Tag: Stock pick

Insurance is rarely the most exciting sector on the ASX.

However, a combination of rising premium rates, improving underwriting margins, and disciplined capital management is creating an interesting investment backdrop for Insurance Australia Group Ltd (ASX: IAG) and QBE Insurance Group Ltd (ASX: QBE).

Why premiums keep rising

The driver behind both stocks is relatively straightforward.

Australia’s insurance industry has spent the past three years repricing policies upward to recover from a period of elevated claims costs.

These costs were driven by natural catastrophes, supply chain inflation, and building cost increases that significantly exceeded what premiums had priced in.

That repricing cycle has not yet fully run its course.

IAG CEO Nick Hawkins confirmed at the company’s half-year results that the business is forecasting high single-digit premium growth for the full year FY2026, with the Australian retail business delivering 14.4% top-line growth in the first half.

QBE similarly reported double-digit premium growth in Q1 2026 and maintained its optimistic full-year outlook.

Gross written premium grew 7% in constant currency across FY2025 driven by targeted expansion across its North American and International divisions.

Insurance Australia Group

IAG is Australia’s largest general insurer, writing more than $14 billion in premium per annum across brands including NRMA, RACV, and CGU.

The first half of FY2026 was a noisy result on the surface, with statutory net profit after tax falling 35% to $505 million.

This was largely due to a one-off $174 million weather impact from the newly acquired RACQI portfolio before it was integrated into IAG’s comprehensive reinsurance program in January 2026.

Stripping out those one-off items, the underlying picture was considerably more constructive.

Underlying insurance profit grew 7.6% to $804 million and the underlying insurance margin held at 15.1%, with management maintaining full-year FY2026 insurance profit guidance of $1.55 billion to $1.75 billion.

The board also announced an on-market share buyback of up to $200 million, reflecting a strong capital position that gives IAG the flexibility to keep returning cash to shareholders even while investing in the RACQI integration.

However, investors should note that IAG could face a claim in an upcoming Greensill court case, with the company provisioning $432 million for legal fees and claims handling while maintaining it expects no net exposure.

IAG shares have fallen in the last 12 months, which may have created a more attractive entry point for investors.

QBE

QBE offers a different but equally interesting angle on the rising premium theme.

As Australia’s second largest international insurer, QBE operates across 27 countries, giving it a diversified premium base that is less exposed to Australian weather events than IAG.

QBE’s FY2025 full-year result delivered a 21% lift in statutory net profit after tax to US$2.16 billion, comfortably ahead of market expectations, with its combined operating ratio improving to 91.9%, the strongest result in several years.

The company declared a full-year dividend of A$1.09 per share, a 25% lift on the prior year, and maintained a 50% payout ratio.

QBE is guiding to continued double-digit premium growth in 2026, with Q1 results confirming the momentum has carried into the new year.

Foolish takeaway

IAG and QBE are each navigating their own near-term complexities, whether that is weather events, legal uncertainty, or the pace of global premium moderation.

Nevertheless, the backdrop of rising premiums, improving underwriting discipline, and strong capital positions makes both stocks worth serious consideration for investors seeking quality financial exposure beyond the big four banks.

The post Why rising insurance premiums could make these 2 ASX insurers very attractive right now appeared first on The Motley Fool Australia.

More reading

• Why this ASX 200 insurance stock is sinking today
• Why Catapult Sports, IAG, Telstra, and Tuas shares are falling today
• 5 ASX 200 shares downgraded by the experts this week
• Are Telstra and these ASX shares a buy, hold or sell after hitting new yearly highs?
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Mark Verhoeven 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.

One of the most satisfying things about owning good ASX dividend shares is when they increase the dividend each year.

Not only does that help protect against (or outperform) inflation, but it also helps us feel wealthier. I love seeing dividend money hit the bank account.

By focusing on businesses with growing payouts, this implies they are much less likely to cut their dividends. If I’m relying on dividends, I don’t want to see my dividend income disappear during an economic downturn.

I think the two businesses below are among the best on the ASX for regular dividend growth.

APA Group (ASX: APA)

I’d say APA has the second-best record on the ASX for consistent payout increases. It has increased its payout every year since 2004.

As an energy infrastructure owner, the business plays a key role in Australia’s economy by transporting gas from sources of supply to demand. Impressively, the business supplies half of the country’s gas usage.

The ASX dividend share’s key asset is a huge gas pipeline network across Australia. APA has regularly expanded its network over the years (with some projects currently in progress), which has helped increase its earnings and cash flow.

It’s the growth of cash flow that helps fund a larger distribution to investors each year. APA also has a portfolio of other energy assets, including renewable energy generation, batteries, electricity transmission, gas power stations, gas storage, and gas processing facilities.

With most of its revenue linked to inflation, it has a pleasing tailwind for growth.

Its guided FY26 payout of 58 cents per security translates into a current distribution yield of 5.6%, at the time of writing.

WCM Global Growth Ltd (ASX: WQG)

WCM Global Growth is a leading investment company (LIC) that aims to generate investment returns through a global share portfolio.

With a great long-term portfolio performance, shareholders can see both a solid dividend and longer-term capital growth.

WCM aims to find high-quality businesses that have expanding economic moats (improving competitive cultures) and a corporate culture that fosters that improvement.

Since the ASX dividend share’s inception in June 2017, its performance (after fees) has been an average of 15.4% per year, outperforming the global benchmark by more than 2% per year.

In 2023, the LIC changed to paying dividends quarterly and has increased the payout every three months. The annual dividend has increased each year since 2019, when it began paying dividends.

The next four dividends to be declared are expected by the LIC’s board to come to 9.69 cents per share, translating into a forward grossed-up dividend yield of approximately 7.5%, including franking credits, at the time of writing.

The post These ASX dividend shares keep giving investors a pay rise appeared first on The Motley Fool Australia.

More reading

• How much is needed in superannuation to target a $7,500 monthly passive income?
• 2 rock-solid ASX dividend shares to buy this May
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• Passive income investors: These 3 ASX dividend shares yield 5% (or more)
• These ASX dividend shares could power your retirement income

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

Most ASX dividend investors prioritise dependability and reliability above all else. After all, what’s the use of a 5% or 6% yield on an ASX dividend stock if the dividend gets reduced or cut entirely down the road?

There are many dependable dividend stocks on the ASX. That’s a label I would be happy to give to Commonwealth Bank of Australia (ASX: CBA), Telstra Group Ltd (ASX: TLS), or Wesfarmers Ltd (ASX: WES), amongst others.

However, I think there are a few ASX dividend stocks that are able to stand above the throng. For me, Washington H. Soul Pattinson and Co Ltd (ASX: SOL) is at the top of the pile.

Washington H. Soul Pattinson, or Soul Patts for short, is an investing house that has been around for more than a century. Over its long history, it has amassed a well-deserved reputation as a prudent manager of capital and one of the ASX’s most reliable income providers.

Soul Patts owns and manages a wide underlying portfolio of investments. These investments are diversified, ranging from large stakes in individual shares to property, venture capital, private credit, and more.

Stunning income growth from this ASX dividend stock

This approach has historically worked wonders for Soul Patts and its investors, with the company delivering market-beating returns over very long periods of time. To illustrate, the company delivered a total return (growth plus dividends) of 11% per annum over the 15 years to 31 January. Over 25 years, that stretched to 12.9% per annum. That compares to the broader market’s returns of 8.6% and 8.4% per annum, respectively.

But let’s talk dividends. Dividend returns have always played a large role in this ASX dividend stock’s performance. Soul Patts has the best dividend streak on the ASX, bar none. It has increased its annual dividends every single year since 1998, and counting.

Between FY 2021 and FY 2026, those dividends have compounded at an average annual growth rate of 11.9%. Yes, the company is yielding a seemingly unimpressive 2.54% at recent pricing. However, if Soul Patts can keep up that kind of dividend growth, it won’t be long before long-term investors are enjoying a yield-on-cost far larger than 2.54%.

At the time of writing, Soul Patts shares are going for $42.14 each. At this price, $10,000 will buy 237 shares of this ASX dividend stock. There aren’t too many better things one can do with their cash, in my view.

The post $10,000 buys 237 shares in this trusty ASX dividend stock appeared first on The Motley Fool Australia.

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• Soul Patts shares rise after taking stake in struggling ASX stock
• Why I’m planning to re-invest my dividends into this ASX share this week
• How to build a passive income stream with ASX shares
• Create a river of dividends for passive income alongside work earnings with ASX stocks
• How much is needed in superannuation to target a $5,000 monthly passive income?

Motley Fool contributor Sebastian Bowen has positions in Washington H. Soul Pattinson and Company Limited and Wesfarmers. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Washington H. Soul Pattinson and Company Limited and Wesfarmers. The Motley Fool Australia has positions in and has recommended Telstra Group and Washington H. Soul Pattinson and Company Limited. 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.

On Friday, the S&P/ASX 200 Index (ASX: XJO) finished the week with a gain. The benchmark index rose 0.4% to 8,657 points.

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

ASX 200 expected to drop

The Australian share market looks set for a poor start to the week despite a decent finish to the last one on Wall Street on Friday. According to the latest SPI futures, the ASX 200 is expected to open the day 58 points or 0.65% lower. In the United States, the Dow Jones was up 0.6%, the S&P 500 rose 0.35%, and the Nasdaq climbed 0.2%.

Oil prices jump

ASX 200 energy shares Santos Ltd (ASX: STO) and Woodside Energy Group Ltd (ASX: WDS) will be on watch after oil prices rose on Friday night. According to Bloomberg, the WTI crude oil price was up 0.25% to US$96.60 a barrel and the Brent crude oil price was up 0.95% to US$103.54 a barrel. However, US-Iran peace talk progress over the weekend could impact oil prices once Asian markets open.

SGH shares rated as a buy

Bell Potter has named SGH Ltd (ASX: SGH) shares as a buy this week. It has put a buy rating and $50.00 price target on the investment company’s shares. It was pleased with the company’s investor day event and highlights its undemanding valuation. It said: “We view SGH’s market valuation as undemanding. SGH has articulated a robust medium and long-term valuation creation framework at its FY26 Investor Day, underpinned by reasonable operational targets. Any forthcoming M&A activity would likely be well received by the market.”

Gold price slips

ASX 200 gold shares Newmont Corporation (ASX: NEM) and Northern Star Resources Ltd (ASX: NST) could have a subdued start to the week after the gold price slipped on Friday night. According to CNBC, the gold futures price was down 0.45% to US$4,556.4 an ounce. This was its second weekly decline in a row amid increasing rate hike bets.

Buy GYG shares

Bell Potter thinks Guzman Y Gomez Ltd (ASX: GYG) shares are a buy. In response to news that the quick service restaurant operator is closing its US operations, the broker has upgraded GYG shares to a buy rating (from hold) with an improved price target of $24.50 (from $22.10).  It said: “We welcome the US exit as a previous overhang removed on the stock and see the switch to focusing on the core Australia opportunity as more beneficial to shareholders. We are confident in the medium term Australia opportunity, backed by a pipeline of 108 restaurants, as well as the successful master franchising operation in Singapore and Japan.”

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

More reading

• ASX 200 consumer staples shares outperformed again last week
• Why Guzman Y Gomez leaving the US might actually be bullish
• 10 ASX shares given buy ratings this week
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• 3 ASX 200 shares crashing in this week’s rebounding market

Motley Fool contributor James Mickleboro has positions in Woodside Energy Group Ltd. 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.

When Australian investors think about bank stocks, they inevitably reach for the big four.

Commonwealth Bank, Westpac, NAB, and ANZ dominate portfolios, ETFs, and superannuation funds alike.

However, Judo Capital Holdings Ltd (ASX: JDO) has been building a banking business that is growing faster, earning higher margins, and capturing a market the big four have chronically underserved.

What makes Judo different

Judo operates exclusively in small and medium enterprise lending, a segment that represents approximately $500 billion in addressable credit in Australia.

This sector has been systematically deprioritised by the major banks in favour of lower-risk, higher-volume mortgage lending.

Judo’s model is built on relationships.

Each banker manages a small portfolio of SME clients and builds in-depth financial knowledge of their businesses, allowing Judo to price credit more accurately and charge a premium for the service and certainty it provides.

That relationship-led model is the reason Judo consistently earns a net interest margin well above what the big four achieve on their business lending books.

The numbers backing the thesis

The most recent half-year results confirmed the strategy is working.

In the first half of FY2026, Judo delivered statutory net profit after tax of $59.9 million, up 32% on the prior half and 46% year-on-year, alongside profit before tax of $86.5 million, up 53% on the prior corresponding period.

The loan book grew 7% during the half to $13.4 billion, up 15% year-on-year, while the cost-to-income ratio improved to 48.5%, down 890 basis points on the prior year, reflecting the operating leverage that emerges as a banking platform scales.

Furthermore, in Q3 FY2026, Judo expanded its net interest margin to approximately 3.15%, a figure that stands in sharp contrast to the margin compression most of the big four are experiencing under intense mortgage competition.

Total deposits grew to $11.5 billion, with a blended cost of deposits at 0.74% over one-month BBSW, a low-cost funding base that directly supports NIM performance.

The FY2027 outlook

Judo has reaffirmed its full-year FY2026 profit before tax guidance of $180 million to $190 million.

However, management has flagged profit will likely come in at the lower end of that range after increasing collective provisions in response to broader economic uncertainty.

That note of caution is worth acknowledging.

Judo’s SME loan book carries more credit risk than a mortgage-dominated portfolio, and any deterioration in business conditions would likely show up in impairment charges before it affected the big four.

Nevertheless, the growth story remains intact.

Management is targeting a return on equity in the low-to-mid teens as the business continues to scale, a figure that would represent a meaningful improvement on current levels and rival the returns generated by several of the big four.

Judo is also expanding into regional and agribusiness lending, launching new products, and deepening relationships with existing customers, all of which should support loan book growth through FY2027 and beyond.

Foolish takeaway

Judo Capital is not a low-risk investment.

The share price has fallen ~23% year to date, and near-term earnings visibility has been clouded by rising provisions.

However, for investors willing to look through those risks, the combination of a superior net interest margin, a large and underpenetrated addressable market, and improving operating leverage makes Judo one of the more interesting banking stories on the ASX heading into FY2027.

The post Why this ASX bank stock could quietly outperform the big four in FY2027 appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX 200 shares today
• 2 ASX shares highly recommended to buy: Experts
• Which Australian banks will benefit the most from rising interest rates?
• Judo Capital Q3 2026: Lending and deposit growth shine
• These top ASX 200 shares could rise 30% to 40%

Motley Fool contributor Mark Verhoeven 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.

Not every defence contract win makes the front page.

But the announcement that Ventia Services Group Ltd (ASX: VNT) had secured a $935 million contract with the Australian Defence Force deserved far more attention than it received.

The contract, which commenced this month, is one of the largest single government contracts the company has ever won.

This tells investors a great deal about where Ventia’s business is heading.

What the contract involves

Ventia has been appointed as the single industry partner to deliver clothing capability services to the Australian Defence Force, coordinating specialist Australian organisations to deliver clothing design and supply, warehousing, distribution, and clothing store services to Defence personnel.

The initial term runs for seven years, with options to extend for up to a further 13 years.

This means that the total potential contract duration extends to 20 years.

Ventia CEO Dean Banks said in the company’s announcement:

We are proud to partner with Defence on this important contract. This award reflects our deep understanding of Defence requirements and our proven ability to deliver integrated solutions in complex environments. We look forward to working alongside our industry partners to deliver an enhanced clothing capability and contemporary customer experience for Defence personnel.

Through this contract, Ventia is the accountable prime contractor.

For the company, this carries both higher responsibility and, in most government contracting frameworks, higher margin potential.

What matters beyond the headline number

The $935 million contract is significant in isolation, but it becomes even more compelling when viewed in the context of Ventia’s broader contract pipeline.

Ventia already carries a record work-in-hand position of $22.1 billion, up 14% year-on-year, with an 82% renewal rate across its FY2025 contract book.

In February 2026, the company also secured a one-year, $107 million extension to its Defence Maintenance Contract with the Department of Defence, effective from December 2028.

Ventia is therefore deepening its existing relationship with its largest and most valuable customer, an encouraging sign for investors.

Australia’s defence budget is expanding under the AUKUS agreement, with the federal government committing to reach 2.4% of GDP in defence spending within a decade.

For a company that already services the ADF across maintenance, clothing, and logistics, that trajectory creates a tailwind that should support contract growth for years.

The share price and broker view

The market has appreciated the company’s contract pipeline and earnings visibility.

However, at current levels, the stock does not look obviously cheap.

Ord Minnett carries an accumulate rating on Ventia with a price target of $6.10, while UBS holds a buy recommendation with a price target of $6.23.

Comparing to current price levels, the company may be trading at fair value already.

Foolish takeaway

Ventia, with remarkable consistency, has won and retained large, long-term government contracts, delivering them reliably, and returning capital to shareholders.

 For investors seeking a stable, growing business with strong earnings visibility and a direct link to Australia’s expanding defence budget, Ventia deserves serious consideration.

The post This ASX stock landed a $935 million Australian Defence Force contract. What does this mean for investors? appeared first on The Motley Fool Australia.

More reading

• Buy, hold, sell: Ventia, Sigma, and Mineral Resources shares
• A long-term contract win is lifting this ASX 200 stock today
• Here are the top 10 ASX 200 shares today
• This ASX 200 stock just jumped 13% in a week. Here’s why
• Ventia Services secures $340m Victorian road maintenance contracts

Motley Fool contributor Mark Verhoeven 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.

Some ASX 200 shares rise because conditions are favourable. Others keep growing because the business itself becomes more valuable over time.

That second group is harder to find, but usually includes companies with strong market positions, sticky customer relationships, useful data, and the ability to reinvest through different cycles.

Two ASX 200 shares that appear to have those qualities are listed below.

CAR Group Ltd (ASX: CAR)

CAR Group is one ASX 200 share that has steadily become a much bigger business than many investors may realise.

It remains best known locally for carsales.com.au, but the company now operates across several major international vehicle markets. Its platforms span Australia, Brazil, South Korea, the United States, and Chile, giving it exposure to a large and underpenetrated global opportunity.

The attraction of this model is that vehicle marketplaces can become stronger with scale. Buyers want choice, sellers want access to buyers, and dealers want tools that help them win business more efficiently. Once that ecosystem is in place, it can be difficult for rivals to replicate.

CAR Group is also moving beyond simple listings. It is adding payments, finance, inspections, dealer products, media, and artificial intelligence (AI)-driven tools that can make the buying and selling process easier.

This is an important development. The company is using its data and marketplace position to create a more useful experience for consumers and dealers. Voice-controlled search, AI companions, and smarter dealer tools all point to a platform that is becoming more intelligent, not just larger.

Vehicle markets will always have cyclical elements, and valuation matters after a strong run. But this ASX share has the type of global marketplace economics and product depth that could support growth for many years.

TechnologyOne Ltd (ASX: TNE)

TechnologyOne is another ASX 200 share that looks well placed for the long term.

It provides enterprise software for organisations such as councils, universities, government agencies, and large enterprises. These customers need reliable systems to manage critical functions, which makes the software deeply embedded once adopted.

That customer stickiness is a major strength. Replacing core enterprise software can be expensive, disruptive, and risky. This gives TechnologyOne a strong foundation of recurring revenue.

The interesting part is how the company is positioning itself for the next stage of enterprise software.

Some software businesses are facing questions about whether AI will reduce the need for traditional seat-based products. TechnologyOne appears to be taking a different path.

Its SaaS+ model and AI products are designed to make its platform more valuable by helping customers simplify processes, improve productivity, and get better outcomes from their data. As a result, AI looks more like an accelerant than a threat.

TechnologyOne shares are rarely cheap. But high-quality software businesses with recurring revenue, defensive customers, and a clear AI strategy arguably deserve attention from long-term investors.

The post 2 excellent ASX 200 shares that look built for the next decade appeared first on The Motley Fool Australia.

More reading

• How to turn $500 a month into $500,000 with ASX shares
• 4 ASX shares scoring upgraded ratings this week
• This ASX tech stock just raised its dividend by 21%
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• Buy, hold, sell: James Hardie, TechnologyOne, and Webjet shares

Motley Fool contributor James Mickleboro has positions in Technology One. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Technology One. The Motley Fool Australia has recommended CAR Group Ltd and Technology One. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

For investors looking to add an ASX small-cap allocation to their portfolio, Environmental Group Ltd (ASX: EGL) is worth watching.

A new report from Bell Potter indicates it could be set to rise significantly over the next 12 months. 

Company overview 

The Environmental Group is an emerging Australian environmental engineering company with a focus in resources and waste sectors. 

EGL’s service proposition covers air emissions control, water pollution and recycling plant solutions across four business segments: 

• Baltec
• EGL Energy
• Total Air Pollution Control
• EGL Waste.

Its share price crashed a whopping 30% last week after the company advised that it now expects FY26 normalised EBITDA to be in the range of $8.5-$9.0m (BPe $13.2m), which compares to prior guidance of 15-20% growth ($12.7-$13.5m). 

At the mid-point this equates to a -21% decline from FY25. 

According to Bell Potter, the revised guidance reflects EGL Energy and Baltec disruptions. 

A $2.5m estimated FY26 EBITDA impact is expected in the Energy division driven by operational matters(through the implementation of the ERP), historical job balance clean-up and higher fleet diesel costs. Baltec is expected to see a $1.5m impact due to delayed deliveries, logistics disruption and slower Middle East tender awards. Clean Air and Waste continue to trade broadly in-line with management expectations.

Can this ASX small-cap rebound?

After falling significantly last week, the team at Bell Potter reduced their price target on this ASX small-cap. 

Additionally, it has adjusted its earnings per share forecast. 

EPS changes in the report reflect operating EBITDA revised in-line with updated guidance and flow on effects to FY27 and beyond: -52% FY26; -22% FY27; -11% FY28.

However the broker still sees upside for this ASX small-cap. 

Environmental Group shares closed last week at 14 cents per share. 

Bell Potter has retained its buy recommendation and updated its price target to 21 cents per share (previously 35 cents per share). 

This indicates 47% upside from current levels. 

EGL is confident it has identified and addressed its ERP issues. The company will now manually check invoices to mitigate any risks moving forward. EGL Energy is still seeing strong demand and revenue growth however Baltec is navigating through a tough operating environment owing to the Middle East conflict. We retain our Buy recommendation driven by the growing recurring revenue stream and now undemanding valuation.

The post This ASX small-cap could be set to rise 47% appeared first on The Motley Fool Australia.

More reading

• Which of these ASX shares hitting record highs is the best buy right now?
• Bell Potter is tipping a 40% rebound for this ASX consumer discretionary stock
• Meet the ASX small-cap healthcare company which could triple this year
• With potential upside of more than 300%, is this ASX biotech the best buy on the ASX right now?
• What is Bell Potter’s view on this ASX small-cap following a clinical trial update?

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

2026 has gone from bad to worse for Webjet Group (ASX: WJL) shares. 

Last week, Webjet shares tumbled another 10%, taking its year to date drop to almost 50%. 

It’s been tough sledding for ASX travel shares this year.

Sentiment has been negatively affected by global conflict, rising interest rates and cost of living pressures. 

As many investors are aware, Webjet provides online travel agency services. Its brands include Webjet OTA, Airport Rentals, Motorhome Republic, and Trip Ninja.

Why are investors exiting positions in Webjet shares?

Webjet shares endured a 10% fall last week largely on the back of its FY26 result.

The company reported: 

• A 1% increase in revenue to $136.4 million, while statutory net profit after tax (NPAT) increased 85% to $3.7 million.
• Underlying EBITDA fell 20% to $28.1 million, and underlying NPAT dropped 24% to $13.6 million.
• Bookings fell 7% to 1.4 million, while total transaction value declined 3% to $1.46 billion.

Perhaps the biggest disappointment of all was Webjet’s update on its agreement with Virgin Australia.

Webjet said Virgin Australia will significantly reduce commission payments and commercial arrangements from July 2026, which would have cut FY26 revenue by about $3 million if applied for the full year. 

While the financial impact is relatively modest, investors may see it as another challenge for Webjet as it faces softer travel demand, airfare pressure, weak consumer confidence, and a tougher FY27 outlook.

What are experts saying?

Following the result, brokers downgraded their views on Webjet shares. 

Morgans said the FY26 result was weak but in line with guidance. 

It pointed out that FY26 was impacted by subdued trading conditions and material investment in the business. 

FY27 is going to be a particularly challenging year for WJL given the Middle East conflict, cost of living pressures, Virgin Australia materially reducing its commission and overrides and the RBA surcharging regulation changes. 

We have made significant revisions to our already well below consensus forecasts. In the absence of corporate activity, shareholders will need to be patient given the current challenges WJL needs to overcome while investing in its business for longer term success. We retain a Hold rating with a new price target of A$0.40.

Similarly, Jefferies cut its price target on Webjet shares by 38% to 40 cents per share.

After closing last week at 45 cents per share, it appears brokers expect more downside for Webjet shares in the short term. 

The post Are Webjet shares a buy after crashing 10% last week? appeared first on The Motley Fool Australia.

More reading

• 5 ASX retail shares whose 12-month price targets just got slashed
• Why are Virgin Australia shares booming 8% higher today?
• Buy, hold, sell: James Hardie, TechnologyOne, and Webjet shares
• Why EOS, Newmont, Webjet, and WIA Gold shares are tumbling today
• Why James Hardie, Flight Centre and Webjet shares are making waves on Wednesday

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.

The Lovisa Holdings Ltd (ASX: LOV) share price has seen a significant decline within the last year, dropping by 48% since August 2025, as the below chart of the ASX dividend share shows.

Lovisa sells affordable jewellery across numerous markets through its global network of stores. At the end of the FY26 half-year result, it had 1,089 stores.

There are a number of reasons why the ASX dividend share is a compelling buy for both passive income and total returns.

Growing dividend

Every income investor probably wants to know what the dividend yield is for this business. I’ll get to that soon, but I believe it’s more important to see that the business is growing its dividend.

To me, dividend growth suggests the business isn’t likely to give investors a passive income cut – those dividend payouts could be essential for someone’s personal finances. A rising (sustainable) dividend also suggests that the company’s earnings are headed in the right direction.

In the FY26 half-year result, Lovisa’s board of directors decided to increase the interim dividend per share by 6% to 53 cents. In 2023, the interim dividend was 38 cents per share and in 2019 it was 18 cents per share.

I’m not sure how big the dividend will be in a few years’ time, but the forecast on CMC Invest suggests the business could pay an annual dividend per share of $1.12 in FY28. At the current Lovisa share price, that translates into a dividend yield of 6.1%, including franking credits.

Global expansion

One of the main reasons to like Lovisa so much is that it’s delivering rapid growth of its global store network in numerous markets. Some of the places it’s in include Australia, New Zealand, Malaysia, China, Vietnam, South Africa, the UK, the USA, France, Germany, Spain, and plenty more.

Store expansion is a key driver of the ASX dividend share’s financials. The HY26 store count reached 1,089, up 6.3% half over half and up 15.5% year over year. This helped Lovisa revenue rise 22.7% year over year and net profit increase 21.5%.

As long as the company’s comparable store sales growth remains positive over time, I believe its global expansion will turn out successfully. In HY26, comparable store sales growth was 2.2.%, showing the benefit of scaling up.

Rising margins

Some businesses don’t see much growth in their margins as they expand.

Lovisa is investing heavily in growth, so I’m not expecting every single result to have a higher profit margin.

The ASX dividend share reported in the HY26 result a gross profit margin of 82.9%, which has increased in each half-year result going back to FY21 when it was 77.2%. This is a strong tailwind for operating profit (EBIT) and net profit margin improvements.

By FY30, I think the business will be significantly more profitable and pay a larger dividend. At this lower price, I think it’s a great price to buy.

The post 1 ASX dividend share down 48% I’d buy right now 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 Lovisa. The Motley Fool Australia has recommended Lovisa. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.