Tag: Stock pick

I like to own ASX shares that are growing, but I also like to own ones that pay dividends because it’s a way for investors to benefit from the rising profits these businesses are generating.

Ideally, we don’t want to trigger any capital gains tax (CGT) events if we don’t need to, because that can mean handing over money to the ATO unnecessarily, disrupting the compounding potential of the portfolio.

I’m going to talk about two ASX shares that I’ve long-admired. I’m expecting rising profits and dividends from them over the long-term.

Australian Ethical Investment Ltd (ASX: AEF)

Australian Ethical describes itself as one of Australia’s leading ethical investment managers. It aims to provide investors with investment management products that align with their values and provide long-term, risk-adjusted returns.

One of the main reasons why I think this business is such a compelling fund manager is because it provides customers with a superannuation option. This is compelling due to the consistent contributions that Aussies make to their superannuation, giving the company regular net inflows.

In the update to 31 December 2025, the company reported that it finished the period with funds under management (FUM) of $14.1 billion, with the business experiencing $0.11 billion of net inflows in its superannuation segment.

The company has been working on delivering efficiencies and scalability, which will hopefully help its margins in the coming years.

The ASX share has also pointed out that it continues to be recognised for its leadership in ethical investing, winning Money Magazine’s 2026 best of the best awards for the best ESG superannuation product and best ESG pension product.

The forecast on CMC Invest suggests the business could pay an annual dividend per share in FY26, which would be a grossed-up dividend yield of 5.9%, including franking credits (at the time of writing).

Propel Funeral Partners Ltd (ASX: PFP)

Propel is the second-largest funeral operator in New Zealand and Australia. At the last count, it has 208 locations, including 41 cremation facilities and nine cemeteries.

One of the main tailwinds for the business is that death volumes are expected to increase in the coming years because of a growing and ageing population.

According to Propel, Australian death volumes are expected to increase by an average of 2.8% per year between 2025 to 2035 and 2.4% per year between 2036 to 2045. In New Zealand, death volumes are expected to increase by 2% per year between 2026 to 2035 and then 1.8% between 2036 to 2045.

The ASX share had a market share of 9% in 2024, compared to InvoCare’s 21% market share. There is room for the company to expand its position in ANZ with both organic growth and acquisitions.

In the first quarter of FY26, the company delivered 3% growth of both revenue and operating profit (EBITDA) year-over-year. It benefited from a 2.7% rise of the average revenue per funeral and a 1% increase in funeral volumes.

According to the forecast on CMC Invest, it’s expected to pay an annual dividend per share of 15.5 cents in FY27, which would be a grossed-up dividend yield of 4.5%, including franking credits (at the time of writing).

The post 2 ASX shares that I rate as buys for both growth and dividends appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Australian Ethical Investment and Propel Funeral Partners. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Australian Ethical Investment. The Motley Fool Australia has recommended Australian Ethical Investment. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Treasury Wine Estates Ltd (ASX: TWE) share price is higher on Tuesday after the company released a market update.

At the time of writing, the Treasury Wine share price is up 6.38% to $5.50. That move offers some short-term relief, but it comes against a sobering backdrop. The stock is still down roughly 50% over the past year after this month’s brutal sell-off.

Let’s take a closer look at the release.

A long-running US issue finally resolved

In a statement to the ASX, Treasury Wine said it has reached a settlement with Republic National Distributing Company (RNDC) in California. The agreement follows RNDC’s decision to exit the California market last year.

Under the agreement, Treasury Wine will repurchase its Treasury Americas portfolio inventory held by RNDC in California at original sale value. While the financial terms of the settlement are confidential, management said the agreement compensates the group for the disruption caused by RNDC’s withdrawal.

Treasury expects the net cash outflow related to this settlement in the first half of FY26 to be around US$65 million. That figure already factors in the expected resale of the inventory to other customers.

Earnings guidance edges higher

Alongside the settlement update, Treasury Wine provided fresh earnings guidance.

The company now expects first-half FY26 EBITS of approximately $236 million. That compares favourably with its previous guidance range of $225 million to $235 million issued in December.

While the upgrade is modest, it indicates conditions are tracking better than some investors had feared.

Management also confirmed the settlement does not change plans to gradually reduce distributor inventory levels in California over the next two years, a process already flagged to the market.

The US business is stabilising

Treasury Wine will continue working with RNDC across other US markets and highlighted that RNDC remains a committed distribution partner outside California.

Notably, Treasury Americas depletions in RNDC-distributed states grew 2.7% in the first half. That indicates demand for the company’s portfolio remains relatively resilient, despite wider pressure across the US wine market.

The company will provide more details when it releases its interim results on 16 February.

A bounce after heavy selling

The positive update has lifted the shares in early trade, but the move follows an extended period of weakness.

Treasury Wine’s shares have been in a steady downtrend for months, weighed down by softer US demand, margin pressure, and investor concerns around inventory levels.

From a technical perspective, the stock remains well below its levels from early last year. As a result, many investors are likely waiting for clearer evidence of a sustained turnaround before becoming more confident.

Foolish Takeaway

Today’s update removes a key operational overhang, but it does not change the broader challenges facing the business.

After a steep decline over the past year, Treasury Wine’s upcoming results will show whether recent US stabilisation can support a sustained recovery.

The post Why Treasury Wine shares are rising today appeared first on The Motley Fool Australia.

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

PLS Group Ltd (ASX: PLS) shares are leaping higher today.

Shares in the S&P/ASX 200 Index (ASX: XJO) lithium stock formerly known as Pilbara Minerals closed yesterday trading for $4.17. In morning trade on Tuesday, shares are changing hands for $4.39 apiece, up 5.2%.

For some context, the ASX 200 is up 0.6% at this same time.

Here’s what’s catching investor interest today.

PLS shares lift on Canmax lithium deal

Before market open this morning, PLS announced that it has inked a multi-year offtake agreement with Chinese-listed lithium-ion battery material manufacturer Canmax Technologies Co Ltd (SHE: 300390).

The binding two-year agreement will see PLS supply Canmax with 150 thousand tonnes a year of spodumene concentrate.

PLS shares look to be catching some added tailwinds with the company reporting it has the option to supply additional volumes, as well as an option to extend the agreement for a third year.

The miner noted that its ability to increase volume based on its own discretions gives it the flexibility to respond to evolving market conditions and customer requirements across its portfolio.

The ASX 200 lithium stock will receive a floor price of US$1,000 per tonne (SC6 basis) from Canmax. PLS noted there is no upside price limitation. This provides the miner with downside protection while maintaining full upside leverage should prevailing lithium market prices rise.

As part of the deal, PLS will also receive a US$100 million unsecured interest-free prepayment. That money will be repaid via the spodumene concentrate to be sold to Canmax under the offtake agreement.

The ASX 200 lithium miner said it has the flexibility to supply the new offtake commitments from its Pilgangoora Operation, located in Western Australia.

What did management say?

Commenting on the agreement with Canmax that’s boosting PLS shares today, CEO Dale Henderson said, “This agreement builds on our established relationship with Canmax and reflects both the quality and consistency of Pilgangoora’s spodumene and PLS’ proven capability as a reliable, large-scale operator.”

Hernderson added:

The US$100 million interest-free prepayment and floor price structure demonstrate strong commercial confidence in our product and performance, while preserving full exposure to price upside.

The agreement strengthens our near-term liquidity and preserves operational flexibility through optional volumes, supporting disciplined production and sales decisions as lithium market fundamentals continue to improve.

Deepening our partnership with Canmax further diversifies our customer base and reinforces PLS’ position as a leading, reliable supplier at scale to the lithium materials market.

With today’s intraday gains factored in, PLS shares are up 99.6% in a year and up 285.1% since posting one-year closing lows on 3 June.

The post Up 285% since June, PLS shares lifting off today on multi-year lithium offtake agreement appeared first on The Motley Fool Australia.

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

ASX dividend shares that increase their payout every year could be the reassuring picks that passive income investors are looking for.

A rising payout will offset inflation, boost the amount of cash in investors’ bank accounts, and should signify a rising underlying value (whether that’s rising profits or a larger net asset value (NAV)).

The two businesses below are building a very impressive dividend record.

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

This business currently has the longest-running dividend growth streak. If it keeps increasing the payout, then it will always have the best record on the ASX. The investment house has hiked its regular annual dividend payout every year since 1998, so it’s getting close to 30 years of continuous increases.

There are some US companies that have increased the annual payout for more years in a row than Soul Patts, but I think the ASX dividend share holds one key advantage.

It owns a diversified portfolio of investments across a range of industries. Soul Patts is not stuck with operations in a single industry like a lot of businesses. It’s in resources, telecommunications, industrial properties, building products, financial services, swimming schools, credit, agriculture and plenty more.

That portfolio of investments pays Soul Patts with cash flow each year, allowing it fund a growing dividend and make new investments with the retained amount.

I think this business has the best chance of continuing to grow its payout out of all S&P/ASX 200 Index (ASX: XJO) shares.

At the current Soul Patts share price, I think it could pay a grossed-up dividend yield of around 4%, including franking credits in FY26.

Universal Store Holdings Ltd (ASX: UNI)

This is one of the impressive operators in the retail space when it comes to dividends, in my view. It started paying an annual dividend in FY21 and has increased its passive income each year since then, which not many retailers have done.

There are a few businesses within this ASX dividend share – Universal Store, Perfect Stranger and CTC. The impressive growth of Universal Store and Perfect Stranger has allowed the business to fund that dividend growth.

In FY25, group sales grew 15.5%, with Universal Store sales growth of 15% to $280.9 million and Perfect Stranger sales growth of 83.1% to $25.5 million. This helped earnings per share (EPS) rise by 14.6% to 45.4 cents per share, funding an 8.5% rise of the dividend per share to 38.5 cents.

At 30 June 2025, the business had 111 physical store locations, including 84 Universal Store locations and 19 Perfect Stranger stores. It has an ambition of 100 or more Universal Store locations and at least 60 Perfect Stranger stores.

FY26 has started well – in the first 17 weeks of FY26, Universal Store total sales were up another 11.4% and Perfect Stranger total sales were up 40.5%.

According to the forecast on CMC Invest, the ASX dividend share is projected to pay an annual dividend per share of 39 cents in FY26. That translates into a potential grossed-up dividend yield of 6.5%, including franking credits.

The post 2 ASX dividend shares raising dividends like clockwork appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Universal Store. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Share prices of over $100 can feel daunting, particularly for new investors. But if the value is there, there is no reason not to consider owning fewer shares at a higher price point. Here are five ASX stocks currently priced at over $100 that remain good value.

CSL Ltd (ASX: CSL)

Australian-based multinational biopharma powerhouse, CSL, has long been an investor darling, known for its reliable returns and healthy dividends.

Twelve months ago, it was trading around the $270 mark. Today, it is sitting at around $180 per share. This swing is likely driven by its revenue downgrades for FY2026 in October, investor concerns about efficiencies as the company looks to restructure, and changes in vaccination behaviour in the US.

For me, this presents a rare opportunity for long-term investors. Despite some recent upheaval, CSL boasts a strong track record of consistent execution, solid earnings, a defensive moat, and a robust growth pipeline – excellent fundamentals that suggest this could be a short-term drop.

Macquarie Group Ltd (ASX: MQG)

Diversified financial services powerhouse, Macquarie Group, has been a solid performer for decades. And this is reflected in its share price performance, which is up 50% over the last five years. But in the last year, it has seen some small declines, down 6%, which may be your opportunity to buy into a quality investment.

Despite prices remaining above the $200 mark, I think upside remains. Macquarie Group offers a solid long-term growth outlook, an attractive dividend profile, and positioning as a market leader in several high-growth industries, including infrastructure and renewable energy.   

REA Group Ltd (ASX: REA)

Market leader, REA, is best known to consumers for the popular realestate.com.au property search website. It also offers commercial property search, mortgage broking, and property data services, with revenue streams in Australia and Asia.

Over the last year, it has experienced share price declines of around 35%, from around $270 in early February 2025 to below the $170 mark in early February 2026. The fall has been potentially spurred by several factors, including softer listing volume in 2025, earnings pressure, and investor concern about its high valuation.

That said, it continues to deliver solid results. Analysts can see the upside at current prices, as can the company itself, if recent buybacks are anything to go by.

If you’re thinking about making a move on REA, you have an attractive entry point right now.

Cochlear Ltd (ASX: COH)

Implantable hearing device pioneer Cochlear has been leading the way in treating hearing loss for over 40 years. It is widely known for its disciplined approach, characterised by low debt, solid capital management, and consistent cash generation.

In the last 12 months, it too has seen some share price declines, dropping 18%. It’s likely these were mostly driven by concerns about high valuations, given that Cochlear continues to deliver impressive results.

And conditions are ripe for this market leader to continue delivering in the long term. It already has robust global operations that generate the majority of its revenue, and that’s likely to grow given the world’s ageing population. In fact, the World Health Organization predicts that 1 in 10 people globally will require hearing intervention by 2050, up from 1 in 20 today.

For me, Cochlear’s recent share price falls are likely short term and provide an excellent opportunity for investors looking to get in on a quality stock with a long-term runway for success.

Pro Medicus Ltd (ASX: PME)

Pro Medicus is a leading provider of radiology and imaging software to hospitals and imaging companies. Its dominant position in the market, capital-light SAAS model, and notable customer retention rates have all made it an investor favourite.

It has experienced significant share price volatility over the last 12 months, dropping from circa $285 a year ago to around $160 right now. This was likely driven by broader softening in the tech sector and overvaluation concerns amongst investors.

Right now, for me, it’s a buy. It has exceptional financials, a positive long-term outlook, and is successfully growing its footprint in the lucrative US market. In an industry that is being reshaped by AI, Pro Medicus is poised to continue delivering.

The post 5 ASX stocks that are still good value at over $100 a share appeared first on The Motley Fool Australia.

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Motley Fool contributor Melissa Maddison 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 CSL, Cochlear, and Macquarie Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Pro Medicus. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool Australia has recommended CSL, Cochlear, and Pro Medicus. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Codan Ltd (ASX: CDA) shares were one of the standouts in 2025. And the tech company hasn’t disappointed so far this year, surging 27%.

Codan shares opened the trading week with a gain of 4.4% to $36.10.

That move caps a stunning run. Codan shares are now up 121% over the past 12 months, cementing their place among the ASX’s top-performing tech stocks.

So, what’s powering the rally — and is there still upside left?

Tech, just not the usual kind

Codan isn’t your standard ASX tech darling. Based in Adelaide, it runs a dual-engine business spanning communications and metal detection. It’s a rare combo that gives it leverage to both defence budgets and goldfields.

Right now, that mix is paying off.

The communications arm has become the real growth engine for Codan shares. It designs mission-critical communications systems, drones, and defence and public-safety equipment. As global defence spending ramps up, Codan is steadily reducing its reliance on the boom-and-bust cycles of gold prospecting.

That said, Minelab still matters — a lot. Acquired nearly 20 years ago, the brand remains a global leader in metal detection, with products used by everyone from weekend gold hunters to humanitarian demining teams and security agencies.

Gold, growth, and a dream run

Codan shares were on fire in 2025, and they’ve been keeping the rally alive in the first weeks of the new year. In January, the $6.3 billion tech stock surged to fresh all-time highs. This came after the company delivered a standout first-half FY26 trading update.

The company expects group revenue of approximately $394 million for the half. This represents a growth of around 29% compared to the prior corresponding period. Underlying net profit after tax (NPAT) is expected to be at least $70 million, up roughly 52% year on year.

The next test Codan faces will be when it reports the first-half results on 19 February. Any further gains will likely depend on Codan delivering solid margins and cash flow. 

Valuation reality check

Now, valuation looks like the pressure point. After such a blistering run, some analysts are increasingly warning that a lot of the good news may already be priced in.

Broker sentiment has cooled noticeably. Most now see Codan shares trading closer to fair value, with consensus recommendations sitting around neutral.

The average 12-month price target of $39.01 implies 8% upside from current levels.

Bell Potter lifted its earnings forecasts and valuation after the Codan trading update in mid-January. However, the broker believes the ASX share is now fairly priced after its strong rally.

It has reiterated its hold rating and raised its price target to $36.70, up from $27.80. This is broadly in line with the current share price of around $36.10.

The post How much further can the Codan shares rally run? appeared first on The Motley Fool Australia.

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Motley Fool contributor Marc Van Dinther 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.

For more than a decade, US stocks have done the heavy lifting for global equity returns. 

From Big Tech dominance to relentless earnings growth, American markets have rewarded investors who stayed the course.

However, thoughtful investors know markets move in cycles. Leadership changes. And when one region stumbles or simply delivers more modest returns, others can quietly step into the spotlight.

That is where emerging markets may come back into focus and why this ASX ETF could be an opportunity if US stocks disappoint.

A strong but narrowing US run

There is no denying the strength of the US markets in recent years. In 2025, American shares delivered a better-than-average year, supported by resilient consumer demand, strong corporate balance sheets, and the obvious enthusiasm for artificial intelligence and productivity gains. ETF investors did well, with total returns, including dividends, of 17.88% for the 2025 calendar year.

However, that performance has also led to concentration risk. A small number of mega-cap companies now account for a significant share of index returns. Valuations were elevated by historical standards, and expectations for continued earnings growth are high in 2026.

If those expectations are merely met — rather than exceeded — future returns may be more subdued.

This does not mean US stocks are destined to fall. It simply raises a reasonable “what if” question for long-term investors building diversified portfolios.

Emerging markets quietly outperformed in 2025

While US stocks captured headlines, emerging markets delivered a quietly impressive year in 2025.

Across Asia, Latin America, and parts of Eastern Europe, equity markets benefited from easing inflation pressures, stabilising interest rates, and improving economic momentum. In several regions, earnings growth outpaced developed markets, helped by younger populations, rising consumption, and improving productivity.

Importantly, emerging markets entered 2025 from a position of relative valuation discount after years of underperformance. That combination — improving fundamentals and lower starting valuations — helped produce returns that rivalled, and in some cases exceeded, those of the US.

Why 2026 could keep the theme alive

Looking ahead to 2026, several structural factors continue to support the emerging markets case.

Many emerging economies now have healthier balance sheets than in past cycles, with higher foreign exchange reserves and more flexible currencies. Supply chains are also diversifying, with manufacturing, energy, and technology investment spreading beyond traditional developed markets.

At the same time, demographic trends remain favourable. Growing middle classes across Asia and parts of Latin America continue to drive demand for housing, healthcare, financial services, and technology.

None of this guarantees another strong year. But it does suggest emerging markets remain relevant for investors thinking beyond a single economic cycle.

One simple way to gain exposure

For Australian investors, the iShares MSCI Emerging Markets ETF (ASX: IEM) offers a straightforward way to access this theme.

Rather than betting on individual countries or companies, the ETF provides broad exposure across dozens of emerging economies and hundreds of businesses. That diversification matters in a region where political, regulatory, and economic conditions can change quickly.

For long-term investors, it can act as a complement to US-heavy portfolios, helping reduce reliance on a single market driving returns.

Foolish Takeaway

This is not a call to abandon US stocks. They remain home to some of the world’s strongest businesses.

However, if US markets deliver more modest returns in the years ahead, emerging markets could matter a lot more than many investors expect. Having diversified exposure in place before leadership changes is often easier than reacting after the fact.

The post If US stocks disappoint, this overlooked ASX ETF could matter a lot more appeared first on The Motley Fool Australia.

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Motley Fool contributor Leigh Gant 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 iShares S&P 500 ETF. The Motley Fool Australia has recommended iShares S&P 500 ETF. 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) has appointed Michael Powell as Chief Operating Officer, as it looks to the future with significant growth plans across Europe and the US.

Mr Powell, the company said, had deep experience in defence and related fields.

The company went on to say:

Michael brings more than 25 years of senior executive and operational leadership experience across defence, aerospace, secure communications, simulation, railway and critical infrastructure markets. His career includes senior roles such as Chief Operating Officer, Managing Director, and Operations Director at leading international organizations including Thales Australia and Knorr-Bremse, where he led large, multinational teams and managed complex, multi-hundred-million-dollar operational portfolios. Across these roles, Michael has built and scaled global manufacturing and supply-chain operations, led international business turnarounds, and delivered large-scale operational transformation programs, balancing execution discipline with the demands of high-reliability, mission-critical customers.

Building out the supply chain

The company said in his new role, Mr Powell would be responsible for scaling up DroneShield’s global operations, “strengthening delivery and sustainment capability, and aligning engineering, manufacturing, and supply-chain functions to support the company’s expanding product portfolio and growing international customer base”.

DroneShield Chief Executive Officer Oleg Vornik said Mr Powell was a “proven operator with deep experience delivering complex programs at global scale”

As demand for counter-UAS (unmanned aerial systems) capability continues to accelerate, his leadership will be instrumental in ensuring DroneShield scales with discipline, resilience, and a relentless focus on customer outcomes.

Revenue growing

DroneShield, in late January, released its second-quarter activities report, in which it reported fourth-quarter revenues of $51.3 million, up 94% on the previous corresponding quarter.

While the figure was well up on the same quarter the previous year, revenue was down from $92.9 million in the third quarter of 2025.

The company said at the time it had committed revenue of $95.6 million for 2026, compared with negligible committed revenue at the start of 2025.

Operating cash flow was $7.7 million for the quarter.

The company also announced in mid-January that it had been selected as a supplier for the Australian Government’s LAND 156 project.

Selection as a supplier does not guarantee any contracts will flow; however, it does allow defence to procure from the company.

DroneShield said at the time:

While the dollar amount of expected sales associated with the Line of Effort 3 results cannot be quantified at this time, it is expected to be material as the demand for counterdrone solutions rises, and the Company will provide further guidance when available.

DroneShield shares have been under pressure lately, falling from levels around $4.70 in late January to $3.15 currently.

The post DroneShield appoints Chief Operating Officer with deep defence expertise appeared first on The Motley Fool Australia.

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Motley Fool contributor Cameron England 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 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.

BlueScope Steel Ltd (ASX: BSL) shares are on a tear. The industrial heavyweight last month surged to a fresh all-time high, and this year the share price has ascended by 20%.

That caps off a 34% gain over 12 months and firmly puts BlueScope back in the spotlight.

Once seen as a steady but cyclical operator, BlueScope shares are now enjoying renewed momentum. And there’s more than one reason why.

Takeover bid lights the fuse

The immediate spark behind the rally was takeover interest. A non-binding, indicative proposal from a consortium led by SGH Ltd (ASX: SGH) and Steel Dynamics, Inc (NASDAQ: STLD) put a clear valuation marker on the stock.

The $30-per-share cash offer represented a meaningful premium to where BlueScope shares had been trading and forced a rapid re-rating as investors priced in deal potential. While the board unanimously rejected the approach, the bid reignited interest in a stock that was already trending higher.

Strength beyond the takeover noise

This rally isn’t just about corporate action. BlueScope enters this phase from a position of strength.

Australian construction activity has picked up, boosting demand for premium-coated and painted steel products such as Colorbond and Zincalume. Meanwhile, BlueScope’s diversified footprint across Australia, North America, and Asia provides multiple earnings levers.

Its North American operations have been particularly resilient, supported by infrastructure spending and disciplined industry capacity. Strong cash generation has flowed through to dividends and capital management, enhancing BlueScope’s appeal to income-focused investors.

BlueScope has recently declared a large special dividend, which has lifted shareholder returns. When special dividends are included, BlueScope’s effective yield for the year moves above 5%, making it attractive for income investors who are comfortable with some cyclicality.

Operationally, management has also shown it can navigate steel’s brutal cycles. Better cost control, improved product mix, and a shift toward higher-value products have helped smooth earnings volatility compared with past cycles.

Global steel cycles

Of course, this is still a steel business. BlueScope shares remain exposed to global steel cycles and face elevated energy and raw-material costs, especially in Australia. The board has flagged these pressures as a real threat to domestic manufacturing competitiveness.

The recent profit collapse — down nearly 90% after an impairment in the US coated-products division — also exposed weaker pockets within the portfolio. Add in relatively modest returns on equity versus global peers, and questions around capital efficiency remain.

What next for BlueScope shares?

From here, the outlook hinges on two things.

First, whether further takeover interest emerges, which could push shares higher or at least provide a valuation floor.

Second, whether operating conditions stay supportive enough to justify BlueScope’s richer valuation even without a deal. More will be revealed when the ASX share releases its H1 2026 results on 16 February.

For now, analysts remain broadly positive. Most rate BlueScope shares a buy or strong buy. The average 12-month price target sits around $32.73, with bullish forecasts reaching $37.

This suggests up to 28% upside from the $28.91 price at the time of writing.

The post Is there more to come from BlueScope shares after 34% jump? appeared first on The Motley Fool Australia.

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• So BlueScope shares go to all-time high of $31. Big deal. What next?

Motley Fool contributor Marc Van Dinther has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Steel Dynamics. 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.

ASX small-cap sentiment has been gaining steam over the last 12 months. 

Despite coming with significant volatility, experts have suggested that conditions could be favourable for small caps. 

According to VanEck, valuations for global small caps are reasonable/attractive relative to global large caps (MSCI World Index), with valuations close to 25-year lows.

Here in Australia, ASX small-cap shares outperformed larger players by almost 2.5 times in 2025.

New analysis from two brokers has identified two more exciting small caps that should be on investors’ radars this year. 

Alpha HPA Ltd (ASX: A4N) 

Alpha HPA is an Australian mining company specialising in high purity alumina (HPA). HPA is a key component of lithium-ion batteries, LED lighting, and has other essential commercial applications.

A4N’s HPA First Project in Gladstone (Queensland) is aiming to supply high-purity aluminium-based products to the semiconductor, lithium-ion battery, and light emitting diode (LED) manufacturing sectors. 

The project’s proprietary technology is expected to disrupt incumbent HPA production. This is through delivering ultra-high purity products with significantly lower unit costs.

The company has drawn a speculative buy recommendation from Bell Potter. 

In a note out of the broker yesterday, it said the company recently completed a $225m equity placement. This will support delivery and commercialisation of the HPA First Stage 2 Project. 

The placement was supported by the Australian Government’s National Reconstruction Fund Corporation. 

Bell Potter said A4N is now expecting higher product prices, boosting potential revenue. The project’s profits are also projected to grow, with EBITDA estimated at $289 million. 

On the other hand, the project will cost more to build, with capital costs now at $699 million. 

First production is slightly delayed, now expected in FY28, about six months later than originally planned.

The team at Bell Potter currently has a price target of $1.50 on this ASX small cap. 

From yesterday’s closing price of $0.72, that indicates an upside of 108.33%. 

A4N’s HPA First process has a competitive advantage in the production of aluminabased thermal interface fillers and Chemical Mechanical Planarization abrasives for the semiconductor sector.

A Stage 1 facility commissioned in 2022 has technically derisked the process and is providing product for market outreach and customer qualification.

Island Pharmaceuticals Ltd (ASX: ILA)

Island Pharmaceuticals is an ASX-listed biotech company developing its flagship drug ISLA-101 against mosquito diseases.

In a note out of Morgans last week, the broker said The FDA has provided formal confirmation and alignment on Galidesivir’s Animal Rule development pathway, setting out a clear two-stage program and materially de-risking the asset. 

The update represents the strongest regulatory signal to date that Galidesivir is on a viable, accelerated path toward approval as a US biodefence countermeasure and supports multiple potential value levers including a Priority Review Voucher.

ILA has also announced it has raised A$9m at A$0.35, which the company believes will be ample funding to see Galvesivir through to potential marketing approval, as well as sufficient excess to advance other opportunities in Ebola and Sudan Viruses.

The post Two exciting ASX small caps to watch according to brokers appeared first on The Motley Fool Australia.

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• Is there more to come from BlueScope shares after 34% jump?
• Why this ASX dividend share’s a retiree’s dream
• How much could the REA Group share price rise in the next year?

Motley Fool contributor Aaron Bell 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.