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The Sayona Mining Ltd (ASX: SYA) share price is down 15.5% since last Friday’s close amid a weakening in the materials sector.

Shares in the lithium producer currently trade for 24.5 cents each.

The S&P/ASX 200 Materials Index (ASX: XMJ) is down 2.2% over this period.

Meanwhile, other ASX lithium shares have gained since the close of last Friday.

Pilbara Minerals Ltd (ASX: PLS) is up 8.28% and Allkem Ltd (ASX: AKE) is up 1.96%.

The Sayona Mining share price has been performing poorly over the past week. That’s despite mostly positive developments for the lithium industry at large.

Due to significant volatility, its share price has been riding wild up-and-down whipsaws over the past week.

Let’s cover the company’s highlights.

What’s going on with the Sayona Mining share price?

Sayona Mining joined the S&P/ASX 200 Index (ASX: XJO) on Monday due to changes in the company’s market capitalisation.

Yesterday my Fool colleague Bronwyn included the company in a roundup post of other lithium shares. She noted that Sayona Mining had delivered the second-highest returns year to date out of the top five ASX lithium shares by market cap.

The company’s shares are currently up 86.5% over this period.

And then last Friday, Sayona Mining announced it would restart lithium spodumene production at its North American Lithium site in Canada.

Operations at the site are due to go live in Q1 2023.

Sayona Mining managing director Brett Lynch made the following comments regarding the restart:

We are delighted to see the continued progress towards the recommencement of lithium (spodumene) production at NAL in Q1 2023. Our project team has overcome potential challenges due to proactive forward planning and the early ordering of critical long‐lead equipment items, while the near completion of permitting and procurement puts us in an excellent position.

The post Why is the Sayona Mining share price in the doldrums this week? appeared first on The Motley Fool Australia.

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More reading

• Which ASX lithium shares are performing best in 2022?
• Is it too late to invest in ASX lithium shares? Apparently not…
• These 8 companies joined the ASX 200 on Monday. Here’s how they’re performing
• Here are the top 10 ASX 200 shares today
• These three ASX lithium shares defied Wednesday’s selloff

Motley Fool contributor Matthew Farley 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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The Zip Co Ltd (ASX: ZIP) share price is having a disappointing finish to the week.

In morning trade, the buy now pay later (BNPL) provider’s shares are down 6% to 68.5 cents.

This means the Zip share price is now down almost 85% since the start of the year.

Why is the Zip share price falling?

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

For example, at the time of writing, the Block Inc (ASX: SQ2) share price is down 9% and the Sezzle Inc (ASX: SZL) share price is down over 7%.

This has led to the S&P ASX All Technology index dropping 3.4%, stretching its year to date decline to over 34%.

Today’s weakness has been driven by a selloff of tech stocks on Wall Street over the last two sessions after the US Federal Reserve made another major hike to interest rates.

The central bank also warned that more hikes were coming, which appears to have sparked fears that the US will fall into a recession in the near future.

Where next for Zip’s shares?

Opinion remains extremely divided on where the Zip share price will go from here.

For example, Citi currently has a sell rating and 80 cents price target, which is now higher than where its shares trade. Elsewhere UBS has a sell rating and lowly 45 cents price target.

Finally, the only bull I can find is Ord Minnett with an accumulate rating and $1.10 price target.

Time will tell which broker makes the right call.

The post Why is the Zip share price sinking 6% today? appeared first on The Motley Fool Australia.

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More reading

• 8 ASX 200 shares got kicked out of the index on Monday. How are they tracking?
• Why Imugene, Link, Newcrest, and Zip shares are dropping
• Guess how many companies in the ASX 300 actually make no money
• The ASX 200 is getting a shakeup today. Here’s the tea
• Out in the cold: How are the ASX 200 evictees faring on Monday?

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 Block, Inc. and ZIPCOLTD FPO. The Motley Fool Australia has positions in and has recommended Block, Inc. 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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Mineral Resources Limited (ASX: MIN) shareholders will be a little richer today as the company pays out its latest dividend.

The mining services company is rewarding its shareholders with a fully franked interim dividend of $1 per share.

At the time of writing, the Mineral Resources share price is down 0.41% to $69.67.

For context, the S&P/ASX 200 Index (ASX: XJO) is also heading south to edge 1.16% lower to 6,622.4 points.

Mineral Resources pays out final dividend

Mineral Resources delivered a subdued performance for its full-year result for the 2022 financial year.

In summary, Mineral Resources reported an 8% decrease in revenue to $3.4 billion.

On the bottom line, underlying net profit after tax (NPAT) slid 64% to $400 million.

Behind the result was record iron ore exports offset by lower realised prices due to weakened Chinese demand.

Nonetheless, higher lithium prices and initial lithium hydroxide earnings helped bump up the overall earnings figures.

The biggest loss for shareholders came from the board’s decision to slash the final dividend by 43% over H2 FY21.

Mineral Resources did not declare an interim dividend in the first half of FY 2022. This was because of market uncertainty and a substantial reduction in iron ore prices over the first half of the year.

In FY 2021, the board paid out $2.75 in dividends to shareholders.

When calculating against the current share price, Mineral Resources has a trailing dividend yield of 1.43%.

Mineral Resources share price snapshot

Over the past 12 months, the Mineral Resources share price has risen 46% on the back of the commodity boom.

However, numerous market shocks in 2022 following the Russian war in Ukraine and steep inflationary movements impacted the company’s shares.

Year-to-date, Mineral Resources shares are up 24%.

The company has a price-to-earnings (P/E) ratio of 38.76 and commands a market capitalisation of roughly $13.25 billion.

The post Own Mineral Resources shares? Your dividends are on the way appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Mineral Resources share price up 5% as miners lead the market on Tuesday
• Here are the top 10 ASX 200 shares today
• ASX lithium mania: Is the ‘incredible amount of interest’ sustainable?
• Top brokers name 3 ASX shares to buy next week

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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The Argosy Minerals Limited (ASX: AGY) share price is avoiding the market weakness today and pushing higher.

At the time of writing, the lithium developer’s shares are up 3% to 61 cents.

Why is the Argosy Minerals share price pushing higher?

The Argosy Minerals share price is rising today after the company released an update on its Rincon Lithium Project in Argentina.

According to the release, the current production well rotary drilling program is progressing better than scheduled. Production well PRP-03 has completed and drilled to a depth of 350m and production well PRP-04 is in progress at a current depth of 253m.

Management advised that it is encouraged with the extended depths of the production well drilling and lithium brine pumping test works conducted to date. It feels that this may enhance the outcomes and provide scope for improved results for the next stage estimation and feasibility works.

The current defined exploration target is estimated as 262,000 tonnes to 479,000 tonnes of lithium carbonate. Whereas the combined JORC indicated mineral resource and exploration target estimates outline the potential for 507,000 tonnes to 724,000 tonnes.

Argosy’s managing director, Jerko Zuvela, was pleased with the progress the company is making. He said:

We are pleased with the current progress of drilling works at our Rincon Lithium Project. This has indicated the increased depth extension prospectivity that may lead to considerably increasing the current shallow-depth JORC Indicated Mineral Resource estimate, deliver a brine Ore Reserve estimate, expand our current annual production target and mine-life estimates, and prepare a feasibility study for larger scale operations – all enhancing the long-term viability and status of our project.

The post Argosy Minerals share price charges higher on lithium update appeared first on The Motley Fool Australia.

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More reading

• These three ASX lithium shares defied Wednesday’s selloff
• Investors are obsessed with ASX lithium shares, but what about this other critical battery metal?
• These 6 ASX mining shares are now in the ASX 300
• Could this give some ASX lithium shares the edge?

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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Brokers are always on the lookout for S&P/ASX 200 Index (ASX: XJO) shares that could be opportunities to buy.

Share prices are changing all the time, which can open up different investment opportunities for investors. A drop in share price could turn expert opinion from a hold to a buy on a business.

Results and business updates can change an expert’s view on a business as well. Sometimes a positive outlook can have a boosting influence on the share price of ASX 200 shares.

Let’s have a look at two of the latest ratings.

New Hope Corporation Limited (ASX: NHC)

New Hope has been rated as outperform by the broker Macquarie, with a target price of $6. A target price is where the broker is guessing that the New Hope share price will be in 12 months.

The New Hope share price has risen by more than 160%, Macquarie is suggesting it won’t move much from here.

The broker notes the big dividend. When New Hope announced its FY22 result, it revealed that its realised price for coal went up 178% to $282 per tonne, with net profit after tax (NPAT) rising 1,146% to $983 million.

With that, the ASX 200 share declared a final ordinary dividend of 31 cents per share and a final special dividend of 25 cents per share. That’s a total of 56 cents, so the combined final dividend equates to a grossed-up dividend yield of 13%. The total FY23 grossed-up yield was 19.9%.

In FY23, New Hope is expected by Macquarie to pay a grossed-up dividend yield of 38.5%. However, profit and the dividend are expected to reduce significantly.

IDP Education Ltd (ASX: IEL)

IDP Education has been rated as a buy by the broker UBS with a price target of $35.50. That suggests that the Idp Education share price could rise by more than 25%.

The broker noted the acquisition that the ASX share recently announced which helps it enter the African market.

Let’s have a quick look at what was in that update.

The global education services ASX 200 share, which operates in more than 50 countries, is acquiring Intake Education for up to $83 million.

It’s described as a leading student placement agency that has operations across Nigeria, Ghana, Kenya, Philippines, Thailand, Taiwan, India and the UK.

The IDP Education interim CEO Murray Walton said:

The geographic footprint of Intake complements IDP’s global network. Intake is the market leader for UK study in several countries and has the largest and most respected agency in West Africa which will accelerate IDP’s growth ambitions in this emerging region.

Using UBS’ profit predictions, the IDP Education share price is valued at 44 times FY23’s estimated earnings and 31 times FY24’s estimated earnings.

The post 2 ASX 200 shares rated as buys by leading brokers appeared first on The Motley Fool Australia.

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More reading

• Is the party just getting started for ASX 200 coal shares?
• Brokers name 2 ASX dividend shares to buy
• Here are the top 10 ASX 200 shares today
• 3 ASX 200 shares paying out ‘special’ dividends in 2022
• Top brokers name 3 ASX shares to buy today

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 Idp Education Pty 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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The CSR Limited (ASX: CSR) share price has fallen 22% in 2022. That compares to a drop of 11% for the S&P/ASX 200 Index (ASX: XJO). CSR is a relatively small ASX 200 share within the index though.

There is a lot more uncertainty in the local and global economy at the moment. Inflation is rising in Australia and worldwide for a number of reasons. One of those reasons includes higher energy prices amid the Russian invasion of Ukraine.

The current situation is having an impact on the company’s valuation. But, it’s this valuation that is now attracting some professional investors to the business as a potential opportunity.

Let’s have a look at what one analyst is thinking about the business.

A building opportunity with this ASX 200 share

The investment team at Wilson Asset Management recently held an investment webinar to outline their current thoughts on some holdings and sectors.

Sam Koch, a senior analyst at Wilson Asset Management, was answering a question about whether WAM was looking at any companies in the building and construction sectors. His response:

I guess the sector has been heavily beaten up. Everyone is worried about the macro uncertainty with the housing market falling off a cliff, and the like. We’re actually seeing a number of really interesting opportunities. We’re positive on CSR Group, and Maas Group Holdings Ltd (ASX: MGH), which we’ve talked to in the past, both of which actually have significant property holdings which underpin their valuations and have strong order books as well, which will drive stable earnings over the next few years.

We’ve always looked for an attractive entry point, and there’s no better one than when everyone’s worried about the housing market. So we’re seeing a number of really interesting opportunities given the macro uncertainty.

Outlook and buyback

At the end of June 2022, CSR announced an on-market share buyback of up to $100 million. This is in addition to the company’s existing dividend policy. Keep in mind that share buybacks can be supportive of the CSR share price.

CSR CEO and managing director Julie Coates explained that the building products side of the business continues to perform well, with improved operational and customer outcomes across diversified market positions. Its investment plans are to lift capacity, improve performance and drive growth.

Coates said that its “robust balance sheet and strong operational performance” allow it to invest in growth while also increasing returns to shareholders through the buyback.

CSR Chair John Gillam said:

CSR has a strong balance sheet, which supports continued investment in the growth and performance strategy for our building products business. We are also progressing major property development projects that will deliver short and long-term earnings, alongside the hedged aluminium position. This highlights CSR’s strength and prospects for the coming years.

A few months ago, the ASX 200 share outlined the strong pipeline of detached housing projects. CSR expects this to continue in the year ahead as completion times lengthen.

In FY23, the company expects its property division earnings before interest and tax (EBIT) to be around $52 million. In aluminium, it has a significant hedge position. It indicated an earnings range for FY23 between $33 million to $49 million based on the current pricing and cost scenarios. Significant aluminium price and cost volatility are expected to impact the final result.

CSR share price snapshot

Over the last month, ASX 200 share CSR’s price has dropped around 2%.

The post Why this boring ASX 200 share is actually really ‘interesting’ right now: expert appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Top ASX dividend shares to buy in September 2022

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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The OZ Minerals Limited (ASX: OZL) share price is edging higher today.

In morning trade, the copper producer’s shares are up almost 1% to $26.25.

This compares favourably to the ASX 200 index, which is down over 1% in early trade.

What’s going on with the OZ Minerals share price today?

Investors have been bidding the OZ Minerals share price higher following the release of a major announcement.

According to the release, the OZ Minerals board has given its final investment approval to develop its fourth operating asset. This will be the West Musgrave copper-nickel project in Western Australia and will come with a direct capital investment of approximately $1.7 billion.

In order to fund the investment, OZ Minerals has entered into credit-approved commitment letters with key relationship banks to provide a new $1.2 billion, 18-month syndicated term loan facility.

Management believes that the syndicated debt facility allows the company to maximise stakeholder value by commencing development of the project while optimising the final funding mix, which may come from a range of sources.

It has suggested that these could include existing debt facilities, long-term infrastructure leases, and the potential to sell a minority interest in the project to a strategic partner. The latter follows significant in-bound expressions of interest from parties with a strategic interest in modern minerals over the last ~6 months.

It certainly appears to be worth the investment. Management expects average nickel production of 35,000 tonnes per annum and average copper production of 41,000 tonnes per annum during the first five years. This is expected to underpin average post tax net cash flow of $280 million to $340 million a year.

Management commentary

OZ Minerals Chief Executive Officer, Andrew Cole, said:

Investment approval for West Musgrave unlocks one of the largest undeveloped nickel projects in the world and, with expected lowest quartile costs, it is set to generate ~$9.8 billion7 undiscounted cashflow over its 24-year operating life.

Along with the support we have received from the Ngaanyatjarra people and Western Australian government, with all key regulatory approvals now in place, a number of our relationship banks have provided credit approved commitment letters for a new $1.2 billion syndicated facility to support development of the West Musgrave Project in addition to our existing facilities.

We are also considering the option to selldown a minority interest in the Project to a strategic partner building on the significant in-bound interest we have received over the past six months.

This sentiment was echoed by OZ Minerals chair, Rebecca McGrath. She said:

The Board’s approval of West Musgrave is a fundamental step towards realising OZ Minerals’ strategy to evolve into a modern minerals producer set to supply global copper and nickel markets as the world moves into the de-carbonisation and electrification era.

The post OZ Minerals share price higher following $1.7 billion thumbs up appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• BHP share price gains amid improved Oz Minerals takeover rumours
• What’s with ASX copper shares on Thursday?
• Why a leading fund manager rates these 2 ASX 200 mining shares as buys
• Why harpooning Oz Minerals could be ‘beneficial’ for BHP shares: fundie

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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The PointsBet Holdings Ltd (ASX: PBH) share price is tumbling lower on Friday.

This is despite the release of a positive announcement by the sports betting company.

At the time of writing, the PointsBet share price is down 4.5% to $1.95.

Why is the Pointsbet share price falling?

The PointsBet share price has come under pressure on Friday after weakness in the tech sector offset the release of a positive announcement.

Investors have been selling tech shares after two very poor nights in a row for the NASDAQ index following the latest rate hike by the US Federal Reserve.

The central bank also reiterated its intention to make further aggressive hikes in an attempt to tame inflation, leading investors to believe that a recession is imminent.

At the time of writing, the S&P ASX All Technology index is down 2.6%.

What about the announcement?

Failing to boost the PointsBet share price today was news that the company has received launch authorisation from the Louisiana Gaming Control Board and has taken its first bet in the state.

This marks the 4th state launch under the partnership with Penn National Gaming announced on 1 August 2019 and represents the company’s 12th online sportsbook operation in the United States.

PointsBet is now active in New Jersey, Iowa, Indiana, Illinois, Colorado, Michigan, West Virginia, Virginia, New York, Pennsylvania, and Kansas.

PointsBet US CEO, Johnny Aitken, was pleased with the news. He said:

The PointsBet team is excited to share that we are now officially live in the Pelican state and that Louisiana is our twelfth state of online operations. The sports community of Louisiana, one that our very own brand ambassador Drew Brees is very familiar with, is unmatched with their devotion and passion for their local teams, the New Orleans Saints of the NFL, New Orleans Pelicans of the NBA and nationally recognized college football programs.

We look forward to delivering Louisiana sports fans, from Bourbon Street to the Bayou, our fast, premium sports betting products. And, with the NFL and CFB season in full swing, the timing is perfect to showcase our live betting capabilities.

The post PointsBet share price sinks despite US expansion update appeared first on The Motley Fool Australia.

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More reading

• 8 ASX 200 shares got kicked out of the index on Monday. How are they tracking?
• The ASX 200 is getting a shakeup today. Here’s the tea
• Out in the cold: How are the ASX 200 evictees faring on Monday?
• Here are the 10 most shorted ASX shares
• Pointsbet share price closes lower after a tough day on the ASX

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 Pointsbet Holdings Ltd. The Motley Fool Australia has recommended Pointsbet Holdings Ltd. 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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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.

Apple Inc. (NASDAQ: AAPL) is in a near duopoly with Samsung in one of the world’s most addictive products: smartphones. Combined, the two account for over half the global smartphone market. In the U.S., however, the iPhone commands about 50% of the market.

Warren Buffett, one of Apple’s largest shareholders and most prominent cheerleaders, believes Apple is the best business he knows in the world. Throughout the iPhone’s upgrade cycles, Apple has consistently improved its design and functionality to meet ever-changing consumer tastes. Perhaps most importantly, the iPhone’s camera gets better with every new version. iPhone users can quickly snap the highest-quality selfies and videos of their kid’s soccer games and post them to social media in a heartbeat.

Referring to lines of iPhone loyalists who wait outside Apple stores in advance of its new releases, Buffett’s right-hand man Charlie Munger quipped: “I’ve got zillions of friends who’d almost part with their right arm before they’d part with their iPhone. That’s a hugely powerful position to be in.”

But it’s more than just the iPhone that’s keeping people entrenched in the Apple ecosystem.

Why Apple’s iPhone is a “sticky” product

Buffett has referred to the iPhone as a “sticky” product, meaning customers repeatedly return to Apple’s smartphones. Aside from the iPhone’s design appeal, users like the brand because of its add-on services. iPhone users can purchase additional iCloud storage, download music from the Apple Music app, and conduct touchless payments with Apple Pay. And if iPhone users wanted to switch to a competitor, they might have to abandon precious data stored in their iCloud or reenter their cards on a new payment platform.

The tiny fees customers gladly shell out for these widely used services may seem like small potatoes for the behemoth company, which has a market cap approaching $2.5 trillion, but the financial impact may surprise you. Because these services are digital, there is minimal additional cost when an iPhone customers add a service. That means every new dollar in revenue Apple receives from its service is more profitable than the last.

Apple generated  $32.7 billion of revenue from its services in 2017, when it first disclosed the segment’s results. The gross margin on its service revenue that year was  55%. By 2021, service revenue had doubled to  $68.4 billion, and gross margin had leaped to nearly  70%.

Apple’s services business has plenty of room to keep growing. For example, only about 75% of iPhone customers have activated Apple Pay, and many haven’t begun to use it. Yet Apple Pay has already overtaken Mastercard Incorporated (NYSE: MA) in transaction volume over the last 12 months. As users continue to adopt Apple Pay and download new music, Apple’s services segment can become a larger part of the overall business, which has grown from about 20% of overall gross margin in 2017 to over 31% last year.

Where will Apple be in five years?

Apple has a huge advantage over many companies in that its increasingly profitable service segment is also its fastest growing. After you factor in that the segment also makes iPhone users more loyal to the company, you can see why Buffett loves the company.

AAPL Shares Outstanding data by YCharts

Another reason Buffett likes Apple is its share repurchases. The company has religiously retired shares over the last 10 years, which increases the percentage of the company existing shareholders own. Similarly, repurchasing shares en masse also increases its earnings per share, all else being equal.

When you combine Apple’s business advantages over other companies with its ability to retire shares at a prodigious clip, you have a stock that has a high probability of outperforming the market over the next five years. Investors are wise to follow Buffett’s lead, considering he bought more shares in the first and second quarters of this year as the stock retreated from its 2021 highs.

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

The post Where will Apple be in 5 years? appeared first on The Motley Fool Australia.

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BJ Cook 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 Apple and Mastercard. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Apple and Mastercard. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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

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The Webjet Limited (ASX: WEB) share price is attractive to Wilson Asset Management senior analyst Shaun Weick. The ASX travel share was one of the names picked out as opportunities.

Webjet has been through a lot of volatility since the onset of the COVID-19 pandemic. There has been pressure on the balance sheet as the business worked to reduce its cash burn to ensure it had enough money to get through to the other side of the lockdowns and closed borders.

But, we now seem to be through that tricky period and investors like Weick are becoming confident on the company’s outlook.

Expert view on the Webjet share price

Speaking on a recent WAM investment webinar, Weick said:

Overall, we are positive on the travel and entertainment sector. I guess, despite emerging consumer pressures, we think that the revenge spending continues. Consumers continue to allocate more of their spend towards services and travel over goods.

So the key stocks we like in the space are online OTA and B2B beds distributor Webjet. We believe they’ve made significant structural improvements in that business model that will underpin market share gains, and the operating leverage will deliver earnings well in excess of pre-COVID as we move through the other side.

What was in the latest ASX travel share update?

Webjet recently said that its online travel agency (OTA) business “continues to leverage our strong brand, scalability and superior technology to increase our market leadership as the number one OTA in Australia and New Zealand and we see opportunity to expand both our domestic and international market shares.”

In what could be a positive sign for the Webjet share price, the company revealed a few weeks ago that bookings were tracking at 95% and that all three of its businesses were profitable for FY23 so far.

The company noted that for WebBeds, bookings have been ahead of pre-pandemic levels since May, July was the record for total transaction value for WebBeds and August was higher than July. During the peak seasonal months of July and August, it hit its aspirational target of an earnings before interest, tax, depreciation and amortisation (EBITDA) margin of 62.5%. WebBeds is also targeting $10 billion of TTV and it wants to grow in North America.

When will it hit pre-COVID profit?

Before COVID, it achieved EBITDA of $157.8 million. It has done a lot of work so that it will be more efficient, more profitable and with a higher market share when travel returns. It’s now seeing that strategy unfold.

Profitability could be a key factor for the Webjet share price as the recovery happens.

Management expects the business to beat pre-pandemic earnings in FY24, well ahead of when the broader travel market is expected to return to 2019 levels. Specifically, in its OTA business, it expects to return to pre-pandemic earnings levels once international airline capacity returns to 2019 levels.

The Webjet managing director John Guscic said:

We are excited for the limitless opportunities that lie ahead.

WebBeds has so much opportunity ahead of it. All the things we’ve done to transform the business means we are confident growth will continue for the remainder of FY23, despite all current well documented macro headwinds.

Webjet share price snapshot

Over the last month, Webjet shares have gone up around 6%.

The post Why this expert is picking Webjet shares to ride the reopening to new heights 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 recommended Webjet Ltd. 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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