts are that (some) renewables will be producing (perhaps much) cheaper energy by that point. Are you going to spend many millions for an uncertain return?

Environmental activism aside, I wouldn’t want AGL betting on coal past 2035 if I was a shareholder.

Rollercoaster, thy name is share prices

I’ve covered market volatility regularly over the past few months, but one additional quick thought from me: If you were looking to buy a whole business, either as an investment or to run as an owner-operator, I reckon you’d be pretty keen if you were offered a company that was having some temporary challenges that was being sold at a cheap price. A cafe with a 3-month road work project going on out the front. An importer whose sales had fallen due to the temporary unavailability of a key product. You get the idea.

Warren Buffett (he’s kind of a big deal) bought shares in American Express when the company had been the victim of a fraud, and the share price sank. He reasoned (correctly) that the storm would pass, and the business would continue to be a wonderful one to own, particularly at a knockdown price.

A little more recently (it feels like longer!) Woolworths Group Ltd (ASX: WOW) lost its way, and the share price fell 45% between mid-2014 and mid-2016. Was this a broken business? Not in any permanent sense, but it was hard to find any love for the company. Fast forward to today, and the shares have doubled over the last six years. Add in dividends, and the gain is closer to 140%.

Or, the market as a whole, which turned a hypothetical $10,000 into $130,000 over the 30 years to June 30 this year, despite fear, panics, slumps and crashes (thanks Vanguard for the info).

It pays to keep your eyes on the horizon, not the headlines.

Holy meatballs, IKEA!

As if 2022 wasn’t already bad enough (well, the whole 2020s so far, really!), apparently IKEA is rolling out new stores without meatballs. Without the whole food hall, actually.

I know. Me too.

But, other than being a crime in and of itself, the announcement underscores a bigger point for investors.

What IKEA is doing from one direction is what Amazon (I own shares) is doing from the other: it’s opening much smaller stores, essentially as showrooms, with the products ordered there and either delivered or picked up from a nearby location.

This is increasingly going to be the future of retail, particularly in urban and suburban areas. There’s a proliferation of same-day delivery companies cropping up in Australia (it’s been increasingly common for a while in the US), and Amazon recently moved its Prime program from free 2-day shipping to next-day in many of Australia’s urban centres.

At the same time, Premier Investments Limited (ASX: PMV) (it owns Just Jeans, Smiggle, Peter Alexander and more) already books almost a quarter of its revenue online (and online sales are growing 4 times as fast as total sales). And get this: Myer Holdings Ltd (ASX: MYR) recorded a 34% jump in online sales last year, and its sales are now almost 25% online, too.

Yes, that Myer!

Retail is (still) changing. The winners and losers are yet to be decided, and it likely won’t be a ‘winner takes all’ outcome. Business models will – and will need to — continue evolving. As should investors.

Quick takes

Overblown: I wouldn’t bet that coal prices stay at or near record highs. Cyclical commodities are called that – both ‘cyclical’ and ‘commodities’ – for a reason.

Underappreciated: There’s a story in today’s Australian about the role of EVs as ‘rolling batteries’ for household use. Your mileage may vary, but it is a potential game changer for both the grid (no/fewer household batteries required) and transport (the ROI of EVs goes up, perhaps a lot, when you consider that dual role).

Fascinating: The climate pressure on companies is building, from both consumers and institutional investors (Super funds, in particular). Love it or hate it, it’s changing the way businesses, particularly large ones, are making decisions. It could also make ‘bad’ businesses good investments if share prices fall as a result.

Where I’ve been looking: I’m a sucker for quality stuff that’s been beaten down. I think we’ll look back on September and October 2022 as an attractive time to buy some companies that rely on discretionary spending. The fall in share prices for retail and travel companies, in particular, strikes me as very overdone. Doesn’t mean it can’t fall further, by the way – just that I think these prices may well look very attractive in hindsight.

Quote: “Success in investing doesn’t correlate with IQ. Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing.” – Warren Buffett.

Fool on!

The post The Pound, AGL, Volatility, IKEA and Warren’s Wisdom appeared first on The Motley Fool Australia.

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American Express is an advertising partner of The Ascent, a Motley Fool company. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Scott Phillips has positions in Amazon. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Amazon. The Motley Fool Australia has recommended Amazon 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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30 September 2022
Looking to buy CBA shares? Here’s what you need to know
Commonwealth Bank of Australia (ASX: CBA) shares are in the red today, down 1.1% to $92.06.

This comes amid a broader sell-off, following a big down day in US and global markets, which sees the S&P/ASX 200 Index (ASX: XJO) down 0.6% at this same time.

That’s today’s price action.

Now, here’s the latest you should know if you’re investing in CBA shares.

Oil and gas project financing remains on the cards

Despite a growing global and domestic push towards zero emissions, CBA is taking a more pragmatic approach to its financing intentions for fossil fuel projects.

Noting that it has 800,000 customers living in areas highly dependent on coal mining, the bank has flagged 2030 as the year it will cease financing thermal coal projects.

But speaking at yesterday’s CBA climate briefing, chairman Paul O’Malley said there is no set date to end financing for new oil and gas projects.

Addressing the government’s 43% emissions reduction target by 2030, O’Malley said (courtesy of The Australian): “Having a federally legislated target of 43%, my engagement with investors is we’ve now pivoted quite dramatically to how we deliver as distinct to whether or not we should deliver.”

CEO Matt Comyn added: “We have a clear policy around oil and gas… The policy sets the boundaries, and then we make decisions during the course of the year within those boundaries.”

Which isn’t to say CBA shares won’t be major backers of renewable energy sources.

According to O’Malley:

Storage capacity even between now and 2030 has to increase sixfold. Grid scale, solar and wind has to increase three times. For those projects to get up they need to access funding and CBA is absolutely wanting to be a lead lender to the increased renewables we need to support the grid.

CBA shares get APRA reprieve

In other news hitting the wires this morning, the Australian Prudential Regulation Authority (APRA) has removed the remaining $500 million capital add-on it applied to the bank following a range of governance and accountability failures.

APRA initially hit CommBank with a $1 billion capital add-on in May 2018. That was reduced to $500 million in November 2020.

The regulator says CBA has complied with the remediation program and addressed all the required recommendations.

The bank said that removing the remaining half of the capital add-on will see an increase of 0.15% to its Common Equity Tier 1 capital.

How have CBA shares been tracking?

CBA shares have modestly outperformed the benchmark in 2022, down 10% compared to a 14% loss posted by the ASX 200.

The post Looking to buy CBA shares? Here’s what you need to know appeared first on The Motley Fool Australia.

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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.

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30 September 2022
Why is the Anson Resources share price nosediving 8% on Friday?
The Anson Resources Ltd (ASX: ASN) share price has run out of steam on Friday.

In late morning trade, the lithium explorer’s shares are down almost 8% to 30 cents.

Why is the Anson Resources share price sinking?

Investors have been selling down the Anson Resources share price despite there being no news out of the company today.

However, it is worth noting that the company’s shares rocketed higher on Thursday. This could mean that profit taking is weighing on them today. Particularly given how the lithium industry is underperforming on Friday, with most lithium shares trading notably lower.

For example, the Lake Resources N.L. (ASX: LKE) share price is down 3.5% and the Pilbara Minerals Ltd (ASX: PLS) share price is down 2.5%.

What got investors excited yesterday?

The Anson Resources share price surged higher yesterday after the company revealed that it has discovered multiple new lithium-rich zones.

This follows recent resource definition drilling at the Cane Creek 32-1 well at the Paradox Lithium Project in Utah, USA.

Management advised that drilling at Cane Creek intersected lithium-rich brines in the additional Clastic Zones 45, 47, 49 and 51. This is on top of the recently reported lithium-rich brines in Clastic Zone.

The release notes that assay results from Clastic Zones 43, 45, 47 and 49 average 100ppm Li, which is ~17% higher than the average grade of Clastic Zones 17, 19, 29 and 33 included in the recent resource upgrade.

Another positive is that the supersaturated brines are chemically similar to those of the previously sampled Clastic Zones in other wells which already have indicated and inferred JORC Resources.

The post Why is the Anson Resources share price nosediving 8% on Friday? 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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30 September 2022
Why has the Core Lithium share price just been halted?
The Core Lithium Ltd (ASX: CXO) share price won’t be going anywhere for the moment.

This comes as the company requested that its shares be placed in a trading halt.

At the time of writing, the lithium developer’s shares are frozen at $1.105 apiece. It’s worth noting that Core Lithium shares have lost more than 20% in value over the past week.

Why is the Core Lithium share price halted?

According to its latest release, Core Lithium is launching a fully underwritten $100 million institutional placement.

This comprises 97.1 million new fully paid ordinary shares that will be created at a price of $1.03 per share. The offer represents a 6.8% discount to the last close price on 29 September.

Core Lithium noted the recent exploration success and favourable lithium pricing market, in which it intends to “pursue new and aggressive exploration programs”.

The company is seeking to expand its ore reserves and mineral resources through its drilling campaign at the Finniss Lithium Project in the Northern Territory.

Core Lithium advised it is on schedule to deliver the first lithium concentrate production in the first half of 2023.

What will the funds be used for?

The monies raised from the capital raise will be used to fund a number of initiatives that include the following:
- Accelerated resource definition, extensional and exploration drilling;
- Advancing development of the proposed BP33 underground mine;
- Introducing a night shift to facilitate an accelerated commissioning of the Finniss concentrator;
- Enhancing project management and corporate development capabilities; and
- Working capital.
Core Lithium CEO Gareth Manderson commented:

The Placement enables Core to pursue several new growth initiatives. We will be well-funded for a larger exploration campaign on our prospective landholding.

Recent exploration success at BP33, Core’s proposed second lithium mine, supports the deployment of growth capital and project development, enabling Core to capitalise on the current strength in lithium prices.

About the Core Lithium share price

Despite tumbling this month, the Core Lithium share price has posted a gain of almost 90% in 2022.

In contrast, the S&P/ASX 200 Materials Index (ASX: XMJ) is up down 8% year-to-date.

Based on valuation grounds, Core Lithium has a market capitalisation of approximately $1.92 million with roughly 1.74 billion shares outstanding.

The post Why has the Core Lithium share price just been halted? appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras 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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30 September 2022
Rio Tinto share price smashes ASX 200 amid lithium production news
The Rio Tinto Limited (ASX: RIO) share price is currently up by around 3.5%. That represents quite a bit of outperformance considering the S&P/ASX 200 Index (ASX: XJO) is down 0.5%.

It’s not the only resources company that is doing well today. The BHP Group Ltd (ASX: BHP) share price is up 1.9% as well.

But it may not just be typical market movements that Rio Tinto investors are responding to.

The business also announced a promising update regarding its lithium plans.

Spodumene concentration production started

Rio Tinto announced yesterday that it has started producing spodumene concentrate, which is an important mineral used in the production of lithium for batteries. This is being done at a demonstration plant in its Rio Tinto iron and titanium (RTIT) Quebec operations at its metallurgical complex in Canada.

The plan for the plant is that it will demonstrate, at an industrial scale, a new spodumene concentration process that provides lithium oxide grades and recoveries “well above the industry average”. It “offers the environmental benefit of not using chemical products and generating only dry, inert residues”.

RTIT managing director Stéphane Leblanc said:

Rio Tinto is exploring new, sustainable ways to extract battery materials for the energy transition. We are seeing strong interest in the market for a North American supply of spodumene concentrate to support production of lithium batteries.

Our demonstration plant will allow us to further validate the innovative spodumene concentration process developed at our Critical Minerals and Technology Centre as we consider moving to commercial-scale production.

Rio Tinto says it’s committed to the battery materials sector and lithium’s role in a low carbon future.

The ASX mining share is focused on the Rincon lithium project, a large undeveloped lithium brine project located in Argentina. Rio Tinto describes this as a “long life, scaleable project” that “has the potential to have one of the lowest carbon footprints in the industry”.

Energy Resources of Australia independent valuation report

The ASX mining share made another announcement yesterday, acknowledging the independent valuation report released by Energy Resources of Australia (ERA) on 26 September 2022, to determine a valuation of the company as it aims to address material cost and schedule overruns on the Ranger rehabilitation project in Australia’s Northern Territory.

Rio Tinto’s position is that the terms of any ERA funding solution should reflect “fair value” regarding the material cost overruns and interim funding requirements, that funds raised will be dedicated strictly to rehabilitation and not any future development, and the Traditional Owners, the Mirarr People’s consistently publicly stated opposition to developing the Jabiluka uranium deposit.

The mining company stated that, in its view, “the independent valuation report prepared by Grant Thornton and adopted by the independent board committee to help set the price for a future entitlement offer, fails to appropriately recognise the long-standing opposition of the Mirarr People to further uranium mining on their country. Rio Tinto understands that this causes distress for the Mirarr elders and community.”

Rio Tinto has offered to subscribe for its full pro-rata entitlement at an offer price that “fully reflects Rio Tinto’s view of fair value”. This offer to ERA is still open.

The ASX 200 mining share said that it’s committed to “ensuring the rehabilitation is completed to a standard that will establish an environment similar to the adjacent Kakadu National Park”.

Rio Tinto share price snapshot

While Rio Tinto shares are up today, they are down by 21% over the last six months. They are also down 6% year to date and by a similar amount over the past 12 months.

The post Rio Tinto share price smashes ASX 200 amid lithium production news 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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30 September 2022
Why US Fintech stocks crashed today
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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

What happened

Shares of fintech stocks Upstart (NASDAQ: UPST), Affirm (NASDAQ: AFRM), and SoFi (NASDAQ: SOFI) were in crash mode today, with each down between 8% and 9% as of 2:27 p.m. ET.

Lately, these beaten-down fintech stocks have been among the most volatile to both the upside and the downside, and their movements are largely based on macroeconomic news.

Today happened to be a big down day in the market following yesterday’s big rally, as interest rate and recession fears, along with perhaps some end-of-quarter liquidations by hedge funds, likely played a role in their synchronous decline.

So what

Stocks have been in free fall in September, especially technology growth stocks following a recent spike in long-term Treasury bond yields, and fintech stocks appear to be caught up in the selling.

Young, high-growth fintech stocks appear to be seen as a risk-on trade by investors, and investors are fleeing risk today amid so much global uncertainty. Today, U.S. jobless claims came in lower than expected, reflecting the very tight job market and potentially fueling “sticky” inflation. That could spur the Federal Reserve to continue hiking interest rates at a rapid pace.

If inflation and interest rates continue their rapid rise, higher interest rates may actually help some mature, profitable banks with low funding costs, but smaller, unprofitable fintechs will likely see their value diminish, since their profitability is still well into the future.

On the other hand, there is also another danger that central banks “overdo it” in their fight against inflation, pushing rates higher until we have a broad recession. That could lead to joblessness and higher charge-offs for loans. Investors will likely also take a skeptical stance with these three stocks, as they don’t have as long a history of underwriting as large, older banks. This is especially true for Upstart, which claims its AI models are a new and better way to underwrite loans than traditional FICO scores.

Fintech stocks also have the problem of funding their loans when rates rise. Large, national banks such as Bank of America (NYSE: BAC), for instance, can charge very low deposit rates due to their size, national scale, and recognizable brand. That allows them to generate lots of leverage in net interest income as rates rise, as they can charge higher interest rates without having to raise deposit rates as much.

That’s not the case with fintechs. For instance, Upstart had to resort to using its balance sheet this year to fund some of its loans. That was a departure from its initial business model of selling all loans to third-party banks and credit unions, as loan buyers balked when interest rates rose rapidly.

For its funding, Affirm relies on warehouse facilities, securitizations, and other forward-flow commitments. These are generally higher-rate options than bank deposits.

Yet even SoFi, which acquired a bank charter earlier this year that gave it access to deposits, has had to raise its deposit rate APY up to 2% as of August, up from 1.5% as recently as June, in order to attract depositors.

Basically, the smaller you are and the earlier you are in your corporate life as a financial company, the higher your funding costs will be relative to large institutions. That tends to put these companies further out on the risk curve, which opens them up to charge-offs.

Now what

With these stocks down so much from their highs, between 82% and 95%, they could have substantial upside if the economy avoids a recession and interest rates moderate. However, there is significant uncertainty on those fronts, with most economists skeptical the Fed can engineer a “soft landing.”

Thus, these former highfliers remain high-risk, high-upside bets that a recession will either be avoided or that it will be shallow and mild. They remain appropriate only for investors comfortable making volatile, high-upside bets that could also yield very big losses.

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

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- This US growth stock could double, according to Wall Street
Billy Duberstein has positions in Bank of America. Bank of America is an advertising partner of The Ascent, a Motley Fool company. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Affirm Holdings, Inc. and Upstart Holdings, Inc. The Motley Fool Australia has recommended Upstart Holdings, Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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

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30 September 2022
Why has the Appen share price just dropped to a new 5-year low?
It has been another disappointing day for the Appen Ltd (ASX: APX) share price on Friday.

In morning trade, the artificial intelligence data services company’s shares are down 5% to $3.09.

This means the Appen share price is now trading at a new five-year low.

Why is the Appen share price at a five-year low?

Investors have been selling down the Appen share price on Friday amid significant weakness in the tech sector.

This follows a very poor night of trade on Wall Street for tech stocks. This led to the tech-focused NASDAQ index falling a sizeable 2.85% overnight, with Apple leading the way with a decline of almost 5%.

In morning trade in Australia, the S&P/ASX All Technology Index is down 2.6%.

What else?

In addition, on Thursday, Facebook’s parent Meta warned that the “macroeconomy remains tough and volatile” and it would aim to cut costs accordingly.

This may have sparked fears that demand from Meta, one of Appen’s biggest customers, could soften in the near term.

And if other tech giants, such as Google, are also feeling the heat from the tough economic environment, demand for artificial intelligence data services from them could also lessen and put Appen at risk of falling short of its guidance for FY 2022.

While Appen hasn’t provided any real guidance, it has advised that it expects the second half to bring higher revenue. Some investors may be doubting that this will happen now based the Appen share price decline today.

Time will tell if that is the case.

The post Why has the Appen share price just dropped to a new 5-year low? 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 Appen Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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30 September 2022
If I’d invested $1,000 in Pilbara Minerals shares at the start of 2022, here’s what I’d have now
ASX lithium shares have been on a rollercoaster this year, and the turbulence may have taken a toll on Pilbara Minerals Ltd (ASX: PLS) investors.

At one point, the S&P/ASX 200 Index (ASX: XJO) lithium favourite had tumbled more than 40% year to date. Fortunately it’s turned things around, rocketing to a record high of $5.08 last week.

But are Pilbara Minerals shares a good investment?

To the victor go the spoils

Assuming I’d invested $1,000 in Pilbara Minerals stock on the first trading day of 2022, I probably would have bought 284 shares for $3.52 apiece.

And that would have marked a good short-term investment. My initial $1,000 holding would have been worth $1,312 at yesterday’s close, having returned 31.25% in that time. Not too shabby, if I say so myself.

But it wouldn’t have been a worry-free buy. The Pilbara Minerals share price closed at $2.04 in mid-June.

Meaning, at its lowest point, my holding’s value would have been a disappointing $579.

And while I’d love to factor in dividends to the equation, I unfortunately cannot. Though, one top broker previously tipped the company to pay its maiden dividend this financial year.

So, with my wishful investment having shot up in value over the last 10 months – despite plenty of volatility – is the stock worth snapping up right now?

Is it too late to buy Pilbara Minerals shares?

The ASX 200 lithium stock recently surpassed a major milestone, posting its first profit. The company brought in $1.2 billion of revenue and posted a $561.8 million after-tax profit over the 12 months ended 30 June.

It also boasts a decent cash position and expects to up its production in coming years amid surging demand for lithium.

However, the future of the Pilbara Minerals share price will likely be contingent on a single outside factor – lithium prices.

Of course, expected demand levels will likely drive up the price of the ‘white gold’, thereby boosting Pilbara Minerals’ bottom line.

Analysts at Wilsons are among many expecting big things from the commodity’s value as demand outstrips supply in coming years, as my Fool colleague Tony reports.

Meanwhile, Macquarie expects Pilbara Minerals shares will surge to $5.60, slapping the stock with a buy rating, The Motley Fool Australia’s James reports.

All in all, I think the future still looks bright for the ASX 200 lithium favourite. If I somehow found myself back at the start of 2022, I know where I’d be putting – and keeping – my cash.

The post If I’d invested $1,000 in Pilbara Minerals shares at the start of 2022, here’s what I’d have now appeared first on The Motley Fool Australia.

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

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30 September 2022
Own Evolution Mining shares? Get ready to dig into your dividends
The Evolution Mining Ltd (ASX: EVN) dividend will be landing into shareholder accounts today.

This comes at an opportune time as investors would have seen their wealth fall significantly in the past couple of months.

At the time of writing, Evolution shares are fetching for $2.01 per share, up 1.26%.

When factoring the last 2 months, the gold miner’s shares are down almost 25%.

What’s happened to Evolution shares?

With gold prices falling to multi-year lows, this has caused a negative sentiment on the Evolution share price.

Just last week, the yellow metal reached a low of around US$1,630 before climbing back to US$1,663 at the time of writing.

Evidently, selling gold at a lower price puts a squeeze on the company’s revenue margins.

This is being driven by the global economic slowdown as well as the US Federal Reserve aggressively ramping up interest rates to combat inflation.

What about the Evolution dividend?

After the company reported its full-year result, the board declared a fully-franked final dividend of 3 cents apiece.

This brings the full-year dividend to 6 cents per share, down 50% year on year.

And is the 19th consecutive dividend paid to shareholders for a total of $1,053 million since 2013.

Evolution has a current dividend yield of 2.98%.

Evolution share price snapshot

It has been a rollercoaster ride for Evolution investors, with its shares reaching a multi-year low of $1.805 on Tuesday.

The company’s share price is down more than 50% in 2022.

Evolution commands a market capitalisation of approximately $3.64 billion and has over 1.83 billion shares on its registry.

The post Own Evolution Mining shares? Get ready to dig into your dividends appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras 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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30 September 2022