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The commodity trade of 2022 is continuing to go strong with companies all along the chain, from mine to metal, still catching a strong bid.

Businesses involved with energy-based commodities have been standouts, with the prices for various raw materials underpinning their operations soaring to record highs this year. And the pace of upside isn’t slowing.

As well, there are new entrants into the arena, bringing with them an entirely new subsector– electric vehicles, and renewable energy.

But who can forget the old rams in the back paddock either, the likes of iron ore, crude oil and gold?

The new age of ASX 200 mining shares

It all sounds really exciting within the mining domain right now. Buzz words like green energy, electric mobility, ‘sanctions’ and the likes are filling the airwaves on a daily basis.

In fact, it can all get a bit overwhelming.

Investing in mining stocks used to be somewhat of a concrete formula, with selective opportunities from diversified mining giants producing the world’s iron ore, all the way down to speculative wildcat’s exploring for gold, for instance.

Like just about all sectors however, we’ve got to adapt with the times. And with that, I’ve covered several ways in which investors can gain exposure to ASX 200 mining shares, backed by the analytical rigour of some of our finest mining analysts here in Australia. Read on.

Where to choose, who to pick?

Gone are the days when individual stock picking was the aim of the day. We know far too much about the benefits of diversification to portfolios.

Plus, we also live in the information age, where content is freely available at the click of a button. Finally, as we’ve seen this year, commodities and mining stocks both like trend following, and move in cycles.

It is for these reasons that investors should think in terms of a particular trend or ‘theme’ that is driving share price returns.

This opens up the floodgates of opportunity for investors by allowing a more pragmatic, diversified approach to investing, versus concentrating positions into 1 or 2 speculative bets.

As we’ve seen to date, various investment themes arise in mining based on demand/supply and prices of commodities in the market. Lithium is case in point here.

Meanwhile, diversification is important not just from a risk management perspective. It provides investors multiple sources of return as well.

Consequently, portfolio managers at Jevons Global recommend to form a “core basket”, or selection of shares, when trying to allocate capital to the mining space.

This includes those investors buying mining stocks for their chunky dividends this year.

Diversified exposure to investment ‘themes’

Using the electric vehicle (EV) theme as an example, it’s clear there are multiple entry points for investors to consider.

We have EV stocks, battery technology companies, and also the miners extracting lithium in its raw forms for example.

On first glance, one might automatically turn to lithium shares to play the EV mining space, seeing as it tends to command most of our attention.

Let’s think a little more laterally, however.

Investors can gain equally as exciting exposure to the space via ASX 200 miners and producers of rare earths, Jevons Global says.

That’s because these metals are critical in the development of EVs.

This is smart and logical investing, positioning at an integral point along the electric vehicle supply chain – versus just the main ‘ingredient’ itself [lithium].

Keeping this in mind, there’s any number of ‘themes’ that Aussie savers can lean towards.

For instance, those bullish on steelmaking, or economic growth in emerging markets such as India and Brazil (where steel consumption has risen markedly in recent years) might also consider going long nickel and iron ore companies – the two mined ingredients to make steel.

And with further support from mining analysts at JP Morgan in its 2022 Energy paper, the central point remains – investing in a basket of companies, rather than picking a single name.

Moreover, this can be easily achieved through the use of thematic ETFs, that do the heavy lifting for us as investors. With ETFs, investors can hold a diversified portfolio of companies with just 1 single instrument.

The Betashares Global Energy Companies ETF – Currency Hedged (ASX: FUEL) and Global X Battery Tech & Lithium ETF (ASX: ACDC) are 2 examples that do just this.

Bringing it together

Whilst we can go on all day on various ways to identify and invest in ASX 200 mining shares, the main points raised here are key.

Identifying investment themes (versus individual companies), selecting a basket of shares (versus just 1 or 2 stocks for diversification), and understanding the benefits of investment vehicles like ETFs are paramount.

All-in-all, the same rules and mantras regarding risk and money management still apply.

The post How do investors decide which ASX 200 mining shares to buy? appeared first on The Motley Fool Australia.

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More reading

• The history-making BHP dividend is being paid out today. Here’s the lowdown
• Why is the BHP share price lagging the ASX 200 today?
• This is how I found a 15-bagger ASX share: fund manager
• $18 billion of ASX dividends are being paid out this week. Here’s the lowdown
• Here’s what this top broker is saying about the BHP share price

Motley Fool contributor Zach Bristow 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 BetaShares Global Energy Companies ETF – Currency Hedged. 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 A2 Milk Company Ltd (ASX: A2M) share price looked good value enough for a fund manager to jump on after the company’s FY22 result.

A2 Milk is a large infant formula and liquid milk business. It also has a sizeable presence in international markets like China and the United States.

It has gone through a difficult period during the COVID pandemic as daigou buyers stopped purchasing in the same volumes as pre-COVID times. The business also saw its profit margins drop, including the earnings before interest, tax, depreciation and amortisation (EBITDA) margin.

Vote of confidence

Wilson Asset Management likes to find undervalued growth companies where there’s a catalyst that could help drive the valuation higher.

Talking on a recent investment webinar, senior equity analyst Shaun Weick said this about A2 Milk shares:

A2 Milk is always a very topical one. Yeah, we actually have bought some shares coming out of the FY22 result. Yeah, we thought it was a very, I guess, clean set of numbers in the context of them taking their medicine around inventory, which they needed to do.

So going forward, they’ve guided to high single-digit revenue growth and a bit of operating leverage, we think that looks very achievable. And the balance sheet is very strong. They’ve got a billion dollars in net cash on the balance sheet. They’ve initiated a $150 million buyback, which starts in a couple of weeks. So that’s sort of the next catalyst we’re looking for there. And, short interest still remains reasonably elevated on this one at 4%.

So there’s still scope for incremental buying to move in. So yeah, we’re actually positive on that one from here.

What has A2 Milk guided?

The guidance can have a positive effect on the A2 Milk share price if it’s signalling growth.

In the FY22 result, A2 Milk outlined its outlook.

Management said that Chinese label infant formula sales are expected to be up in FY23 with “significant growth” in sales in the first half of FY23 year over year. English label infant formula sales are also expected to be up in FY23.

Australian liquid milk sales are expected to remain “broadly in line with FY22”, with reduced in-home consumption as lockdowns finish.

US liquid sales are expected to be up in FY23, driven by continued growth in core liquid milk. A “significant improvement” in EBITDA losses is expected as well.

Overall, the business is expecting “high single digit” revenue growth in FY23, with a lot of the growth coming in the first half. The FY23 gross profit margin is expected to be “broadly in line” with FY22. Cost of goods increases relating to increasing milk, ingredient and packaging costs will be offset by price increases, mix benefits, and cost mitigation initiatives.

A2 Milk share price snapshot

Over the past month, A2 Milk shares have risen by 16%.

The post Why this expert acquired a thirst for A2 Milk shares following the company’s latest results appeared first on The Motley Fool Australia.

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More reading

• A2 Milk shares: Buy, hold, or fold?
• Could the A2 Milk share price be ready to leave the ‘doghouse’?
• Leading fund manager sees “material upside” to the a2 Milk share price
• Broker says the A2 Milk share price can charge even higher
• Why A2 Milk, BHP, Lovisa, and Nickel Industries shares are charging higher

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 A2 Milk. 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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Fund manager Wilson Asset Management (WAM) has identified two top small-cap ASX shares in one of the portfolios it manages that could be investment ideas.

WAM operates several listed investment companies (LICs). Some focus on larger companies like WAM Leaders Ltd (ASX: WLE) and WAM Capital Limited (ASX: WAM).

There’s also one called WAM Microcap Limited (ASX: WMI) which focuses on small-cap ASX shares with a market capitalisation under $300 million at the time of acquisition.

WAM says WAM Microcap targets “the most exciting undervalued growth opportunities in the Australian microcap market”.

These are the two small-cap ASX shares the fund manager outlines in its recent monthly update.

Austin Engineering Ltd (ASX: ANG)

WAM described Austin Engineering as a business that partners with mining companies, contractors and equipment manufacturers to create engineering solutions such as truck bodies, trays and buckets. The company’s headquarters are in Perth.

Last month, the business announced it was buying Australian mining equipment manufacturer Mainetec for $19.6 million.

The fund manager believes that the acquisition will allow Austin Engineering to grow its excavator mining offering for international markets such as the United States at a reduced cost.

August also saw the business release its result during reporting season. FY22 net profit after tax (NPAT) beat the previous guidance provided. Total revenue increased to $203.3 million. Earnings before interest, tax, depreciation and amortisation (EBITDA) was in line with the upgraded forecast of $32.5 million.

Concluding the optimistic case for the small-cap ASX share, WAM said:

With an enlarged order book, strong cash position and increasingly efficient operating base, we believe Austin Engineering is well-positioned to continue to deliver on what has been achieved during FY22.

MMA Offshore Ltd (ASX: MRM)

The other pick is a specialist in providing high-specification marine vessels. It also offers a suite of marine and subsea services to the offshore energy sector, government defence, and wider maritime industries.

In August, the company announced its FY22 result which showed a 19.5% rise in revenue to $283.8 million.

It also improved its balance sheet by reducing its net debt during the year.

The fund manager explained its positivity about this small-cap ASX share:

We remain positive on MMA Offshore as the company continues to trade at a discount to its net tangible asset value despite continuing to see positive market momentum returning to the oil, gas and renewables. Further, we believe the company is well-positioned to take advantage of the exponential growth in offshore wind power developments.

The post 2 small cap ASX shares that are ‘exciting’: fund manager appeared first on The Motley Fool Australia.

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More reading

• Top broker names 2 ASX dividend shares to buy
• ‘Deep value’: 2 ASX shares this expert will pounce on this dip
• Here are 2 ASX 200 blue chip shares that experts rate as buys
• 5 things to watch on the ASX 200 on Friday
• 2 ETFs for ASX income investors to buy for dividends

Motley Fool contributor Tristan Harrison has positions in WAM MICRO 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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Searching for dividend shares to buy? Listed below are two that the team at Morgans has slapped buy ratings on.

Here’s what the broker is saying about them:

Dexus Industria REIT (ASX: DXI)

Morgans thinks Dexus Industria could be a dividend share to buy. This is due to its attractive valuation and exposure to industrial and logistics assets.

The broker currently has an add rating and $3.25 price target on its shares. It commented:

DXI’s portfolio is valued at $1.76bn and is weighted 79% towards industrial and logistics assets. The weighted average cap rate is 5.1%; WALE 5.9 years; and occupancy 97%. DXI is trading at a discount to NTA, offers an attractive yield with solid underlying portfolio metrics and has near/medium-term growth opportunities via the development pipeline.

Morgans is forecasting dividends per share of 16.4 cents in FY 2023 and 16.9 cents in FY 2024. Based on the latest Dexus Industria share price of $2.60, this will mean yields of 6.3% and 6.5%, respectively.

QBE Insurance Group Ltd (ASX: QBE)

Another dividend share to buy according to the broker is QBE. It feels the tide is turning for the insurance giant and the next few years could be very positive for the company and its shareholders.

Morgans has an add rating and $14.93 price target on its shares. The broker said:

With strong rate increases still flowing through QBE’s insurance book, and further cost-out benefits to come, we expect QBE’s earnings profile to improve strongly over the next few years. The stock also has a robust balance sheet and remains relatively inexpensive overall trading on ~9.1x FY23F PE

Its analysts are expecting dividends per share of 41.8 cents in FY 2022 and then 77 cents in FY 2023. Based on the latest QBE share price of $11.92, this will mean yields of 3.5% and 6.5%, respectively.

The post Top broker names 2 ASX dividend shares to buy appeared first on The Motley Fool Australia.

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More reading

• Brokers say these ASX 200 dividend shares are buys now
• Analysts name 2 ASX 200 dividend shares to buy
• ‘Sweet spot’: Citi names 2 ASX 200 shares that are ‘inexpensive’ right now

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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As stock markets around the world digest the consequences of the US Federal Reserve and Bank of England meetings this week, many ASX shares remain heavily discounted.

Shaw and Partners portfolio manager James Gerrish told his Market Matters newsletter that the Australian market will rise heading into Christmas.

“We’re not expecting any major surprises from the Fed and/or BOE but we do believe another relief rally will then become a strong possibility.”

As such, buying up cheap stocks now could prove fruitful in the coming period.

Here are two ASX shares that tempt Gerrish’s team right now:

‘Value has been restored’

The Market Matters team is looking to add construction materials provider James Hardie Industries plc (ASX: JHX) to its flagship growth portfolio.

The share price has lost almost 43% since the start of the year.

“James Hardie is highly leveraged to the US housing market, which, like our own, is understandably out of favour as interest rates surge higher,” said Gerrish.

“But there’s already plenty of bad news factored into this stock and sector.”

James Hardie shares went into the Queen’s memorial holiday at $32.54 each. 

The update delivered during last month’s reporting season showed “nothing too untoward”, according to Gerrish, and that 80% of the analyst community currently rates the stock as a buy.

“We believe deep value is slowly approaching into current weakness,” he said.

“While another dip under $30 cannot be discounted in today’s hawkish environment, we believe value has been restored and the stock’s in a definite accumulation zone.”

Earnings that rise with inflation + reliable dividend

In the income portfolio, Gerrish’s team favours infrastructure owner APA Group (ASX: APA).

“The owner & operator of gas transmission and distribution assets in Australia offers two key things we like in this uncertain environment,” said Gerrish.

“Predictable earnings that rise with inflation (90% of earnings linked to CPI) and a dependable dividend that is now back up above 5% given the share price weakness.”

Indeed, the APA share price has plunged 15.9% since 8 August.

The Market Matters team has held the stock in the past, and will buy back in when the price sinks to the $10 mark.

APA shares hit the Thursday public holiday sitting at $10.24 apiece.

Gerrish evaluates APA shares compared to bond yields.

“APA generally trades at a 2.8% premium to the 10-year bond yield,” he said.

“While it is currently only 1.63% above 10-year yields, below $10 and applying a more typical payout, we’re getting closer to this number.”

The post ‘Deep value’: 2 ASX shares this expert will pounce on this dip appeared first on The Motley Fool Australia.

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More reading

• Looking to buy ASX shares? Expert reveals ‘one metric to assess the quality of a business’
• These are the top ASX 100 buy ideas from Macquarie
• How I’d invest $50,000 in ASX dividend shares for retirement, if I had to start from scratch
• Why is the James Hardie share price having such a stellar end to the week?
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Tony Yoo 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 APA Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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If you are looking to bolster your portfolio with some ASX 200 blue chip shares, you may want to look at the two listed below.

Here’s why these ASX 200 shares are highly rated by experts right now:

Coles Group Ltd (ASX: COL)

The first ASX 200 share that could be a buy is supermarket giant, Coles.

Coles could be a good option for investors in the current environment due to its defensive qualities, strong market position, positive outlook, and favourable exposure to rising inflation.

In addition, the company continues to work hard on its refreshed strategy, which is focusing on cutting costs with automation and efficiencies. This includes two new warehouses with Ocado that are expected to boost its online business in 2023.

Analysts at Morgans remain very positive on the company. They currently have an add rating and $20.00 price target on its shares.

Another positive is that Coles shares a significant portion of its profits with its shareholders. Morgans expects this to lead to the company paying fully franked dividends of 65 cents per share in FY 2023 and then 66 cents per share in FY 2024. Based on the latest Coles share price of $16.60, this will mean yields of 3.9% and 4%, respectively, over the next two years.

REA Group Limited (ASX: REA)

Another ASX 200 share that could be a buy right now is property listings company REA Group.

It is the owner over the realestate.com.au website (among others), which is dominating the ANZ market. For example, in FY 2022, the company averaged 12.7 million unique visits each month, which represents 62% of Australia’s adult population. And these people didn’t just visit once. REA reported a total of 124.1 million average monthly visits, which is 3.36x greater than its nearest competitor.

It is thanks to this dominant market position, together with new acquisitions and revenue streams, that REA Group has been tipped to grow strongly in the coming years.

Goldman Sachs is one of those brokers tipping solid growth in the coming years. In light of this, its analysts currently have a buy rating and $164.00 price target on the company’s shares.

The post Here are 2 ASX 200 blue chip shares that experts rate as buys appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Friday
• Looking to buy ASX shares? Expert reveals ‘one metric to assess the quality of a business’
• Viva Energy share price leaps 5% on Coles acquisition
• Coles share price falls despite $300m Coles Express sale
• Coles shares on watch after massive $300 million selloff to Viva Energy

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended COLESGROUP DEF SET. The Motley Fool Australia has recommended REA 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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On Wednesday, the S&P/ASX 200 Index (ASX: XJO) was well and truly out of form and sank deep into the red. The benchmark index dropped 1.6% to 6,700.2 points.

Will the market be able to bounce back from this on Friday and end the week on a high? Here are five things to watch:

ASX 200 expected to sink again

The Australian share market looks set to end the week in the red following two consecutive nights of sizeable declines on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open 52 points or 0.8% lower this morning. In the United States, the Dow Jones was down 0.35%, the S&P 500 dropped 0.85%, and the Nasdaq tumbled 1.4% lower. Investors have been selling down stocks amid recession fears following another big hike from the US Federal Reserve on Wednesday night.

Oil prices rise

Energy producers such as Beach Energy Ltd (ASX: BPT) and Woodside Energy Group Ltd (ASX: WDS) could have a decent finish to the week after oil prices pushed higher overnight. According to Bloomberg, the WTI crude oil price is up 0.7% to US$83.52 a barrel and the Brent crude oil price is up 0.6% to US$90.40 a barrel. Oil price rose on Russian supply concerns.

Coles rated as a sell

The Coles Group Ltd (ASX: COL) share price could be heading lower from current levels according to analysts at Goldman Sachs. This morning the broker has retained its sell rating and $15.60 price target on the supermarket giant’s shares. This follows news that Coles is selling its Coles Express business. Goldman said: “We do not view this transaction as material to impact our view on the core supermarkets business given the relative size of the segment compared to the group’s business.”

Gold price rises

Gold miners including Newcrest Mining Ltd (ASX: NCM) and St Barbara Ltd (ASX: SBM) could finish the week on a relatively positive note after the gold price edged higher overnight. According to CNBC, the spot gold price is up 0.3% to US$1,680.30 an ounce. This followed the softening of the US dollar and treasury yields.

Premier Investments results

The Premier Investments Limited (ASX: PMV) share price will be on watch today if the retail conglomerate finally releases its full year results. The company didn’t release its FY 2022 results as expected on Wednesday, so today looks set to be the day. According to a note out of Goldman Sachs, its analysts are expecting the Smiggle owner to report revenue of $1,416 million and EBITDA of $480.4 million.

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

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More reading

• Why Imugene, Link, Newcrest, and Zip shares are dropping
• Viva Energy share price leaps 5% on Coles acquisition
• Coles share price falls despite $300m Coles Express sale
• Coles shares on watch after massive $300 million selloff to Viva Energy
• Could international demand keep boosting Woodside shares for the next 20 years?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended COLESGROUP DEF SET. The Motley Fool Australia has recommended 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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If you’re building an income portfolio but don’t feel like you have sufficient funds to maintain a truly diverse portfolio, then exchange traded funds (ETFs) could be the answer.

There are a number of ETFs that have been set up to give investors exposure to a collection of dividend shares. All through a single investment.

Two that could be worth considering are listed below:

BetaShares S&P 500 Yield Maximiser (ASX: UMAX)

The first ETF for income investors to consider is the BetaShares S&P 500 Yield Maximiser.

This ETF has been designed to generate attractive quarterly income and reduce the volatility of portfolio returns. To achieve this, BetaShares has implemented an equity income investment strategy over a portfolio of shares comprising the S&P 500 Index.

This index is of course home to 500 of the largest companies listed on Wall Street. Among the companies you’ll be investing in include Apple, Exxon Mobil, Johnson & Johnson, Microsoft, and United Health.

At the last count, its units were providing investors with a 6.4% distribution yield.

Vanguard Australian Shares High Yield ETF (ASX: VHY)

Another ETF that could be a good option for income investors is the Vanguard Australian Shares High Yield ETF.

This ETF provides investors with exposure to companies that have higher than average forecast dividends. Importantly, this is done with diversification in mind. Vanguard restricts the proportion invested in any one industry to 40% of the total ETF and 10% for any one company. This ensures that you’re holding a diverse collection of dividend shares.

Among the companies included in the fund are Commonwealth Bank of Australia (ASX: CBA) and the big four banks, as well as mining giants such as BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO).

The Vanguard Australian Shares High Yield ETF currently trades with an estimated forward dividend yield of 5.8%.

The post 2 ETFs for ASX income investors to buy for dividends appeared first on The Motley Fool Australia.

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More reading

• Top ASX dividend shares to buy in September 2022
• Here are 2 ASX dividend shares with attractive yields
• Could these ASX ETFs soon play a bigger role in Aussie super funds?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended BetaShares S&P500 Yield Maximiser. The Motley Fool Australia has recommended Vanguard Australian Shares High Yield Etf. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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It’s fair to say that investing in the small side of the share market carries more risk than other areas.

However, if your risk tolerance allows for it, having a bit of exposure to this side of the market could be a good thing for a balanced portfolio due to the potential returns on offer.

After all, if you can find a future mid or large cap whilst it is still a small cap, the returns could be incredible.

With that in mind, listed below are two small cap ASX shares that have been tipped as buys. They are as follows:

Hipages Group Holdings Ltd (ASX: HPG)

The first ASX small cap share to look at is Hipages. It is a leading online platform and software as a service (SaaS) provider that connects consumers with trusted tradies.

The Hipages platform helps tradies grow their business by providing job leads from homeowners and organisations looking for qualified professionals.

Goldman Sachs is a very big fan of Hipages and believes “HPG presents a compelling long term growth opportunity as it scales to become the leading trade services marketplace in Australia.”

The broker currently has a buy rating and $2.20 price target on its shares.

Silk Laser Australia Limited (ASX: SLA)

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

It is one of Australia’s largest specialist clinic networks. Silk offers a range of nonsurgical aesthetic products and services including laser hair removal, cosmetic injectables, skin treatments, body contouring, and skincare products.

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

Pleasingly, management remains positive on the future and “expects to continue its growth trajectory in FY23.”

This went down well with the team at Wilsons. In response to its results, the broker has put an overweight rating and $3.62 price target on the company’s shares.

The post 2 growing small cap ASX shares analysts rate as buys appeared first on The Motley Fool Australia.

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More reading

• Goldman Sachs names 3 mid cap ASX shares to buy
• Goldman Sachs names 2 exciting small cap ASX shares to buy
• SILK Laser share price surges as FY22 earnings beat guidance
• Goldman Sachs names 2 ASX shares to buy right now
• Hipages share price sinks as ‘perfect storm’ hits profit

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 Hipages Group Holdings Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended SILK Laser Australia Limited. The Motley Fool Australia has positions in and has recommended Hipages Group Holdings Ltd. The Motley Fool Australia has recommended 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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Warren Buffett is one of the world’s richest people and has been a leading investor for decades. I think there are some interesting All Ordinaries (ASX: XAO), or All Ords, ASX shares that would fit right into the Berkshire Hathaway portfolio.

Berkshire Hathaway owns plenty of banks in its portfolio, but there are plenty of other businesses that it invests in, including furniture.

Included in the Berkshire Hathaway portfolio are: Jordan’s Furniture, Nebraska Furniture Mart and Star Furniture. With that in mind, I think that Nick Scali Limited (ASX: NCK) shares would fit into Warren Buffett’s investment strategy for a number of reasons.

Management team

Warren Buffett likes to find businesses that have good management teams. The current managing director of the business is Anthony Scali, who joined the business in 1982. He has almost 40 years’ experience in furniture retailing. He owns just over 11 million Nick Scali shares. That’s a hefty holding considering the Nick Scali share price is around $10 at the moment.

I think it’s a very good sign that the business is still managed by the same family. It naturally makes Anthony Scali very motivated to continue managing the business in a long-term, sustainable way. Ordinary shareholders are very aligned with management.

Growth potential

Nick Scali is looking to grow in a number of different ways.

Warren Buffett likes to find businesses that could have a long growth runway so that they have plenty of compounding potential.

The All Ords ASX share is looking to grow its Nick Scali store network in Australia to at least 85 stores. It’s expanding geographically into New Zealand. It recently bought the Plush furniture business, which also has a store rollout plan. Nick Scali also wants to grow its online sales across the business.

Dividends

Warren Buffett isn’t exactly known for being a dividend investor. But, Nick Scali’s dividend payments are a good boost for overall returns from this business.

In FY22, the All Ords ASX share paid a final dividend of 35 cents per share (up 40%) and total dividend of 70 cents per share (up 6.7%).

The full-year dividend translates into a grossed-up dividend yield of 9.75% at the current Nick Scali share price.

Outlook

Uncertainty may be increasing amid an increase in inflation. Nick Scali itself said that “given the current global economic environment, the business will face challenges in respect of potential rising freight costs and inflationary pressure on operating costs over the next 12 to 24 months”.

But, despite that, it had an elevated order book at the end of June. It also gets a boost from the revenue of the acquired Plush business. It’s expecting the FY23 first-half revenue to be “materially above” the previous year.

July trading was “positive”, with total written sales orders for the group of $43.2 million, up 64.1%.

Foolish takeaway

With the Nick Scali share price valued at just 11x FY22’s earnings, I think it could be worth jumping on considering it has dropped by around 33% in 2022. I think this decline more than makes up for the possible economic decline that could happen in the next 12 months.

The post Why I think Warren Buffett should buy this ASX All Ords share appeared first on The Motley Fool Australia.

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More reading

• Why is the Nickel Industries share price dipping on Wednesday?
• Here’s why the ASX 200 could be set up for an almighty rally before the end of this horrible year for stocks
• ‘Better chance of making good money when markets are down’: fundie
• 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 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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