Tag: Stock pick

Megaport Ltd (ASX: MP1) shares have risen almost 40% over the past 12 months, but according to the analysts at Macquarie, new contract wins make the case for further strong rises even more compelling.

Macquarie has released a new research report into Megaport, with an upgraded price target, which I’ll get to shortly.

First, let’s look at the company’s recent news.

Major new contract wins lead to revenue upgrade

Megaport said earlier this week that it had struck three new AI infrastructure contracts worth $978.6 million in total.

The new contracts increase the company’s annual recurring revenue (ARR) to about $1.1 billion, and the company would also book $322.6 million in prepayments from the contracts.

Megaport added:

The three agreements, two of which are with new customers, have a combined total contract value of approximately US$685.0M ($978.6M ) and encompass GPU and CPU compute,  network, and storage for AI applications and inference workloads. These contracts are expected to contribute approximately US$162.7M ($232.4M1) in ARR. Megaport has secured 2 power and space for the new strategic customer contracts.  

The company said it had started procurement for the equipment needed to replenish its GPU pool to fulfil the new contracts, and it had also secured the power and space required for the new equipment.

Megaport Chief Executive Officer Michael Reid said:

Since April, we’ve announced approximately $2.3 billion in total strategic contract value. Earlier deployments, new contracts, and Network growth underpin our upgraded FY27 revenue and EBITDA margin guidance. Customers have committed approximately $323 million in prepayments on today’s contracts, supporting the infrastructure investment behind future growth. “We’re broadening our customer base, replenishing our GPU pool, and expanding our AI inference platform. Our progress has been extraordinary, and we remain focused on delivery and disciplined investment. We’re just getting started.

Megaport upgraded its full-year guidance, saying revenue was now expected to be $720 million to $810 million up from $620 million to $730 million.

The company’s EBITDA margin is now expected to be 42% to 44%, up from 38% to 40%.

Megaport shares looking cheap

Macquarie said in its research note on Megaport that the company’s GPU pool was a strategic advantage.

They said:

Capacity can initially support on-demand workloads but be redirected to longer-term contracts as opportunities arise. This allows MP1 to respond quickly to demand, bringing forward billing while reducing utilisation and funding risk.

Macquarie said Megaport had AI exposure with shorter lead times and less capital expenditure than data centres and neoclouds.

Following this week’s update, Macquarie increased its price target for Megaport from $32 to $34.70.

If achieved, this would be a 68% increase from the current level of $20.65.

Megaport is valued at $4.91 billion.

The post How high does Macquarie think Megaport shares will go? appeared first on The Motley Fool Australia.

More reading

• Megaport shares fly 204% in just 6 months. Can they keep climbing?
• Here are the top 10 ASX 200 shares today
• ASX 200 holds steady as investors brace for a big afternoon
• Megaport shares on watch after locking in almost $1 billion of new AI deals
• Megaport lifts FY27 outlook after landing $1B in new AI infrastructure deals

Motley Fool contributor Cameron England has positions in Megaport. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group and Megaport. The Motley Fool Australia has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Yancoal Australia Ltd (ASX: YAL) share price is in focus after the company announced it had completed the acquisition of an 80% interest in the Kestrel Coal Mine, adding a high-quality, long-life metallurgical coal asset to its portfolio.

What did Yancoal Australia report?

• Completed acquisition of an 80% stake in the Kestrel Coal Mine, Queensland
• Upfront cash consideration of US$1.85 billion paid at completion
• Funded through available cash and a five-year US$1.2 billion syndicated loan facility
• Contingent cash consideration up to US$550 million subject to coal price benchmarks
• Yancoal to recognise production, revenue, and earnings from Kestrel from 1 October 2026

What else do investors need to know?

The Kestrel Coal Mine is a large-scale, long-life asset located in Queensland’s Bowen Basin and is known for its premium metallurgical coal. This acquisition increases Yancoal’s scale and product diversification, strengthening its footprint in the Australian coal industry.

Yancoal’s liquidity remains well-supported, with a US$200 million working capital facility undrawn as of completion. The company plans to issue a detailed circular to shareholders by 23 November 2026, outlining further information and independent reports relating to the acquisition.

What did Yancoal Australia management say?

CEO Sharif Burra said:

The acquisition of an 80% interest in the Kestrel Coal Mine represents a strong strategic fit for Yancoal and adds a high-quality, long-life metallurgical coal asset to our portfolio. Kestrel delivers increased scale and diversification to Yancoal’s portfolio; it adds a premium metallurgical coal to our product mix. The acquisition positions us to deliver greater value to our shareholders and consolidates Yancoal’s position as a leading Australian coal miner. We have worked closely with EMR, Adaro and KCG management over the past months to facilitate integration of Kestrel into the Yancoal portfolio. We look forward to working closely with the committed Kestrel employees, and Mitsui, our joint venture partner and owner of 20% of Kestrel, to continue to add value to the mine, local communities and stakeholders.

What’s next for Yancoal Australia?

Yancoal intends to integrate Kestrel’s operations swiftly, focusing on maximising the value of its new, long-term metallurgical coal asset. The company’s expanded scale and product mix are expected to support its ongoing commitment to delivering value for shareholders.

Looking ahead, Yancoal will be providing shareholders with detailed reports and updates on the full impact of the acquisition over the coming months. The extra scale positions Yancoal well to navigate market dynamics and strengthen its leadership in Australian coal production.

Yancoal Australia share price snapshot

Over the past 12 months, Yancoal shares have risen 14%, outperforming the S&P/ASX 200 Index (ASX: XJO), which has declined 1% over the same period.

View Original Announcement

The post Yancoal Australia share price in focus as Kestrel Coal Mine deal closes appeared first on The Motley Fool Australia.

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Motley Fool contributor Laura Stewart 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. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial summary of the company announcement. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.

The Wesfarmers Ltd (ASX: WES) share price has been a solid performer over the last five years, rising by 40%. Investors may be wondering what’s next after that strength.

The owner of Kmart and Bunnings has proven very effective at reinvesting for long-term growth. Rising earnings is the best thing a company can do to send its share price higher.

I’d need a crystal ball to know exactly what’s going to happen next for Wesfarmers, but we can look at its most recent trading update, analyst earnings estimates and Wesfarmers share price targets to give insights.  

Recent sales performance

The company said with its FY26 result that in this environment its retail divisions are well-positioned to grow profitably, supported by their strong value credentials, focusing on improving the customer experience and expanding addressable markets.

Some of those struggles for Australian consumers include cost of living pressures, uncertainty about the outlook for inflation, house prices, interest rates and tax settings. Costs of doing business are reportedly weighing on business confidence and spending.

To mitigate the higher costs of doing business, of elevated labour, energy and supply chain costs, Wesfarmers’ said it will continue to execute their productivity agendas, through a ‘people-first, digitally-enabled’ approach including digitising operations and leveraging AI and technology to support operating efficiency.

In the first seven weeks of the 2027 financial year, Bunnings’ sales growth was slightly stronger compared to the second half of the FY26, partly helped by unseasonably dry weather in July. In the second half of FY26, Bunnings achieved revenue growth of 4%.

Kmart Group’s sales growth for the first seven weeks of FY27 was in line with the second half of FY26. In the six months to 30 June 2026, Kmart Group’s revenue growth was 2.3%.

Wesfarmers said that Officeworks’ sales growth in the first seven weeks of FY27 was positive, though it was slightly below the second half of FY26 growth rate of 2.8%.

Within WesCEF (chemicals, energy and fertilisers), the company said that it, along with its joint venture partner, remain focused on the ramp-up of the Covalent Lithium refinery, with production rates expected to accelerate through the second half of FY27 as further odour mitigation solutions are implemented.

Product qualification with key offtake partners will continue to progress while the refinery ramps up. Spodumene concentrate (lithium) production at Mt Holland is expected to be in line with nameplate capacity of approximately 380kt (with WesCEF’s share being approximately 190kt), with around half of this production to be sold to the market.

Finally, the company said the healthcare division of Wesfarmers is well-positioned to continue improving earnings by executing its transformation program and capitalising on long-term health and wellness trends. This division remains focused on accelerating growth in its higher-margin consumer business and building on recent improvements in wholesale.

Wesfarmers share price predictions by analysts

According to CMC Invest, there has been a mixture of analyst opinions on the business.

Within the last three months, there have been three buy call ratings, three hold call ratings and five sell call ratings.

Of those 11 analyst ratings, the average price target was $77.69. That implies a possible rise of around 1%, so it seems virtually fully valued according to experts. But, according to the projection on CMC Invest, it could pay a grossed-up dividend yield of 4.5%, including franking credits, at the time of writing. So, it could still produce positive returns.

The most optimistic price target is $88.80, which implies a possible rise of around 16%.

Overall, I think Wesfarmers is a high-quality business that can compound over the long-term, but analysts seem to be suggesting that there are better value opportunities out there.

The post How much could the Wesfarmers share price rise in the next year? appeared first on The Motley Fool Australia.

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

September was a mixed month for S&P/ASX 200 Index (ASX: XJO) bank shares.

Some ASX bank stocks experienced a pullback over the past month, while others started trending higher. 

It looks like investors aren’t sure what to make of rising inflation, higher interest rates, a weakening housing market, all against a backdrop of macroeconomic pressures and broad-based uncertainty.

What happened to the ASX 200 big four major banks in September?

Australia’s banking sector is dominated by the big four banks: Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB), and ANZ Group Holdings Ltd (ASX: ANZ).  

Together, they make up around a quarter of the ASX 200 by market capitalisation. 

There wasn’t any price sensitive news out of any of the big four banks in September, so share price fluctuations were due to shifts in investor sentiment.

At the close of the last day of the month, CBA shares were around 0.5% higher to $151.01 each. But the ASX 200 major bank’s shares have dropped around 6% over the course of September. 

NAB shares also ended the month in the green, up slightly by around 0.1% for the day on Wednesday, at $39.15 a piece. NAB shares have been relatively stable over the past month, and ended around 1% higher than they started. 

ANZ shares, however, ended the last day of the month in the red. The shares fell around 0.5% to $38.31 on Wednesday afternoon, to $38.31 each. But over the past month, the bank stock has climbed around 3% higher.

Meanwhile, Westpac shares ended around 0.2% higher on Wednesday afternoon, at $35.07 each. Over the past month, the shares have risen around 1.5%.

What about the ASX 200 mid-tier banks?

It was a similar story among the ASX 200 mid-tier banks too.

Bendigo and Adelaide Bank Ltd (ASX: BEN) closed around 0.5% higher on the last day of September, at $10.36 each. Over the month the shares fell around 3%.

Bank of Queensland Ltd (ASX: BOQ) shares climbed slightly into the green, up around 0.2% to $6.61. They were also up around 1% over the course of September. 

While Macquarie Group Ltd (ASX: MQG) also tumbled around 0.5% on Wednesday, closing the month at $246.10 a piece. The bank shares were also down around 2% over the month.

Which ASX bank shares are a buy for October?

Macquarie shares were one of the poorest performing ASX bank shares in September. But it’s still the only stock that brokers are bullish about going forward. Market Index data shows that the majority have a strong buy rating on Macquarie shares. The average $270.89 target price implies the shares have the potential to climb another 10% higher, at the time of writing.

Which ones have been rated as a sell?

The experts have had a strong sell rating on CBA shares for some time now. And there hasn’t been a change in sentiment this month either. Market Index data shows the majority of brokers have a strong sell rating, and the $125.20 target price implies a downside of around 17%, at the time of writing. That’s the largest forecasted downside of any of the ASX banks.

The experts also have a sell rating on Westpac shares. Market Index data shows the average $34.18 target price implies a downside of around 3%, at the time of writing.

Brokers are also bearish on the outlook for Bendigo and Adelaide Bank shares. Market Index data shows the majority have a sell rating, and the $10.06 average target price also implies a downside of around 3%.

And what shares do brokers rate as a hold?

The data also shows that the majority have a hold rating on NAB shares. The $39.88 average target price implies the shares have the potential to climb slightly, by around 2%, over the next 12 months.

It’s a similar story for ANZ shares. Most brokers also have a hold stance on the major bank, but after a slightly stronger September, the $36.05 average target price now suggests the shares could fall by up to 6% over the next 12 months, at the time of writing.

BOQ shares are the last on the list. Again, the majority have a hold rating, and the $6.06 average target price implies a downside of around 8%, at the time of writing.

The post Are ASX 200 bank stocks a buy in October? appeared first on The Motley Fool Australia.

More reading

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• Here’s the dividend forecast out to 2028 for Westpac shares

Motley Fool contributor Samantha Menzies 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 Macquarie Group. The Motley Fool Australia has positions in and has recommended Bendigo And Adelaide Bank. The Motley Fool Australia has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

DroneShield Ltd (ASX: DRO) shares are starting October around $1.70 after a jump on the final day of last month.

Investors were buying the counter-drone technology company’s shares after it was awarded a major US procurement vehicle.

Does that make the shares a buy in October?

I think so, although investors need to be comfortable with plenty of volatility.

What does the US win actually mean?

DroneShield has been awarded an Indefinite Delivery, Indefinite Quantity contract supporting the US Joint Interagency Task Force 401 Domestic Shield initiative.

The vehicle has a maximum value of US$500 million over three years and is designed to provide a streamlined way for the US government to procure DroneShield’s counter-drone capabilities.

Importantly, that does not mean DroneShield has suddenly booked US$500 million of revenue.

Individual orders still need to be awarded under the agreement, and DroneShield says it will announce material orders as they occur.

For me, that distinction is important, but it does not take away from the significance of the announcement.

DroneShield has already delivered DroneSentry-X Mk2 systems in support of JIATF-401 requirements, including systems that have been installed and accepted on US military vehicles. The new agreement gives the company another pathway to supply its technology as the US expands counter-drone protection across military installations and other priority locations.

That is the sort of relationship I want to see developing.

The valuation is demanding

One thing that can’t be ignored is DroneShield’s valuation.

Consensus forecasts currently point to earnings per share (EPS) of around 1 cent in FY28.

At a $1.70 share price, that would put DroneShield shares on a PE ratio of roughly 170 times forecast FY28 earnings.

That is clearly expensive by almost any conventional measure. But I am not convinced that figure tells us everything about the company’s longer-term earnings power.

DroneShield is still investing heavily to become a much larger business. That includes manufacturing capacity, research and development, sales operations, and its international footprint.

Those costs can constrain reported earnings today while potentially creating the capacity to generate much more revenue later.

If US defence demand accelerates and DroneShield converts procurement vehicles like this one into substantial orders, I think profits could eventually scale much faster than the current EPS forecast suggests.

Why I would still buy

Counter-drone technology is becoming increasingly important as cheap and readily available drones change the nature of warfare and create new security challenges.

DroneShield is positioning itself directly in that market with technology spanning detection, electronic countermeasures, command and control, and sensor integration.

The latest US agreement gives me more confidence that its products are gaining traction with a strategically important customer.

But I would expect the journey to be bumpy. Defence contracts can be large and irregular, expectations around DroneShield are already high, and a valuation of around 170 times FY28 forecast earnings leaves little room for disappointment.

Foolish takeaway

I would buy DroneShield shares around $1.70, but I would go in expecting volatility.

The current earnings numbers make the shares look extremely expensive. For me, though, the bigger question is what earnings could look like once today’s investment starts translating into a much larger order book.

The new US procurement vehicle does not guarantee that outcome, but I think it strengthens the case that DroneShield has a genuine opportunity to become a much larger defence technology business.

The post Should I buy DroneShield shares after its big US news? appeared first on The Motley Fool Australia.

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

The Transurban Group (ASX: TCL) share price is in focus after announcing a $4.5 billion deal to acquire additional stakes in key Sydney toll road operators, boosting its interests in Westlink M7, NorthConnex, and WestConnex.

What did Transurban Group report?

• Agreed to acquire CPPIB’s 25% interest in NorthWestern Roads Group (Westlink M7, NorthConnex)
• Also acquiring a 10.5% stake in Sydney Transport Partners (WestConnex)
• Total cash consideration for the deal is $4.5 billion
• Post-acquisition: 75% of NWRG and 60.5% of STP owned by Transurban
• Funding via new committed debt facilities—no equity raising required
• No expected impact on FY27 free cash and distributions

What else do investors need to know?

The acquisition is set to boost Transurban’s weighted average concession life, with asset concessions running as long as 2060. There will be no change to tolls or the daily experience for NSW motorists—only the economic interest splits among partners are changing.

The deal must clear several regulatory and contractual conditions, including approval from the Australian Competition and Consumer Commission. Completion is anticipated during calendar 2027, with the final valuation set as of 31 March 2027.

What did Transurban Group management say?

Transurban CEO Michelle Jablko said:

Sydney is a core market for Transurban. WestConnex, Westlink M7 and NorthConnex provide options for Sydney motorists as they move around the city and will play an important role in supporting Sydney’s growth for decades to come. We remain disciplined with how we allocate capital in our key markets of Australia and North America and we are committed to maintaining strong investment grade credit metrics.

What’s next for Transurban Group?

Transurban expects to complete the acquisition in 2027 after securing all necessary approvals. The company has stressed its continuing commitment to strong credit metrics and investment-grade ratings, planning to refinance the acquisition debt into longer-term facilities over time.

Management highlighted that no equity raising is required and that the acquisition is expected to drive long-term growth in free cash per security, with only a minor short-term impact initially.

Transurban Group share price snapshot

Over the past 12 months, Transurban shares have declined 4%, trailing the S&P/ASX 200 Index (ASX: XJO), which has declined 1% over the same period.

View Original Announcement

The post Transurban Group share price: $4.5bn deal for bigger Sydney road stakes appeared first on The Motley Fool Australia.

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Motley Fool contributor Laura Stewart 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 Transurban Group. The Motley Fool Australia has positions in and has recommended Transurban Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial summary of the company announcement. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.

The Lynas Rare Earths Ltd (ASX: LYC share price is in focus today after announcing a significant acquisition—Lynas will acquire all shares in Meteoric Resources Ltd (ASX: MEI) via an all-scrip deal, valued at approximately A$968 million. Meteoric shareholders are set to benefit from a substantial control premium, while Lynas boosts its resource base, including the largest ionic clay rare earth resource outside China.

What did Lynas report?

• Lynas to acquire 100% of Meteoric Resources through a scheme of arrangement.
• Meteoric shareholders will receive 0.0207 new Lynas shares per Meteoric share held.
• Implied offer value of A$0.286 per Meteoric share, a 68.4% premium to last closing price.
• The transaction is valued at A$968 million (fully diluted, 60-day VWAP basis).
• Post-acquisition, Lynas shareholders will own ~94.1% and Meteoric shareholders ~5.9% of Lynas.
• Lynas will provide a working capital facility of up to A$110 million to support Caldeira’s development and costs.

What else do investors need to know?

The acquisition will bring Meteoric’s Caldeira Project—one of the world’s largest ionic clay rare earths deposits—into the Lynas portfolio. Caldeira boasts a mineral resource of 1,631Mt @ 2,317ppm TREO and an Ore Reserve of 151Mt @ 3,524ppm TREO, with a projected 23-year mine life.

Meteoric’s board and largest shareholder have unanimously recommended the deal, provided no superior offer arises and subject to an independent expert’s positive conclusion. The transaction is still subject to regulatory and court approvals, and the Scheme Booklet is expected to be dispatched in December 2026.

What’s next for Lynas?

Lynas expects the all-scrip structure to preserve its strong balance sheet, allowing continued funding for both Caldeira’s development and other growth initiatives. The company plans to integrate Meteoric’s team and expertise, ensuring continuity for the Brazil-based project.

With this acquisition, Lynas will significantly diversify its resource base, expanding its global footprint and enhancing supply of critical minerals at a time of robust demand. Investors should watch for further announcements as the deal moves through regulatory and shareholder processes into early 2027.

Lynas share price snapshot

Over the past 12 months, Lynas shares have declined 19%, trailing the S&P/ASX 200 Index (ASX: XJO), which has declined 1% over the same period.

View Original Announcement

The post Lynas to acquire Meteoric Resources in major rare earths deal appeared first on The Motley Fool Australia.

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Motley Fool contributor Laura Stewart has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Lynas Rare Earths 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. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial summary of the company announcement. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.

The Australian Foundation Investment Company (ASX: AFI) share price may interest income-focussed investors, with the Board announcing a fully franked FY27 dividend of 37 cents per share and a move to more frequent, quarterly payments.

What did Australian Foundation Investment Company report?

• FY27 total dividend guidance of 37 cents per share, fully franked
• Ordinary dividend of 27 cents per share, up 1.9% on FY26
• Special dividend of 10 cents per share for FY27
• Transition to quarterly dividend payments, starting November 2026
• First quarterly dividend of 9.25 cents per share declared, payable 12 November 2026
• Dividend Reinvestment Plan (DRP) and Dividend Substitution Share Plan (DSSP) remain available

What else do investors need to know?

The shift from semi-annual to quarterly dividends follows feedback from shareholders who want more regular income. This change aims to make AFIC’s payments more in line with other income-focused investment choices on the market.

The Board will spread the FY27 dividend equally across four quarters, maintaining a stable and predictable payment schedule. While the ordinary dividend is primarily funded by earnings, some realised capital gains will supplement payments, subject to profit outlook and available franking credits.

Existing DRP and DSSP options mean shareholders can continue to reinvest dividends or substitute them for additional shares, adding flexibility for those building their investment.

What’s next for Australian Foundation Investment Company?

Looking ahead, the Board says further special dividends beyond FY27 will depend on future earnings, franking credits, and realised capital gains. The company remains committed to a stable or growing dividend over time, while returning surplus franking credits where possible.

AFIC plans to review the dividend approach each year to ensure it remains aligned with both company performance and shareholder needs, particularly around providing reliable income.

Australian Foundation Investment Company share price snapshot

Over the past 12 months, AFIC shares have declined 7%, trailing the S&P/ASX 200 Index (ASX: XJO), which has declined 1% over the same period.

View Original Announcement

The post AFIC reveals FY27 dividend guidance and moves to quarterly payouts appeared first on The Motley Fool Australia.

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Motley Fool contributor Laura Stewart 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. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial summary of the company announcement. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.

Commonwealth Bank of Australia vs BHP Group Ltd shares

If you’re keen on ASX blue chips, chances are you’ve looked at Commonwealth Bank of Australia (ASX: CBA) and BHP Group Ltd (ASX: BHP). They’re both among the nation’s most valuable companies, but come from wildly different corners of the economy: one’s a financial powerhouse, the other a global mining giant. So which offers the better proposition for Aussie investors as we head into October? Here’s what I’ve found digging into their latest numbers.

The case for Commonwealth Bank of Australia

As one of Australia’s “big four” banks, Commonwealth Bank of Australia is about as iconic as it gets on the ASX. With roots stretching across Australia and into New Zealand, the UK, the US, and Asia, CommBank offers a comprehensive range of financial services—from everyday banking to wealth management, insurance, and broking. It holds a top spot for market capitalisation (in the banking sector) and customer base locally.

From the latest data, I noticed a few standout fundamentals:

• Market cap: $253.56 billion—immense, even among banking peers.
• P/E ratio: 23.14—suggesting investors are willing to pay a premium compared to many other blue chips, though it’s worth remembering banks’ valuations often differ from sectors like resources.
• Dividend yield: 3.35%, with dividends 100% franked and a robust record of consistent, fully-franked payouts over decades. The most recent dividend was $2.70 per share (final), with an interim of $2.35 earlier this year.

CBA’s brand recognition and broad financial reach are major moats, and its dividend reliability makes it a favourite among income-seeking investors.

The case for BHP

BHP is a global heavyweight in resources, with roots going back centuries. Once known as BHP Billiton, it’s now streamlined to a single ASX listing. The company digs up and sells a range of core commodities: iron ore, copper, coal, and more. As commodity prices shift, so too does BHP’s share price—so you get a different risk profile with this stock compared to the big banks.

A few key data points jumped out to me:

• Market cap: $304.03 billion—BHP actually edges past CBA here, making it the largest ASX-listed giant in this comparison.
• P/E ratio: 22.11—slightly below CBA’s, though I’d note sector comparison between mining and banking is far from apples-to-apples.
• Dividend yield: 3.98%, also 100% franked. BHP’s dividends sometimes swing with profit cycles, but its recent payouts remain substantial: its last final dividend was $1.38 per share, with a $1.04 interim earlier this year.
• Year-to-date (YTD) return is a massive 38.8%, driven up by the latest commodity boom and strong operational delivery.

BHP’s company description highlights its sensitivity to commodity prices, a double-edged sword—potential for big gains in strong years, but risks if global demand wobbles.

Valuation comparison

Here’s how the numbers stack up side by side:

	Commonwealth Bank of Australia	BHP
Market Cap	$253.56 billion	$304.03 billion
P/E Ratio	23.14	22.11
Dividend Yield	3.35%	3.98%
Dividend Franking	100%	100%
Earnings per Share	6.517	1.932
Dividend per Share	5.05	2.42

Note: Both companies report similar P/E ratios, though these aren’t strictly comparable with each other due to the different sectors they operate in. Yield-wise, BHP edges out CBA on dividend, though this can vary considerably year to year for miners.

Recent share price performance

Comparing recent share price activity up to 25 September 2026:

• Commonwealth Bank of Australia closed at $150.83 on 25 Sep 2026, with a year-to-date return of -2.9%. Over the last week in the data, CBA’s price wobbled, experiencing several days of negative moves after a long period above $150.
• BHP Group closed at $60.72 on 25 Sep 2026, with a year-to-date return of 38.8%. Its share price has surged over the year, though like many resource stocks, recent daily moves bounced around—up one day, down another, with a slight negative in the last session displayed.

Which is the better buy?

If I’m weighing up between these two blue chips for October, my pick would be BHP Group. Here’s why: the current data shows BHP outpacing CBA on this year’s return by a massive margin, and it’s also offering a higher 3.98% fully-franked yield compared to CBA’s 3.35%. Both companies show strong dividend records and full franking, but BHP’s recent price momentum and sector tailwinds, driven by strong commodity prices, tip the balance for me right now.

Of course, with BHP, you are exposed to the swings of the global commodity cycle, so you have to be comfortable with a bumpier ride than you’d get from a major Australian bank like CBA. CommBank remains a reliable income stock and will always deserve a place in any ASX blue chip conversation, but at this snapshot in time—with sector differences acknowledged—I think the stronger momentum and yield favour BHP.

The post Commonwealth Bank vs BHP: Which ASX blue chip is the better buy in October? appeared first on The Motley Fool Australia.

More reading

• Are ASX 200 bank stocks a buy in October?
• 7 ASX mining shares with 11% to 158% upside ahead: experts
• 5 leading ASX shares I’d buy and hold until 2040
• Commonwealth Bank vs ANZ: Which is better for passive income?
• Sell alert! Expert calls time on Corporate Travel and CBA shares

Motley Fool contributor Laura Stewart 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 BHP Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial draft. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.

PLS Group Ltd (ASX: PLS) shares are a popular option for investors looking for exposure to the lithium industry.

However, if you are looking for outsized returns, Bell Potter thinks the ASX lithium stock in this article could be the one to buy.

Which ASX lithium stock?

The stock that Bell Potter is tipping to rocket is lithium miner Liontown Ltd (ASX: LTR).

The broker highlights that Liontown has announced plans to expand Kathleen Valley Spodumene Concentrate production capacity. It commented:

LTR has announced a positive Final Investment Decision to expand Kathleen Valley Spodumene Concentrate (5.4% Li2O) production capacity to around 780ktpa from FY30 (currently ~500ktpa). The expansion capital cost is estimated at $389m, including the $60-70m early works previously communicated in FY27 guidance. The expansion capital will be spent over FY27-29 with a step-change in production from FY30. 

At normalised expanded production rates, targeted unit costs are $840-920/t (US$610-670/t) SC and annual sustaining capital $90-100m. LTR also reiterated FY27 production and unit cost guidance and Kathleen Valley remains on track to reach 2.8Mtpa mining and processing by mid-2027. FY27 capex guidance is now $435-495m (previously $320-370m), which incorporates the expansion capital.

While this expansion comes at a cost, Bell Potter appears pleased with the plans. It said:

LTR’s expansion was within our capital cost estimate and is extremely efficient compared with the expansions of peer lithium producers. Wesfarmers (ASX: WES, not rated) recently announced Mt Holland expansion FID which adds 380ktpa SC capacity for gross capex of $1.3-1.4b. PLS Group’s (ASX: PLS, Hold TP$5.20/sh) P2000 expansion will also likely be highly capital intensive. LTR expect to fund the expansion from cash ($561m at 30 June 2026) and cash flows from operations. 

We have incorporated LTR’s expansion metrics, resulting in EPS changes: FY27 -8%; FY28 -18%; and FY29 -17%. The key adjustment to our model being a step-change in production from FY30 compared with our previous assumption of more incremental expansions over FY28-29.

Big potential returns

According to the note, Bell Potter has retained its buy rating on the ASX lithium stock with a trimmed price target of $1.70 (from $1.90).

Based on its current share price of 93 cents, this implies potential upside of more than 80% for investors over the next 12 months.

Commenting on its buy recommendation, the broker said:

LTR’s EV is lagging the recent recovery in lithium markets and expected tight supplydemand fundamentals. When LTR was trading at its current EV in October 2025, SC6 prices were US$820/t and net debt was $274m. Since then, the Kathleen Valley underground ramp-up has been further de-risked and spot SC6 prices are above US$1,700/t. While we expect lithium markets will be volatile, market fundamentals remain strong. Over FY27, LTR will continue to ramp up and de-risk Kathleen Valley, a highly strategic asset in terms of scale, long project life and location in a tier-one mining jurisdiction

The post Forget PLS, this ASX lithium stock could rise 80% appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
• Liontown Resources approves $389m Kathleen Valley lithium expansion
• 2 ASX shares highly recommended to buy: Experts
• Here are the top 10 ASX 200 shares today
• These are the 10 most shorted ASX shares

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