Tag: Stock pick

The ASX dividend stock Premier Investments Ltd (ASX: PMV) has fallen heavily over the last few months, as the chart below shows. It’s down around 25% from the September 2025 high – this could be a smart time to invest.

Following the divestment of various apparel businesses to Myer Holdings Ltd (ASX: MYR), there are three core areas to the Premier Investments division.

Firstly, I believe the key business is Peter Alexander, a retailer that specialises in selling sleepwear. Smiggle is a retailer that sells school, lifestyle, and stationery items, including bags, lunchboxes, drink bottles, and many more. Finally, it also has a sizeable ownership of coffee machine business Breville Group Ltd (ASX: BRG).

Let’s take a look at how appealing the ASX dividend stock could be for investors.

ASX dividend stock credentials

Over the past decade, the company has delivered a history of dividend increases in most years.

Of course, past dividend payments are not a guarantee of future dividend payments. Premier Investments is a different business following the sale of various clothing brands, including Just Jeans and Jay Jays, to Myer.

However, analysts expect pleasing dividend income in the years ahead.

The forecast on CMC Markets suggests the business could pay an annual dividend per share of 79 cents in FY26. That translates into a potential grossed-up dividend yield of 6.5%, including franking credits.

In FY27, things could get even better for investors in the ASX dividend stock. It’s predicted to pay an annual dividend of 88.5 cents per share. That translates into a forward grossed-up dividend yield of 7.3%, including franking credits.

In the eyes of most investors focused on passive income, these potential future yields appear very promising.

Earnings growth potential

The business appears to have a promising future. Earnings growth pays for dividend growth.

Peter Alexander continues to go from strength to strength – in FY25, its sales increased 7.7% year over year. In the second half of FY25, sales rose by 9.2% year over year.

I’m particularly excited by the company’s expansion plans for the UK, where it recently launched its first few stores in prime London Shopping centres. The UK population is significantly larger than Australia’s, offering ample growth potential.

In Australia and New Zealand, the ASX dividend stock is already working on four new Peter Alexander stores and three relocations/expansions into larger formats in the first half of FY26. At least 15 additional opportunities have been identified for both new and larger-format stores in Australia and New Zealand.

While Smiggle sales have struggled since the COVID-19 pandemic, the decline in sales is improving and will hopefully return to growth sooner rather than later.

I’m excited by what Breville could deliver in the coming years – I’m a shareholder in this business myself. I think home coffee consumption can continue to grow, particularly in markets like China, South Korea and the Middle East, where Breville recently expanded.

According to the forecast on CMC Markets, the Premier Investments share price is valued at 16x FY26’s estimated earnings, which seems appealing to me.

The post 1 ASX dividend stock down 25% that I’d buy right now appeared first on The Motley Fool Australia.

More reading

• Macquarie names 16 potential ASX takeover targets

Motley Fool contributor Tristan Harrison has positions in Breville Group. 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 Myer and Premier Investments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

With markets bouncing between optimism and anxiety thanks to interest-rate uncertainty and questions around the strength of the global tech rally, it is easy to forget one simple truth.

That is that long-term investors don’t need perfect conditions, they just need great businesses.

And right now, the ASX is home to a handful of high-quality growth stars that continue to deliver through cycles, build global scale, and strengthen their competitive advantages year after year.

These aren’t speculative punts, they are proven, profitable, long-run compounders with enormous addressable markets.

If I had to pick three ASX growth shares to back for the next five years, these would be at the top of my list.

Life360 Inc. (ASX: 360)

Life360 has quietly become one of Australia’s most impressive global tech success stories. Its family safety app now reaches 91.6 million monthly active users, up 19% year on year, and its subscriber base continues to surge, with 2.7 million paying circles after adding a record 170,000 in the last quarter.

The company’s revenue momentum is equally impressive. In the third quarter of FY 2025, Life360 delivered US$124.5 million in total revenue. This was up 34% year on year, with subscription revenue rising at the same pace.

In addition, its adjusted EBITDA jumped 174% to US$24.5 million, while operating cash flow surged 319% to US$26.4 million. Annualised monthly revenue last stood at US$446.7 million, reflecting the growing value of its subscriber ecosystem.

With a massive global addressable market, new product opportunities, and US$457.2 million in cash, Life360 looks exceptionally well placed for another five years of strong, scalable growth.

Pro Medicus Ltd (ASX: PME)

Another ASX growth share that I would buy is Pro Medicus. Its Visage imaging platform has become the go-to choice for major hospitals and radiology groups across the United States, which is the most lucrative healthcare market in the world. Every new contract improves long-term revenue visibility thanks to multi-year, multi-million-dollar deals that scale with usage.

The company’s margins are among the highest on the ASX, and its capital-light model means much of its revenue flows straight through to profit and cash.

With radiology workloads rising, radiologist shortages, and hospitals under pressure to do more with less, Pro Medicus is positioned at the heart of a long-term digital transformation.

WiseTech Global Ltd (ASX: WTC)

Finally, WiseTech is a third ASX growth share I would buy. Its CargoWise platform is now used by many of the world’s largest freight forwarders and logistics groups, managing everything from international shipping to customs processes.

As supply chains become more complex and companies push for efficiency, automation, and transparency, WiseTech’s role becomes increasingly essential.

The company continues to expand globally through both organic growth and strategic acquisitions, adding new capabilities in areas such as customs software, compliance, and logistics optimisation. Its recurring revenue model, sticky customer relationships, and high margins give it the kind of long-term compounding profile growth investors love.

Over a five-year horizon, I believe WiseTech will be significantly larger than it is today.

The post 3 ASX growth stars I’d back for the next five years appeared first on The Motley Fool Australia.

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• 5 things to watch on the ASX 200 on Monday
• What I’d buy first if the ASX share market fell 30%
• My plan of attack for the next share market crash
• Here are the top 10 ASX 200 shares today
• Why Gentrack, Kogan, Webjet, and WiseTech shares are pushing higher today

Motley Fool contributor James Mickleboro has positions in Life360, Pro Medicus, and WiseTech Global. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Life360 and WiseTech Global. 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 Life360 and WiseTech Global. The Motley Fool Australia has recommended Pro Medicus. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Guzman y Gomez Ltd (ASX: GYG) shares hit an all-time low of $21.89 a piece at the close of the ASX on Friday afternoon. The share price fell 2.93% over the course of the day. This dragged the shares down 11.56% over the month and 45.14% lower than this time last year.

Why are Guzman y Gomez shares still tumbling?

There was no price-sensitive news out of the company last week. The downward trend of Guzman y Gomez shares is likely due to a continued slump in investor sentiment. The company’s two disappointing earnings updates this year significantly dented confidence.

In August, the restaurant operator reported its FY25 results. It revealed a 23% year-on-year increase in global reported sales. It also recorded a 45.5% increase in EBITDA, and a 151.8% surge in net profits after tax (NPAT). 

But investor optimism was dented by news of the comparable sales growth numbers in Australia. The company’s Australian business, which includes operations in Singapore and Japan, achieved 9.6% comparable sales growth, $1,168 million in network sales, and $66 million in segment underlying EBITDA. 

The company also revealed that its sales had risen just 3.7% in the seven weeks since 30 June, which was sharply below the 7.6% growth expected by the market. 

Earlier in the year, the Mexican fast-food service operator also posted disappointing H1 FY25 results. Whilst overall network sales rose 22.8% to $577.9 million, sales in the United States fell 12.7% to $4.9 million. Sales in the Australia segment rose 9.4% to $573 million. 

Guzman y Gomez has also recently been listed as one of the most shorted stocks on the ASX, with approximately 11.8% of its shares loaned out to hedge funds that are betting on the price to fall, according to data from the Australian Securities and Investments Commission. It is now the sixth most shorted stock in the market.

Is there any chance of an upside ahead?

Analyst sentiment about Guzman y Gomez shares is relatively divided. TradingView data shows that out of 12 analysts, 6 have a buy or strong buy rating on the stock, 3 have a hold rating, and the remaining 3 have a sell or strong sell rating.

However, the average target price is $28.41 per share, implying a potential 29.8% upside for investors over the next 12 months, as of the time of writing. 

Analysts at Macquarie recently initiated coverage on the stock with a slightly more bullish price target of $31.10. At the time of writing, that represents a potential 42.1% upside over the next 12 months. The broker said Guzman y Gomez’s current share price weakness is an attractive entry point for investors. Combined with bold expansion plans, Macquarie thinks the business can deliver strong earnings growth through to FY30. 

Morgans also has a buy rating on the shares and a $32.60 price target. At the time of writing, that implies a potential 48.9% over the next 12 months. 

The ASX 200 share has outlined plans to expand significantly in the next few years. If this comes to fruition, the current rock-bottom share price presents a fantastic opportunity to get into the stock for cheap.

The post Guzman y Gomez shares tumble to all-time low: Is there any upside ahead? appeared first on The Motley Fool Australia.

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• 3 ASX 200 stocks plumbing 52-week lows today
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• Investing for the long-term? Here’s why Guzman Y Gomez shares are ‘hard to beat’

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

The best S&P/ASX 200 Index (ASX: XJO) blue-chip shares are capable of producing really strong returns. When we’re given the opportunity to invest in high-quality names at lower prices, it can be a great time to invest.

Over time, it’s businesses that are growing their earnings at a faster pace that benefit the most from compounding.

Amid recent volatility, there are a few names that look too good to miss, like the two below.

Pinnacle Investment Management Group Ltd (ASX: PNI)

Investing in Pinnacle can be a bit of a rollercoaster, as its short-term share price movements are correlated with the market. The company invests in a wide range of fund managers, each of whom generates earnings from the funds under management (FUM).

The company takes minority stakes in these fund managers (affiliates). It helps them focus on investing by offering a wide array of administrative services, taking care of the behind-the-scenes tasks.

Some of the fund managers that it’s invested in include Hyperion, Plato, Palisade, Resolution Capital, Solaris, Antipodes, Metrics, Spheria, Firetrail, Coolabah Capital, Aikya, Life Cycle and Pacific Asset Management.

The Pinnacle share price has dropped by 34% between August and now, yet the most recent update we’ve heard from the ASX 200 blue-chip share was positive.

In the first quarter of FY26, the business reported that its total affiliate FUM had reached $197.4 billion, representing a 10% increase from June 2025, with the majority of the growth driven by strong net inflows. Net inflows for the quarter amounted to $13.3 billion.

I believe the ASX blue-chip stock now appear undervalued in terms of their long-term growth potential. According to the forecast on CMC Markets, it’s priced at 19x FY27’s estimated earnings.

Xero Ltd (ASX: XRO)

Xero is a leading cloud accounting business with a global presence across countries such as the UK, Australia, and New Zealand. It has ambitions to expand into other countries, such as Canada and the US, in particular.

Painfully, the Xero share price is down almost 40% from its June 2025 high, so this is a great time to invest, in my opinion.

The company still has incredibly loyal subscribers, with a churn rate of just 1% each year. Xero has managed to increase subscription fees in Australia, the UK, and New Zealand, which has helped drive several key metrics.

In FY25, the business reported the average revenue per user (ARPU) increased 15% to $49.63, the total lifetime value of subscribers grew by 15% to $19.6 billion, operating revenue rose 20% to $1.19 billion, operating profit (EBITDA) grew 21% to $378 million, net profit after tax (NPAT) climbed 42% to $135 million and free cash flow jumped 54% to $321 million.

With the recent Melio acquisition, the company is clearly aiming to increase its presence in the huge US market where there is strong competition. I don’t think it needs to succeed in the US to do well overall, particularly at this lower valuation.

Following the significant valuation reversal, I think the ASX 200 blue-chip share looks like an attractive long-term buy.

The post 2 great ASX 200 blue-chip shares I’d buy right now appeared first on The Motley Fool Australia.

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• What’s driving a 9% divergence in ASX 200 consumer staples vs. discretionary shares?
• Top brokers name 3 ASX shares to buy next week
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• How to turn small weekly savings into life-changing wealth with ASX shares

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

At the start of each week, I like to look at ASIC’s short position report to find out which shares are being targeted by short sellers.

This is because I believe it is well worth keeping a close eye on short interest levels as high levels can sometimes be a sign that something isn’t quite right with a company.

With that in mind, here are the 10 most shorted shares on the ASX this week according to ASIC:

• Boss Energy Ltd (ASX: BOE) continues to be the most shorted ASX share with short interest over 21.6%. This is up slightly week on week. Short sellers appear to believe that the uranium miner will disappoint with its production beyond 2026.
• Domino’s Pizza Enterprises Ltd (ASX: DMP) has seen its short interest ease again to 16.9%. Short sellers have been closing positions after this pizza chain operator was the subject of takeover speculation.
• Pilbara Minerals Ltd (ASX: PLS) has short interest of 12.8%, which is down week on week again. Many analysts believe that the lithium oversupply will be around for longer than expected.
• Paladin Energy Ltd (ASX: PDN) has short interest of 12%, which is flat since last week. Short sellers appear to be expecting production ramp-up disappointment from this uranium miner.
• IDP Education Ltd (ASX: IEL) has 11.9% of its shares held short, which is up week on week. This language testing and student placement company is struggling with unfavourable student visa changes.
• Guzman Y Gomez Ltd (ASX: GYG) has short interest of 11.5%, which is down since last week. This burrito seller’s poor start to life in the United States market could be weighing on sentiment.
• PWR Holdings Ltd (ASX: PWH) has short interest of 11.2%, which is up week on week. This motorsport products company’s shares have come under pressure as it goes through a lengthy transitional period.
• Flight Centre Travel Group Ltd (ASX: FLT) has short interest of 11.1%, which is up since last week. Short sellers aren’t giving up on this travel agent despite it revealing a positive start to the year.
• IPH Ltd (ASX: IPH) has joined the top ten with 10.8% of its shares held short. Weak trading conditions in the intellectual property services market could be behind this.
• Polynovo Ltd (ASX: PNV) has short interest of 10.6%, which is down since last week. Short sellers don’t appear to believe this medical device company’s shares deserve their premium valuation.

The post These are the 10 most shorted ASX shares appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in Domino’s Pizza Enterprises. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Domino’s Pizza Enterprises, PWR Holdings, and PolyNovo. The Motley Fool Australia has positions in and has recommended PWR Holdings. The Motley Fool Australia has recommended Domino’s Pizza Enterprises, Flight Centre Travel Group, IPH Ltd , and PolyNovo. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

ASX 200 consumer staples and consumer discretionary shares have dramatically diverged over the past month.

The S&P/ASX 200 Consumer Discretionary Index (ASX: XDJ) has fallen 9.16% while the S&P/ASX 200 Consumer Staples Index (ASX: XSJ) has demonstrated resilience, rising 0.59% over the past four weeks.

Broker Bell Potter says the pause in interest rate cuts amid potentially resurgent inflation has led to a sell-off in discretionary stocks.

However, the broker expects a change in momentum as we enter the pre-Christmas retail period.

ASX 200 consumer staples vs. discretionary shares

Bell Direct market analyst, Sophia Mavridis said several factors had given consumer staples shares positive momentum in recent weeks.

They include dairy sector price inflation rising 2% year-over-year in September to an 18-month high.

There has also been sustained spending growth at Woolworths Group Ltd (ASX: WOW) and Coles Group Ltd (ASX: COL).

Weakness in the New Zealand dollar is providing a foreign exchange tailwind for A2 Milk Company Ltd (ASX: A2M), which is now the consumer staples sector’s third largest business after 61% growth in its share price this year.

Looking ahead to the silly season, Mavridis said the consumer discretionary sector is “showing some encouraging signs”.

She noted spending in non-food categories rose 5% year-over-year in September.

Additionally, the Westpac/Melbourne Institute Consumer Sentiment Index surged above its 100-point confidence baseline this month.

That’s the first time it’s gone above 100 since the interest rate tightening cycle began in May 2022.

The Consumer Sentiment Index rose 12.8% from 92.1 in October to 103.8 in November.

Westpac analyst Matthew Hassan said this is a seven-year high excluding the COVID period.

Mavridis said higher consumer confidence should be supportive in the upcoming trading season.

This includes Black Friday at the end of November and the pre-Christmas shopping spree in December.

Seasonality has prompted Bell Potter to change its key share picks in the ASX 200 consumer staples and discretionary sectors.

Bell Potter’s top stock picks

In the consumer staples arena, Bell Potter is focused on market leaders.

The broker is positive on Woolworths shares, Endeavour Group Ltd (ASX: EDV), and Bega Cheese Ltd (ASX: BGA).

Bell Potter also has a buy rating on rural services and agribusiness Elders Ltd (ASX: ELD).

The Elders share price rose 8.61% to $7.57 last week after a strong FY25 report.

Bell Potter sees more growth ahead for Elders shares with a 12-month price target of $9.45.

In the discretionary sector, Bell Potter’s high conviction picks include Harvey Norman Holdings Ltd (ASX: HVN).

Bell Potter also likes youth apparel retailer Universal Store Holdings Ltd (ASX: UNI) and footwear retailer Accent Group Ltd (ASX: AX1).

It also has a buy rating on Aristocrat Leisure Ltd (ASX: ALL) with a share price target of $80.

The post What’s driving a 9% divergence in ASX 200 consumer staples vs. discretionary shares? appeared first on The Motley Fool Australia.

More reading

• Should you buy Woolworths and these ASX dividend shares?
• Why did the ASX 200 dive to a near six-month low last week?
• 2 of the best ASX dividend shares to buy for dependable passive income
• Age Pension worries? 7 income stocks to consider for retirement
• How to make $50,000 of passive income a year from ASX shares

Motley Fool contributor Bronwyn Allen 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 Harvey Norman and Woolworths Group. The Motley Fool Australia has recommended Accent Group, Elders, and Universal Store. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Are you on the lookout for some ASX dividend shares to buy for your income portfolio?

If you are, then read on because listed below are three that broker currently rate as top buys. Here’s what you need to know about them:

HomeCo Daily Needs REIT (ASX: HDN)

HomeCo Daily Needs REIT could be a top pick according to analysts at UBS.

It is a real estate investment trust that owns a diversified portfolio of convenience-based retail properties, including supermarkets, healthcare centres, and hardware stores. These are properties that tend to perform well regardless of economic conditions.

It notes that its geographically diverse national footprint is 86% metro-located and exposed to markets with above average population growth. It has no exposure to department stores and minimal exposure to discretionary retail and fashion.

Its three largest shareholders are Coles Group Ltd (ASX: COL), Wesfarmers Ltd (ASX: WES), and Woolworths.

UBS believes the company is positioned to pay dividends per share of 8.6 cents in FY 2026 and then 8.7 cents in FY 2027. Based on its current share price of $1.32, this would mean dividend yields of 6.5% and 6.6%, respectively.

UBS has a buy rating and $1.53 price target on its shares.

Sonic Healthcare Ltd (ASX: SHL)

Bell Potter has named Sonic Healthcare as an ASX dividend share to buy now.

It is a medical diagnostics company that operates laboratories and collection centres across Australia, Europe, and the United States.

After a tough period, Bell Potter thinks the company is ready for a return to consistent growth. It is expecting partially franked payouts of 109 cents per share in FY 2026 and then 111 cents per share in FY 2027. Based on its current share price of $23.09, this equates to dividend yields of 4.7% and 4.8%, respectively.

Bell Potter has a buy rating and $33.30 price target on its shares.

Woolworths Group Ltd (ASX: WOW)

Finally, Woolworths could be a top ASX dividend share to buy right now.

While the supermarket giant may not offer the largest dividend yield, it does have potential to grow strongly over the next decade as its earnings rebound and then return to steady growth.

Bell Potter expects Woolworths to reward its shareholders with fully franked dividends of 91 cents per share in FY 2026 and then 100 cents per share in FY 2027. Based on its current share price of $28.08, this would mean dividend yields of 3.25% and 3.55%, respectively.

Bell Potter currently has a buy rating and $30.70 price target on Woolworths’ shares.

The post Should you buy Woolworths and these ASX dividend shares? appeared first on The Motley Fool Australia.

More reading

• What’s driving a 9% divergence in ASX 200 consumer staples vs. discretionary shares?
• Why did the ASX 200 dive to a near six-month low last week?
• 2 of the best ASX dividend shares to buy for dependable passive income
• How much upside does Macquarie predict for Sonic Healthcare shares?
• How to make $50,000 of passive income a year from ASX shares

Motley Fool contributor James Mickleboro has positions in Woolworths Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Wesfarmers. The Motley Fool Australia has positions in and has recommended Woolworths Group. The Motley Fool Australia has recommended HomeCo Daily Needs REIT, Sonic Healthcare, and Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

On Friday, the S&P/ASX 200 Index (ASX: XJO) once again finished the week deep in the red. The benchmark index sank 1.6% to 8,416.5 points.

Will the market be able to bounce back from this on Monday? Here are five things to watch:

ASX 200 expected to rebound

The Australian share market looks set for a good start to the week following a positive finish to the last one on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 92 points or 1.1% higher. In the United States, the Dow Jones was up 1.1%, the S&P 500 rose 1%, and the Nasdaq pushed 0.9% higher.

Oil prices drop

It could be a poor start to the week for ASX 200 energy shares Santos Ltd (ASX: STO) and Woodside Energy Group Ltd (ASX: WDS) after oil prices dropped on Friday night. According to Bloomberg, the WTI crude oil price was down 1.6% to US$58.06 a barrel and the Brent crude oil price was down 1.3% to US$62.56 a barrel. This reflects optimism that Russia and Ukraine could soon sign a peace deal.

Pro Medicus update

Pro Medicus Ltd (ASX: PME) shares will be on watch today when the health imaging technology provider holds its annual general meeting. It is possible that the company will provide the market with a trading update ahead of the main event. Investors will no doubt be keen to see how quickly Pro Medicus is growing so far in FY 2026.

Gold price rises

ASX 200 gold shares Newmont Corporation (ASX: NEM) and Northern Star Resources Ltd (ASX: NST) could start the week higher after the gold price rose on Friday night. According to CNBC, the gold futures price was up 0.5% to US$4,116 an ounce. This was driven by increasing US rate cut bets in December.

Buy WiseTech shares

Bell Potter thinks that WiseTech Global Ltd (ASX: WTC) shares could offer 50%+ upside over the next 12 months. This morning, the broker has retained its buy rating on the logistics solutions technology company’s shares with a trimmed price target of $100.00. It said: “In FY26 we now forecast revenue and EBITDA of US$1.40bn and US$569m which is towards the lower end of the guidance range for the former and close to the middle for the latter. That is, we see more risk at revenue than EBITDA this year, particularly with the greater-than-usual revenue skew to H2. Any weakness or miss at revenue, however, we would expect to be offset by a stronger margin.”

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

More reading

• What I’d buy first if the ASX share market fell 30%
• Here are the top 10 ASX 200 shares today
• Why Gentrack, Kogan, Webjet, and WiseTech shares are pushing higher today
• Why this ASX 200 gold share is powering ahead
• Why are ASX 200 tech stocks getting smashed on Friday?

Motley Fool contributor James Mickleboro has positions in Pro Medicus, WiseTech Global, and Woodside Energy Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended WiseTech Global. 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 WiseTech Global. The Motley Fool Australia has recommended Pro Medicus. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Since early August, QBE Insurance (ASX: QBE) shares have fallen more than 16%. 

For context, S&P/ASX 200 Financials (ASX:XFJ) index lost about 5% in the same period. 

Earlier this month, Macquarie placed an outperform rating on QBE shares with a price target indicating roughly 15% upside. 

However the team at Bell Potter is a little less optimistic. 

Bell Potter released updated analysis on QBE shares last Thursday. 

The broker has a hold recommendation on QBE shares. 

Here’s what the broker had to say. 

Concerns over slowing rate increases

In last week’s report, Bell Potter said it sees the investment thesis on QBE as generally good, but with some concerns over slowing rate increases and potential rising inflation. 

The broker said premium rates have been improving, ahead of inflation, showing that insurers retain pricing power, although rate increases are now slowing.

Profitability is seeing a strong underwriting profit, and investment returns are reasonable and stable (running yield) meaning the business is making a return on equity of 17.5% in FY25e.

The valuation is full, and in our opinion, and anticipates a lengthy continuation of a positive upcycle.

Hold recommendation from Bell Potter

The broker said at the half year results, it felt the company could be seen to be growing into a softening environment. 

With a PCA capital ratio of 1.81 (after interim dividend), the company’s capital is at the top of its target range (1.6-1.8x). This capital is being valued by the equity market at a premium to book value and the company is looking for ways to utilise its capital and grow into attractive areas.

The broker said it will review its forecasts post the Q3 update, noting the upside with the shares below $20. 

However for now, Bell Potter has maintained its target price of $21.20 and retained its hold recommendation.

QBE shares closed last week at $19.64. 

Based on this price target it appears QBE shares are hovering close to fair value, with an indicated upside of approximately 8%. 

The post What’s the upside for QBE shares after a rocky 2 months? appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Friday
• What does Macquarie think QBE shares are worth?
• A 16% upside plus dividends! Macquarie upgrades QBE shares to outperform
• Are QBE or IAG shares a buy according to Macquarie?
• QBE Insurance Group launches US$300m subordinated notes issue

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.

ASX industrials stock Tasmea Ltd (ASX: TEA) has risen 60% in the last 12 months. 

Tasmea is a skilled services company. 

The company provides essential maintenance, engineering, and specialised project services and solutions across the following four service streams to the mining and resources; oil and gas; waste and water; power and renewable energy; and defence and infrastructure industries.

In the last week it has shed almost 15% which may have created a buy the dip opportunity. 

Following the recent share price drop, the team at Morgans has upgraded its view on this ASX industrials stock. 

Here is the latest from the broker. 

WorkPac Acquisition reason for optimism

Earlier this week, Tasmea acquired 100% of the issued capital in WorkPac Group Pty Ltd. 

WorkPac is a workforce solutions business. It specialises in tailored, end-to-end solutions in workforce management, recruitment, skills and career development across diverse sectors including Mining, Industrial, Construction, Engineering, Healthcare, Social Care and more.

Commenting on the acquisition, Tasmea’s Managing Director, Stephen Young said:

This transaction reflects our disciplined approach to growth and our commitment to building a diversified, scalable platform across Australia.

It seems the team at Morgans saw this as a positive move for the ASX industrials stock. 

In a note out of the broker on Thursday, it said WorkPac gives Tasmea a deeper labour pool which will be helpful in a tight market as it endeavours to self-perform all its services. This has the capacity to positively impact margins.

The WorkPac acquisition is +10% EPS accretive or +5-6% including the dilution from the recent equity raise. This transaction is a step-out from the company’s strategy to acquire more specialised services businesses, though it sends a clear signal about TEA’s visibility over demand in its key end-markets.

The broker also believes Tasmea should benefit from improved speed of mobilisation, which is critical given the fast-paced nature of some of its responsive services. 

Target price increase from Morgans

The team at Morgans has maintained its buy recommendation on this ASX industrials stock. 

The broker also increased its price target to $5.40 (previously $5.00). 

Based on this new price target, Morgans sees an upside of 20% for Tasmea shares. 

The post Broker tips 20% upside for this ASX industrials stock appeared first on The Motley Fool Australia.

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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.