Tag: The Motley Fool Australia

ASX All Ords copper stocks are having a great run as the commodity price surges on the back of low supply and rising demand.

The copper price rose to a two-year high of US$4.70 per pound late last month.

As shown below, the red metal has been rising since early February and is now up 19% in the year to date.

ASX copper stocks rise on commodity price gains

The rising commodity price has given many ASX copper stocks a bump.

In the year to date:  

• Aeris Resources Ltd (ASX: AIS) shares are up 80%
• WA1 Resources Ltd (ASX: WA1) shares are up 43%
• Sandfire Resources Ltd (ASX: SFR) shares are up 33%
• FireFly Metals Ltd (ASX: FFM) shares are up 28%

Why is demand for copper rising?

Copper played a foundational role when the world first embraced electrification back in the 1880s.

The red metal is an excellent electricity conductor. Back then, it was used to make wires and pipes for water and sewage systems, to manufacture telephones, and to power expanding railway networks.

Today, the red metal is poised to once again play a key role in electrification mark II, or in other words, the green energy transition.

Electric vehicles, wind turbines, solar energy systems, and data centres all need copper.

Global copper supplies are currently constrained.

Trading Economics explains why:

Cobre Panama, the world’s largest open-pit copper mine was suspended, while power cuts in Zambia hit key mines.

The difficulty in securing supplies and lower margins for smelters in China resulted in a potential cutback of 10% in this year’s output.

Broker says buy this small-cap ASX copper stock

If you want to get in on the copper action, Tom Bleakley from BW Equities has a recommendation.

He’s got a buy rating on ASX All Ords copper stock, FireFly Metals.

Bleakley explains on The Bull:

FireFly is a copper explorer and developer. The company’s Green Bay Copper-Gold project is in Newfoundland, Canada. Exploration has revealed high grade copper mineralisation at depth.

The broker said copper demand would rise over the next decade and “FireFly offers good exposure to a rising copper price”.

Firefly Metals is a small-cap ASX copper stock with a market capitalisation of $365 million.

The Firefly Metals share price is 83 cents at the time of writing, up 2.48% on Tuesday.

The big miners expand their copper exposure

Major ASX 200 miners are also expanding their investment into the copper space.

BHP Group Ltd (ASX: BHP) bought out ASX copper pure-play stock Oz Minerals last year for $9.6 billion.

And just last month, the ‘Big Australian’ made a play for Anglo American plc (LSE: AAL) via a non-binding, all-scrip offer worth 31.1 billion pounds (about A$60 billion).

As my colleague James reported at the time, BHP appeared motivated to buy Anglo American for its copper assets.

If the deal had gone ahead, BHP would have become the largest copper miner in the world, producing about 10% of global output.

Rio Tinto Ltd (ASX: RIO), which began life as a copper miner in 1873, is also increasing its exposure to copper.

The post Buy this ASX All Ords stock for ‘good exposure to a rising copper price’ appeared first on The Motley Fool Australia.

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More reading

• Why Graincorp, Lindsay Australia, NAB, and Sims shares are sinking today
• This ASX 200 real estate stock has been flying ahead of tomorrow’s key update. Should you buy?
• Are CBA shares a buy or a sell ahead of Thursday’s update?
• Hunting for passive income? Here’s everything you need to know about the boosted ANZ dividend
• Why Pilbara Minerals shares are a buy for this lithium short seller

Motley Fool contributor Bronwyn Allen has positions in BHP 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 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.

In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to record another solid gain. At the time of writing, the benchmark index is up 0.7% to 7,734.4 points.

Four ASX shares that have failed to follow the market higher today are listed below. Here’s why they are rising:

Graincorp Ltd (ASX: GNC)

The Graincorp share price is down a further 3.5% to $7.83. Investors have been selling this grain exporter’s shares this week after it downgraded its earnings guidance for FY 2024. GrainCorp now expects to report FY 2024 underlying EBITDA in the range of $250 million to $280 million. This is down from its previous guidance range of $270 million to $310 million. In addition, it expects underlying net profit after tax to be $60 million to $80 million. This is down from its previous guidance of $65 million to $95 million. A recent deterioration in trading conditions is to blame.

Lindsay Australia Ltd (ASX: LAU)

The Lindsay Australia share price is down almost 8% to 88 cents. This follows the release of a trading update from the logistics company this morning. Lindsay Australia advised that it expects underlying EBITDA to be between $88 million and $94 million in FY 2024. This is below expectations due to lower horticultural volumes because of wet weather, multiple rail disruptions, and disrupted freight flows and volumes impacting operational efficiency and utilisation.

National Australia Bank Ltd (ASX: NAB)

The National Australia Bank share price is down 2.5% to $33.79. This has been driven by the banking giant’s shares going ex-dividend this morning for its latest payout. Last week, the big four bank released its half-year results and declared a fully franked interim dividend of 84 cents per share. Eligible shareholders can now look forward to receiving this dividend in their bank accounts when it is paid in just under two months on 3 July.

Sims Ltd (ASX: SGM)

The Sims share price is down 5% to $11.20. Investors have been hitting the sell button today after the scrap metal company downgraded its earnings guidance for FY 2024. Management advised that ongoing market challenges have continued across the industry. This has seen its SA Recycling and ANZ Metal businesses face increased challenges compared to the first half. As a result, the company advised that its second-half underlying EBIT will be marginally lower than the first half. This compares to its previous guidance for underlying EBIT “to improve in H2 FY24 compared to HY1 FY24.”

The post Why Graincorp, Lindsay Australia, NAB, and Sims shares are sinking today appeared first on The Motley Fool Australia.

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More reading

• One ASX 200 stock that just upgraded earnings guidance (and one that downgraded)
• Why is the NAB share price sinking today?
• 5 things to watch on the ASX 200 on Tuesday
• Why Block, Graincorp, Spark, and Tourism Holdings shares are sinking today
• What you need to do to secure the next NAB dividend

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

The Goodman Group (ASX: GMG) share price has risen almost 5% this week and around 8% this month, as we can see on the chart below. In this article, I’m going to look at whether the S&P/ASX 200 Index (ASX: XJO) stock is a buy.

Goodman is a large owner and developer of industrial property in Australia and overseas. The business is now putting a lot of effort into growing its exposure to data centres. With Goodman expected to release its FY24 third quarter operational update tomorrow, is now a good time to think about the ASX 200 stock?

Strong update expected

The Australian reported on recent commentary from broker Citi, which suggested there is going to be improved earnings guidance when the update is released.

Citi analyst Howard Penny believes there could be good news on the data centre rollout and potential for an earnings upgrade from Goodman’s investor update.

Citi suggested there could be a positive market response to the Goodman share price if the guidance is hiked.

What progress has Goodman revealed about data centres?

When Goodman announced its FY24 first-half result, it said the data centre global power bank had expanded to 4GW across 12 major global cities.

The ASX 200 stock said its secured power increased to 2.1GW with another 1.9GW in the advanced stages of procurement. These new data centres will require large amounts of energy to power them.

Goodman explained it is gaining planning approvals and starting infrastructure works across the power bank to provide customers with certainty on project milestones.

It also said it’s continuing to work with customers on delivery and leasing models for powered shell and turn-key solutions, utilising Goodman’s planning, architectural and engineering capabilities, and strong balance sheet.

Is the Goodman share price a buy?

The Goodman share price has railed strongly, so it’s certainly not as good value as it was a few months ago.

But, numerous financial measures are moving in the right direction. In the HY24 result it upgraded its operating earnings per share (EPS) guidance to 11% growth, up from the previous guidance of 9% growth.

The ASX 200 stock said it’s executing on its high-quality development workbook with attractive project margins. At the latest disclosure, the business had work in progress (WIP) of $12.9 billion.

Goodman also said its investment property is “performing strongly with high levels of occupancy and income growth”. In the HY24 result, Goodman reported a portfolio occupancy rate of 98.4%, while the 12-month rolling like-for-like net property income growth was 5%, which I think is a solid growth rate.

If Goodman keeps delivering good underlying growth, it can continue to justify a higher Goodman share price. We’ll see how the market reacts tomorrow, but the long-term looks promising.

The post This ASX 200 real estate stock has been flying ahead of tomorrow’s key update. Should you buy? appeared first on The Motley Fool Australia.

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More reading

• Why the ASX 200 is predicted to leap higher in 2024 despite higher interest rates
• 5 things to watch on the ASX 200 on Tuesday
• Here are the top 10 ASX 200 shares today
• Why Carnarvon Energy, Goodman, Nickel Industries, and Southern Cross Electrical are rising
• What can ASX 200 investors expect from the RBA interest rate call tomorrow?

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

It’s a big week for ASX bank shares this week. We’ve already had earnings reports from two of the big four banks thus far. And owners of Commonwealth Bank of Australia (ASX: CBA) shares will get a look at a quarterly update later this week.

Yesterday, we went through the latest results from Westpac Banking Corp (ASX: WBC). These included a hike to the company’s interim dividend, as well as a new $1.5 billion share buyback program.

Today, ANZ Group Holdings Ltd (ASX: ANZ) released its own set of earnings for the six months to 31 March. The headline ended up being similar to that of Westpac, with ANZ revealing a decent hike to its interim dividend, as well as a new $2 billion share buyback.

And on Thursday, we’ll hear from CBA – the ASX’s largest bank stock by a country mile.

ASX 200 bank stock set to deliver quarterly update

Now CBA’s update on Thursday will be a quarterly update, not a full earnings report. That means we probably won’t get any new dividend or share buyback announcements, just an update on how CBA’s finances are looking as of 31 March.

CBA shares have had a pretty solid run over the past week or so. The bank is up more than 3% over the past five trading days, and today it’s back over $117 a share. Perhaps investors have taken note of a recent development out of CBA.

Today, CBA revealed that it has “been selected” by the Queensland Government to “provide whole of Government banking and payment services for a minimum term of five years”.

The bank will provide all banking and payment services to the entire Queensland Government at least until 2029, with two optional three-year term extensions on the table.

Last week, my Fool colleague James looked at some of the things that ASX broker Goldman Sachs is telling ASX investors to keep an eye on with this quarterly update. Those included the bank’s mortgage profitability, bad debts and cost controls. Goldman concluded by stating:

Overall we are of the view the key to offsetting these inflationary pressures will be the banks’ ability to deliver productivity improvements.

So should investors buy or sell CBA shares before this update gets publically released on Thursday?

CBA shares: Buy or sell?

Well, one ASX expert remains on the fence.

According to The Bull, Tom Bleakley, analyst at BW Equities, has just given CBA shares a ‘hold’ rating. Bleakley notes that while the CBA share price has risen substantially in recent months, the bank’s profits have been falling. Here’s what he said in full:

The share price of Australia’s biggest bank is off its highs above $120 in early March. But the price has risen from $96.87 on November 1 to trade at $114.195 on May 2.

Cash net profit after tax of $5.019 billion in the first half of fiscal year 2024 was down 3 per cent on the prior corresponding period. Yet the fully franked interim dividend of $2.15 a share was up 2 per cent. Investors can hold for a reliable and appealing dividend and potential capital growth.

Unfortunately for CBA bulls, Bleakley’s hold rating appears to be as good as it gets for the bank when it comes to broker recommendations.

Last month, we discussed how at least three other brokers all called ‘sell’ on CBA shares. Most of these brokers cited valuation concerns as the primary reason for their bearish outlook.

But let’s wait and see what CBA has to say on Thursday.

The post Are CBA shares a buy or a sell ahead of Thursday’s update? appeared first on The Motley Fool Australia.

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More reading

• After hitting all-time highs in March, why did the CBA share price tumble 5% in April?
• Own CBA shares? Here’s what to look out for with the bank’s Q3 update
• Maximizing dividends: 3 of the best ASX shares for income investors right now?
• Forget CBA shares and buy these ASX 200 stocks in May
• Which asset class are self-managed superannuation funds abandoning in favour of shares?

Motley Fool contributor Sebastian Bowen 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 Goldman Sachs Group. 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 interim Australia and New Zealand Banking Group Ltd (ASX: ANZ) dividend was revealed this morning.

The S&P/ASX 200 Index (ASX: XJO) bank stock reported its half-year results for the six months ending 31 March before market open.

In good news for passive income investors, management opted to increase the ANZ dividend despite a dip in the company’s half-year cash profits.

In early afternoon trade today, the ANZ share price is down 0.8% following the results, with shares trading for $28.53 apiece. That’s trailing the 0.4% gains posted by the ASX 200 at this same time.

Here’s what’s happening on the passive income front.

The boosted ANZ dividend

With ongoing mortgage competition in the banking sector, ANZ saw its net interest margin (NIM) shrink by 0.02% over the six months to 1.63%.

That didn’t help its cash profit, which dipped 1.0% year on year to $3.55 billion.

Still, management rewarded shareholders with an interim ANZ dividend of 83 cents per share, franked at 65%. That’s up 2.5% from last year’s interim dividend of 81 cents per share, though that one came with 100% franking credits.

And it came in ahead of the consensus estimates of 81 cents per share.

At the current ANZ share price of $28.53, this equates to an instant partly franked yield of 2.9% from the interim dividend alone.

If you’re hoping to bank this passive income, you’ll need to own shares at market close this Friday 10 May. ANZ shares trade ex-dividend on Monday 13 May.

You can then expect to see that payout land in your bank account on 1 July.

That is, unless you’d prefer to reinvest that cash and put it to work for you via the magic of compounding.

In that case, ANZ’s Dividend Reinvestment Plan (DRP) is in effect for this payout. Management said the big four bank intends to provide shares under the DRP through an on-market purchase.

If we add in the final dividend of 94 cents per share, paid on 22 December, ANZ shares trade on a partially franked yield (partly trailing, partly pending) of 6.2%.

What did management say?

Commenting on the bank’s performance and the ANZ dividend, CEO Shayne Elliot said:

We’ve driven a lot of productivity gains, and we take those gains by getting more efficient and some of those go back to our shareholders in the form of dividends and others, a lot of it, gets reinvested into the business and that’s really what we’re able to do again this year.

Atop the boosted interim dividend, ANZ announced plans to buy back up to $2 billion of shares on-market as part of its capital management plan.

The post Hunting for passive income? Here’s everything you need to know about the boosted ANZ dividend appeared first on The Motley Fool Australia.

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More reading

• ANZ shares tumble despite $3.5b half-year profit
• ANZ share price on watch amid first-half earnings beat and $2b buyback
• 5 things to watch on the ASX 200 on Tuesday
• Brokers say these ASX dividend stocks are buys
• Own ANZ shares? Here’s your first-half results preview

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.

Pilbara Minerals Ltd (ASX: PLS) shares are down 22% from their all-time high. Undeterred, one practised fund manager selects the heavily shorted company as the pick of the lithium crop.

The Western Australian miner has come under intense pressure since November 2022. At the time, lithium carbonate was fetching around USD$85,000 per tonne. Fast forward 18 months, miners are now confronted with prices that are lucky to be one-fifth of those glory days.

Short sellers have been banking on the lithium downfall to print returns. Not only is Pilbara Minerals among the most shorted ASX-listed companies, it is the most shorted… and has been for a long time now.

Still, a fundie who is familiar with finding short targets believes Pilbara Minerals shares are being misplaced.

Best-of-breed ASX lithium pick

Sage Capital is an investment management firm located in Sydney. The youthful equity manager was formed in 2019 by ex-Tribeca portfolio manager Sean Fenton.

Fenton is no stranger to making money by identifying overvalued equities. For 15 years, Fenton guided Tribeca’s Alpha Plus fund, chasing S&P/ASX 200 Index (ASX: XJO) outperformance by implementing a mix of short selling and going long (buying) listed Aussie companies.

While Fenton switched out Tribeca for his firm, the approach remains the same.

The astute fund manager describes the strategy as one that’s grounded in exploiting behavioural biases, saying:

People panic when things start going wrong and get overconfident when things go well. All those different biases can lead to poor investment decisions. A lot of what we do is about exploiting those poor decisions made by people and trying to remove them from our own processes.

A prime example of this is Fenton’s backing of Pilbara Minerals shares. In a case of what might be throwing the baby out with the bathwater, the fundie thinks the Pilgangoora mine operator is cut from a different cloth to its lithium peers.

Fenton partly favours the $12.6 billion lithium company for its robust balance sheet. As of 31 December 2023, Pilbara Minerals held $2.14 billion in cash and cash equivalents, towering over its $452.5 million worth of debt — a net cash position of $1.6 billion.

The positive view, however, does not extend to other ASX lithium shares. Sage Capital has shorted others in the space, including Lake Resources N.L (ASX: LKE), Core Lithium Ltd (ASX: CXO), and Sayona Mining Ltd (ASX: SYA).

Contrarian take on Pilbara Minerals shares

Apparently, Sean Fenton and his team don’t mind being the odd ones out.

As noted by my colleague, James Mickleboro, Pilbara Minerals is still the most shorted ASX share heading into the week. Nearly 22% of the company’s shares are sold short — twice the short interest attracted by Liontown Resources Ltd (ASX: LTR), a pre-production lithium name.

Likewise, the Pilbara Minerals share price has underperformed the ASX 200 over the past year, as shown above.

Yet, Fenton believes shorters are barking up the wrong tree. He believes short sellers are piling on Pilbara Minerals because of its premium price tag. However, he thinks the premium is warranted, calling it a ‘low-risk way to play’ lithium demand.

The post Why Pilbara Minerals shares are a buy for this lithium short seller appeared first on The Motley Fool Australia.

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More reading

• These are the 10 most shorted ASX shares
• What would I have now if I’d invested $10,000 into Pilbara Minerals shares in April?
• Here are the top 10 ASX 200 shares today
• Are Pilbara shares worth buying right now?
• These are the 10 most shorted ASX shares

Motley Fool contributor Mitchell Lawler 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 smartest things ASX shares investors can do is learn from the mistakes of others.

The odds are we’re all going to stuff up in similar ways when making investment decisions, especially when we’re new to the game.

The Fool has a complete guide to buying ASX shares for beginners, and in this article, we’re going to hear from a few professional investors about what they have learned over many years of trading.

In a blog published on the ASX, they reveal what they wish they’d known before starting investing.

Invest in quality ASX shares, ETFs and other securities

Arian Neiron, CEO of VanEck Asia Pacific, an issuer of exchange-traded funds (ETFs), says buying quality ASX shares, ETFs and other securities should be the primary goal of every investor, and this requires thorough research. 

Company fundamentals become critical when the tide turns [the market falls].

Investors need a strong reason why they invested in a company in the first place, and to be able to ‘stress test’ their thesis [when things don’t work out as you expect].

Take the money and run on speculative investments

Neiron recommends keeping speculative companies “as satellite positions rather than in the portfolio core”, and taking profits when it is sensible to do so.

For speculative investments that go on a momentum run, I also learned to take profits.

Investors can really fall in love with an investment, but they need to know when to fold and move on.

Don’t be overwhelmed by choice

Ord Minnett Private Wealth Advisor Vera Lin says it’s easy for new investors to suffer “decision fatigue” given there are so many investment choices available to them.

On the ASX alone, investors can buy many types of securities, including individual ASX shares, ETFs, listed investment companies (LICs), shares options and so much more.

Over the years, I’ve learned that investing is much simpler than many people realise and that there are lots of good investment experts and advisers out there who can help you.

Keep it simple, stupid (the KISS principle)

Lin also advocates keeping your investment strategy simple.

I fancied myself as an analyst and an economist when I started investing.

I was trying to pick stocks, predict macro changes, and time the market, only to realise that approach is so unnecessary and unsuccessful for most people.

Start investing in ASX shares and other securities early  

Caroline Gurney, CEO of Future Generation, wishes she had become serious about investing earlier.

Hindsight is a wonderful thing, but had I known about the power of compounding returns over years and decades, I would have invested more and spent less, and started my investing journey earlier.

Educate yourself

New investors need a commitment to education, but this does not have to be arduous, says Gurney:

Even simple things like reading your annual superannuation statement or reading the quarterly report from a fund you invest in can make a big difference to your market knowledge.

Consider your personal values

Future Generation has two philanthropic LICs trading on the ASX. Gurney suggests that new investors consider their personal values when building an investment strategy. 

Looking back, I didn’t think enough about my personal values when I began investing and thought philanthropy was something only for wealthy people.

I didn’t realise that investors, large and small, can potentially build wealth while helping others at the same time through listed philanthropic funds.

Another popular values-based investment trend today is environmental, social, and corporate governance (ESG) investing, whereby investors favour ASX shares or ETFs that represent companies actively seeking to reduce their carbon emissions, or whose businesses are less harmful to society or the environment.

The post Buying ASX shares? Experts reveal what they wish they knew before investing appeared first on The Motley Fool Australia.

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More reading

• Paladin Energy share price hits a 12-year high: Too late to buy?
• Why the ASX 200 is predicted to leap higher in 2024 despite higher interest rates
• The ASX 200 telco and energy stocks set to benefit from AI
• Goldman says this ASX 200 share can rise 20% and offer a juicy dividend yield
• Down 10% since mid-March, are Medibank shares a buy or a sell?

The Paladin Energy Ltd (ASX: PDN) share price is having a very strong session.

At the time of writing, the uranium miner’s shares are up 7% to a 12-year high of $16.74.

This means the company’s shares are now up an impressive 155% since this time last year.

To put that into context, a $10,000 investment into Paladin Energy shares a year ago would now be worth approximately $25,500 today.

Why is the Paladin Energy share price at a 12-year high?

Investors have been scrambling to buy the company’s shares over the last 12 months due to booming uranium prices.

There have been a number of catalysts for this. This includes production shortfalls in Kazakhstan, which is the largest producer of the chemical element, and forecasts for very strong growth in demand thanks to many countries embracing nuclear power as part of their decarbonisation plans.

In addition, recent news that the United States is banning Russian supplies has sparked further concerns over the supply/demand balance.

And while all this is happening, Paladin Energy has been busy restarting its Langer Heinrich Mine (LHM) in Namibia. In fact, it just recently announced that commercial uranium concentrate production and drumming were achieved at the LHM. It is now focused on its production ramp-up and building a finished product inventory, ahead of shipments to customers.

Is it too late to invest?

Unfortunately, most brokers now believe that the Paladin Energy share price has peaked or is close to peaking. At least for the time being.

For example, a recent note out of Bell Potter reveals that its analysts have a buy rating but a $1.65 (now $16.50 following its reverse stock split). This is a touch below where the company’s shares are currently trading.

The broker highlights that “at full capacity LHM will be a top ten producer supplying 6Mlbs pa by FY26 (BPe).”

Elsewhere, the team at Citi put a buy rating and $17.00 price target on the company’s shares last week. This implies potential upside of just 1.5% for investors from current levels.

And finally, the most bullish broker is arguably Morgan Stanley. It has an overweight rating and $17.45 price target on the uranium producer’s shares. Based on its current share price of $16.74, this suggests modest upside of 4.2% over the next 12 months.

All in all, based on these recommendations, investors may want to wait for a pullback before considering an investment in Paladin Energy’s shares.

The post Paladin Energy share price hits a 12-year high: Too late to buy? appeared first on The Motley Fool Australia.

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Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The S&P/ASX 200 Index (ASX: XJO) is charging higher again today.

In late morning trade the benchmark index is up 0.5% at 7,721.2 points.

If it can hold these gains through close, today will mark the fourth consecutive day of gains for the ASX 200.

If you’re reading this before 2:30pm AEST, one important variable in today’s trading that remains to be seen is what the Reserve Bank of Australia (RBA) chooses to do with interest rates.

Markets have broadly priced in that the central bank will hold rates steady at the current 4.35% to keep a lid on inflation.

If the RBA surprises with a rate cut, stocks will likely fly higher.

Should the RBA opt to hike interest rates, stocks will likely sink in afternoon trade.

However, long-term investors would do well to remember that the ASX 200 gained 9.3% in 2023 when the RBA hiked interest rates five times.

And 2 April this year saw the benchmark index hit new record highs of 7,901.2 points despite sticky inflation and ongoing high rates.

With that in mind, here’s why these experts aren’t losing sleep over the prospect of high rates.

Why the ASX 200 could boom amid high interest rates

As The Australian Financial Review reports, UBS equity strategist Richard Schellbach now forecasts the ASX 200 will end 2024 at 8,000 points, or 3.6% above current levels.

And these figures don’t include the dividend payouts many blue-chip companies pay their shareholders.

According to Schellbach:

The positive view I had on equity markets this year has played out a bit faster than I had expected. We’re in an environment where equity market valuation multiples are likely to overshoot on the upside.

As for how a potential RBA interest rate hike this year would impact markets, Schellbach said, “Often that would spook the markets.” However in this, “These higher interest rates we’re seeing are a product of what ultimately is a good story to equities, which is that the economy is strong … reflecting a slightly better profit growth story for equities.”

Betashares chief economist David Bassanese also predicts a strong run for the ASX 200, forecasting it will reach 8,250 points by the end of 2024. That’s 6.9% above current levels.

He expects one or more rate cuts from the RBA this year.

According to Bassanese (quoted by the AFR):

As soon as the RBA does finally pivot to start signalling rate cuts and the rest of the economy starts to improve, generic consumer stocks will improve and that’s what’s going to be driving our market higher.

The overall outlook is still one of a soft landing for the global economy and Australian economy… focusing on the big picture, it’s still a bullish outlook.

The post Why the ASX 200 is predicted to leap higher in 2024 despite higher interest rates appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Tuesday
• Here are the top 10 ASX 200 shares today
• What can ASX 200 investors expect from the RBA interest rate call tomorrow?
• These are my top ASX 200 share picks for growth right now
• 5 things to watch on the ASX 200 on Monday

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.

Artificial intelligence (AI) stands out as a clear and promising investment trend with long-term tailwinds, according to Wilson Asset Management Lead Portfolio Manager, Matthew Haupt.

Haupt runs the WAM Leaders (ASX: WLE) listed investment company (LIC). The investment strategy revolves around “picking inflection points and positioning the portfolio ahead of those changes”.

Haupt has identified one ASX 200 telco stock and one ASX 200 energy stock that he thinks will do well in the rapidly growing AI era.

Which ASX 200 telco and energy stock?

Haupt says AI is a valuable productivity tool, particularly in sales operations.

As AI continues to influence hardware advancements, his team of analysts anticipate significant benefits for ASX 200 telco stock Telstra Group Ltd (ASX: TLS) and ASX 200 energy stock Santos Ltd (ASX: STO).

He says:

Investments in companies like Telstra and Santos offers investors an attractive opportunity to participate in the growth of AI, but at reasonable valuations and while benefiting from the certainty of established businesses.

Let’s dig deeper.

Why Telstra?

Haupt says Telstra should be able to capitalise on the business sector’s need for better and faster connectivity to enable their artificial intelligence systems and processes to run smoothly.

He explains:

Leading mobile communications provider Telstra commands 99% of data connectivity through its subsea cables and is expanding its infrastructure with fibre optic cables to enhance data transfer speeds and bandwidth.

With AI driving the need for faster and more robust connectivity, Telstra stands poised to capitalise on this, offering investors exposure to this trend.

The Telstra share price is $3.60 at the time of writing, up 0.14% for the day so far. The ASX 200 telco stock has lost 17% of its value over the past year.

According to CBA data, Telstra’s price-to-earnings (P/E) ratio is 18.64x.

Why Santos?

Haupt says Santos is well-positioned to leverage the surge in electricity demand that will result from AI advancements.

He says:

Forecasts suggest electricity demand is set to double over the next decade – a demand Santos can meet with its low-cost energy solutions.

Renowned for being best in class, and boasting a motivated management team, Santos presents a compelling investment opportunity to capitalise on the evolving AI landscape.

The Santos share price is $7.46 at the time of writing, down 0.27% for the day so far. The ASX 200 energy stock has risen 2.2% over the past year.

According to CBA data, Santos shares are trading on a P/E of 12.04x.

Fellow Wilson Asset Management portfolio manager Oscar Oberg says AI will accelerate revenue growth and/or reduce operational costs for many companies.

He names 4 other ASX shares that are set to benefit directly from AI.

The post The ASX 200 telco and energy stocks set to benefit from AI appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Tuesday
• Almost ready to retire? I’d buy cheap ASX dividend shares for income
• Forget NAB and buy these ASX dividend shares
• 5 things to watch on the ASX 200 on Monday
• Why are ASX 200 energy shares getting smashed in May?

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