With much uncertainty hanging over both consumers and businesses, stock picking at the moment is a fraught activity.

However, there could be a pretty straightforward method to spot ASX shares worthy of buying.

Some stocks took off during last month's reporting season. And it's not an outrageous argument to hop on to these stocks that have both business and share price momentum.

The analysts at Celeste Funds Management this week named two such ASX shares this week that still have appealing prospects for further returns.

Executing well and plenty of future opportunities lined up

Shares for automotive industry software maker Infomedia Limited (ASX: IFM) went absolutely gangbusters in February.

"Infomedia rose 26.7% over the month, with the 1H23 result pointing to sales re-acceleration, good progress on cost control and a healthy sales pipeline," stated a Celeste memo to clients.

"Infomedia delivered sales growth across all regions (HoH) and made solid progress in reshaping the cost base."

The Infomedia share price has now gained more than 7% over the past year, all while paying out a dividend of 3.5%. Not bad for a period when most technology stocks suffered.

There is plenty of potential to be tapped in the near future, too.

"The company disclosed $15 million of potential annual recurring revenue opportunities, and while they still have to be won, it highlighted a refocus on client engagement by the new management team," read the Celeste memo.

"The balance sheet is net cash and Infomedia should see ongoing improved performance."

Much of the rest of the professional investment community agrees with the Celeste team. According to CMC Markets, six out of seven analysts currently rate Infomedia as a buy with five of those recommending it as a strong buy.

'Appealing exposure to a defensive industry'

While Australian Clinical Labs Ltd (ASX: ACL) shares have struggled over the past year, losing 22.5%, the stock enjoyed a massive renaissance during reporting season.

"Australian Clinical Labs rallied 16.5% during the month following a 1H23 result that beat market expectations," read the Celeste memo.

"Although COVID revenue was down (PCR testing volumes), the core business revenue grew 18%."

The Celeste analysts were impressed with the pathology service provider's cost control, as it "maintained an operating profit margin of 11%, in line with previous guidance". 

The current half is already looking great, and Celeste analysts reckon the shares are still inexpensive to buy in.

"Looking ahead, 2H23 has started strongly with Jan 23 LFL revenue growth of 22%," read the memo.

"ACL is an appealing exposure to a defensive industry and remains cheap versus listed peers."

Australian Clinical Labs is also popular with other fund managers, with four out of five analysts currently surveyed on CMC Markets rating it as a strong buy.

The post Catch these fast-rising 2 ASX shares before it's too late: Celeste appeared first on The Motley Fool Australia.

Although — or maybe because — small-cap ASX shares were absolutely hammered in 2022, some experts are tipping a roaring comeback in 2023.

IML portfolio managers Simon Conn and Marc Whittaker are certainly in this camp and specifically like the look of small-cap industrials.

The fund managers told clients on an IML blog post that the greatly reduced valuations for these stocks now factor in "a lot of negative news" already.

"Small industrials are trading at their biggest discount for over a decade," read the blog.

"Small industrials and large industrials have tracked each other quite closely for much of the past 10 years. However, over the past year a significant value gap has opened between the two indexes."

If you're wondering which ASX shares would be the best to buy right now to take advantage of this small-cap revival, the IML team thankfully named three:

'Astutely led' with a bank of assets

The IML fundies reckon Bega Cheese Ltd (ASX: BGA) did not have a chance to show its full potential in the 2022 financial year because of a string of one-off hurdles.

"Shanghai shutdowns negatively impacted its June 2022 result by over $40 million. Then as operations were returning to normal Bega witnessed a rapid increase in costs, particularly the price it pays farmers for milk," read the memo.

"However, at its recent AGM, Bega confirmed that it had finished implementing these price increases and its profit for the 2nd half of FY2023 should be back to the level it anticipated when it bought Lion Dairy and Drinks [in January 2021]."

Looking ahead to financial year 2024, Conn and Whittaker love the outlook for Bega because of three factors: competitive advantage, balance sheet, and management quality.

"Bega has a significant asset base on its balance sheet, including land & buildings worth circa $400 million," read the blog.

"Bega has been astutely led by the current chairman for a significant time, who has overseen the company grow from a small dairy company with one operating site on the South Coast of NSW to today being one of Australia's leading food and dairy companies."

The Bega share price has declined more than 21% over the past year, but has spiked up 27.5% since early November.

'Well-recognised brands' at a cheap valuation

GUD Holdings Limited (ASX: GUD) is primarily a vehicle parts and accessories provider.

According to Conn and Whittaker, its oldest business is the automotive aftermarket, distributing products like Ryco filters and DBA brakes.

"This division is relatively defensive given the wear and tear nature of demand for its products, and generates significant cash — however it has limited growth potential," they said.

"GUD has made a series of acquisitions over recent years in order to diversify its earnings. This makes it more resilient, while providing a potential growth driver for earnings."

Similar to Bega, GUD has had its share of troubles with supply disruptions and cost inflation.

But its growth potential, pricing power, and cheap valuation have the IML fund managers licking their lips.

"At current levels, GUD is very attractively priced at under 10 times FY2023 earnings with earnings that should grow into FY2024 as supply chains normalise and recently won contracts with major Australian car companies are fulfilled," read the blog post.

"GUD has had good success in the past in raising prices to mitigate cost increases, given its portfolio of well-recognised brands in the aftermarket and focus on wear and tear parts for the trade, where range and service are valued."

COVID cash well invested

Pathology services provider Australian Clinical Labs Ltd (ASX: ACL) saw earnings grow strongly during the COVID-19 pandemic.

The company used that cash, according to Conn and Whittaker, to pay off its debts, leaving it in a strong financial position for post-pandemic growth.

Like Bega Cheese, the IML team reckons ACL displays excellent competitive advantage.

"ACL has invested significantly in its national laboratory footprint, which allows it to flex its costs up and down as volumes fluctuate," read the blog post.

"This unified national laboratory system enables it to process samples in any laboratory around the country, so maximising the efficiency of its fixed-cost, laboratory network."

The pair also love ACL's growing earnings and management team.

"The recent acquisition of Medlab is a significant development for the company as this provides ACL with a presence in the Queensland market for the first time, meaning it is now able to offer a national footprint to customers and tender for national contracts," said the IML experts.

"It is [now] one of only three national pathology providers."

There is no doubt ACL shares are now heavily discounted. It has dropped more than 43.5% over the past 12 months.

The post 'Very attractive valuations': Experts name 3 small-cap ASX shares to buy appeared first on The Motley Fool Australia.

If you want to buy a car, you try to look for the best price. 

Who in their right mind would want to pay $50,000 if they can purchase the same vehicle for $40,000?

So it's irrational when investors are put off by ASX shares that have recently plunged in price.

If the business behind it is sound and has an exciting future, short-term discounting in the stock price should present a golden buying opportunity.

With this in mind, the analysts at Celeste Funds Management recently named two stocks in its portfolio that had a pretty ordinary December:

Still a quality company 

Shares for cooling systems provider PWR Holdings Ltd (ASX: PWH) have done outstandingly in the past year while most other stocks have struggled.

The stock price has rocketed more than 38% upwards over the last 12 months.

However, it detracted from the Celeste portfolio as 2022 ended, dipping a painful 8% in December.

In a memo to clients, the Celeste team noted that the Christmas fall came after a strong November rally on the back of its yearly financial results.

"While there were no new trading updates over the period, the stock was supported by a strong FY22 result that saw NPAT of $20.8 million (+23.9% vs pcp), 6.5% ahead of consensus expectations."

The analysts are "mindful" of how the share price has risen in recent times, but reckon more good times are ahead.

"We believe the committed order book, a strong balance sheet and the growth optionality in emerging technologies will underwrite earnings momentum over the near term."

Post-COVID recovery expected

Pathology services provider Australian Clinical Labs Ltd (ASX: ACL) watched in horror as its shares crashed 12.1% in December.

A longer timeframe doesn't do it any favours either, with the stock halving in value over the past 12 months.

The Celeste team attributed the disastrous showing to two factors.

"The first is revenue generated from COVID testing. With Australia well into the endemic phase of COVID-19, the number of COVID tests and government funding for those tests has declined precipitously," the memo read.

"This should not have come as a surprise, but consensus estimates have been slow to come down."

The second issue is the recovery in "business-as-usual" (BAU) pathology tests. 

"While testing rates have recovered from pandemic lows, the recovery has been slower than expected across the industry," the Celeste team stated.

"In part this has been driven by increased telehealth consultations and in part by staff/patient absenteeism."

It's this second business that the Celeste analysts are hanging their hats on.

"As the endemic phase of COVID-19 annualises, we expect BAU testing to recover to well above pre-COVID levels."

The post 2 hammered ASX shares to buy before they rise again: Celeste appeared first on The Motley Fool Australia.

For a few names, the pandemic saw elevated earnings. COVID testing produced a lot of extra profit and cash flow for names like Sonic Healthcare Ltd (ASX: SHL), as illustrated below, and Australian Clinical Labs Ltd (ASX: ACL).

But the COVID-testing businesses have seen their share prices plunge over the past year as COVID testing has reduced.

Many other ASX 200 healthcare shares actually suffered because surgeries and other forms of healthcare were delayed. Two examples of such delays impacting earnings during COVID include Ramsay Health Care Limited (ASX: RHC) and Cochlear Limited (ASX: COH).

CSL Limited (ASX: CSL) also suffered because the pandemic increased the cost of blood plasma and also reduced collections.

What's the outlook for ASX 200 healthcare shares?

The companies that saw surgery delays now have waiting lists, so they can benefit from that strong demand in FY23.

While COVID testing is dropping, it's still happening. For the month of October 2022, Sonic Healthcare reported that it generated $57.7 million of COVID-related revenue, which suggests that testing cash flow can still benefit those companies involved.

The investment giant Blackrock is one of the investors that likes the healthcare sector at the moment.

Blackrock said that healthcare is benefiting from a structural transition amid ageing populations. It said that healthcare has "appealing valuations and likely cash flow resilience during downturns".

The fund manager suggested that it also likes healthcare because it's "developing medicine and equipment to help meet ageing population needs".

Valuations

While some ASX 200 healthcare shares have fallen, they still don't have incredibly low price-to-earnings (P/E) ratios, reflecting investor confidence in their defensive nature.

Using the Commsec earnings projections for FY23, these are some of the valuations:

The CSL share price is valued at 35 times the estimated earnings.

The Ramsay Health Care share price is valued at 39 times the estimated earnings.

The Sonic Healthcare share price is valued at 19 times the estimated earnings.

The Cochlear share price is valued at 45 times the estimated earnings.

The ResMed CDI (ASX: RMD) share price is valued at 31 times the estimated earnings.

The post Are healthy returns on the horizon for ASX 200 healthcare shares in 2023? appeared first on The Motley Fool Australia.

Sure, it's been a frightening time for investors. But 2022 has also been an opportunity to pick up some absolute bargains as quality ASX shares end up heavily discounted.

With this in mind, it's prudent to see which stocks have fallen radically in recent weeks but the professionals are still backing for a long-term rise.

This allows a low entry point for maximum long-term returns.

Fortunately, the analysts at QV Equities revealed two such stocks in a recent memo to clients.

Short-term pain, long-term gain

The QVE team admitted its fund fell behind its benchmark slightly in October.

"The main reasons for the lagging performance were some very strong performances by lithium stocks, which the portfolio is not exposed to, as well as strong rises in several consumer discretionary stocks, which we remain cautious on given what looks to be a tough 2023 ahead for the sector."

The portfolio was also held back by "some disappointing performances" seen in a pair of "key stocks".

"Ampol Ltd (ASX: ALD) fell 5.3% in October following a mixed quarterly update in which its fuel distribution business recorded an unexpected loss due to one-off factors, while the company's other divisions performed strongly."

The Australian Clinical Labs Ltd (ASX: ACL) share price also took a 4.3% hit downwards for the month as COVID-19 testing volume continued to wind down.

"Although the company also reported that its underlying business is still growing strongly."

Despite these short-term losses, the QVE team is keeping the faith.

"Both Ampol and Australian Clinical Labs remain very well positioned in their industries with strong balance sheets and we retain our positive long-term view of their prospects."

How ASX stocks Ampol and ACL have been going

During a time when energy and fuel prices have been soaring, it may be surprising that the Ampol share price is actually down 8% year to date. 

It does pay out a juicy 5.8% dividend yield though.

The petroleum provider last month named as one of the 22 ASX shares that Wilsons is targeting for their high-income yield.

October was not the only bad month for Australian Clinical Labs. Its stock price has almost halved since the start of the year.

A life of queuing for hours for a PCR test and scrambling to purchase rare rapid COVID-19 tests now seems like a distant memory, even though that was just 10 months ago.

The devaluation of ACL does mean its dividend yield now stands at a remarkable 15.8%.

The post 16% dividend yield: Fund names 2 slammed ASX shares to buy for the long run appeared first on The Motley Fool Australia.

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

Australia and New Zealand Banking Group Ltd (ASX: ANZ)

The ANZ share price is down almost 4% to $24.86. This follows the release of the banking giant's full year results for FY 2022. For the 12 months ended 30 September, ANZ reported a 5% lift in cash profit from continuing operations to $6,515 million. While this was slightly ahead of Goldman Sachs' estimates, its pre-provisioning operating profit "came in 1% lower than GSe, as an in-line NIM performance was more than offset by slightly weaker volumes and weaker than expected performance in Markets income."

Australian Clinical Labs Ltd (ASX: ACL)

The Australian Clinical Labs share price is down 4% to $3.39. This morning this pathology provider revealed that it was the victim of a cyber incident all the way back in February. And despite finding customer data on the dark web in June, it has taken the company until now to tell patients and the market.

Core Lithium Ltd (ASX: CXO)

The Core Lithium share price is down 4.5% to $1.39. Investors have been selling this lithium miner's shares after it revealed that its proposed offtake agreement with Tesla has collapsed. However, the company doesn't appear concerned given the insatiable demand for lithium and its other offtake agreements which account for 80% of planned production.

Kogan.com Ltd (ASX: KGN)

The Kogan share price is down 6% to $3.29. This appears to have been driven by a broker note out of Credit Suisse this morning. In response to the company's dismal first quarter update, the broker has downgraded its shares to an underperform rating and slashed the price target on them by 25% to $2.73.

The post Why ANZ, Australian Clinical Labs, Core Lithium, and Kogan are sinking today appeared first on The Motley Fool Australia.

In morning trade, the pathology services provider's shares are down 12% to $3.12.

Why is the Australian Clinical Labs share price sinking?

The Australian Clinical Labs share price has been sold off today after the company revealed that it was the victim of a cyber incident all the way back in February!

According to the release, the company Medlab Pathology business, which was acquired in December 2021, has experienced a "notifiable cyber incident" involving personal information of some of its patients and staff.

Australian Clinical Labs has conducted a forensic analysis of the affected information and has determined that personal information of approximately 223,000 individuals has been affected. This group of individuals is largely confined to New South Wales and Queensland.

The company has released a summary of the records breached of most concern. They are:

• ~17,539 individual medical and health records associated with a pathology test
• ~28,286 credit card numbers and individuals' names (Of these records ~15,724 have expired and ~3,375 have a CVV code)
• ~128,608 Medicare numbers and an individual's name

Australian Clinical Labs advised that the Office of the Australian Information Commissioner (OAIC) has been notified and both the OAIC and the Australian Cyber Security Centre (ACSC) are being kept up to date.

The company also highlights that there is no evidence of misuse of any of the information or any ransom demands, to date. But as we have seen with Medibank Private Ltd (ASX: MPL), that could change quickly.

As mentioned above, the company revealed that it was actually first aware of unauthorised third-party access to its IT system all the way back in February but did not inform patients or the share market. Even worse, this customer data was found on the dark web in June but once again the company chose not to notify patients or investors.

This was because it has apparently taken its forensic analysts and experts four months "to determine the individuals and the nature of their information involved."

Australian Clinical Labs' CEO, Melinda McGrath, said:

On behalf of Medlab, we apologise sincerely and deeply regret that this incident occurred. We recognise the concern and inconvenience this incident may cause those who have used Medlab's services and have taken steps to identify individuals affected. We are in the process of providing tailored notifications to the individuals involved. We want to assure all individuals involved that ACL is committed to providing every reasonable support to them. We will continue to work with the relevant authorities.

The post Another ASX All Ords share is plunging 12% on cyberattack news appeared first on The Motley Fool Australia.

When investing in times of economic uncertainty like now, it can help to think of the brands you use on a day-to-day basis.

If you and millions of Australians are already regularly using the products and services, that demand may well remain resilient even as consumers have less to spend.

Spotee chief executive Chris Batchelor this week nominated two ASX shares he would buy that fit this description:

You've likely watched, read or listened to this company 

Yes, we know many people don't watch linear television anymore.

But Nine Entertainment Co Holdings Ltd (ASX: NEC) has so many tentacles, the chances are most Australians have run into their services each day in some way or another.

"Nine's diversified media business comprises television, newspapers, radio and streaming services," Batchelor told The Bull.

"It also owns 55% of real estate advertising business Domain Holdings Australia Ltd (ASX: DHG)."

Those non-TV assets include big names like The Sydney Morning Herald, The Age, 2GB and 3AW.

Any company that relies on advertising for revenue is exposed to the whims of the economic cycle. However, Batchelor feels like Nine is partially insured against that.

"The company's diversity leaves it cushioned to the volatile advertising industry," he said.

"The company appeals, as it's trading on an undemanding price-earnings ratio and an attractive dividend yield."

Indeed Nine Entertainment shares are currently paying out a yield of 6.27% while trading at a PE multiple of 17.

The stock has fallen by about one-third so far this year, although it is up 10% since mid-June.

You've likely submitted a throat swab to this company

While Australian Clinical Labs Ltd (ASX: ACL) may not be a name that rolls off the tongue for every Australian, its services have been keenly used in the background in recent years.

"The pathology services provider benefited from providing testing services during the pandemic," said Batchelor.

"COVID-19 revenue grew by 205% in fiscal year 2022, while non-COVID-19 revenue grew by 8%."

The analyst admitted the coronavirus boom would not last, but that didn't affect his positive view on the stock.

"The forward price/earnings ratio and dividend yield paint a bright outlook," he said.

"COVID-19 revenue is expected to decline from here, but this has been factored into expectations."

Similar to Nine, ACL shares have also dropped by about a third year-to-date. It's paying out a stunning dividend yield of 12.56%, while trading at a 4.77 PE ratio.

The wider professional community is somewhat polarised on Australian Clinical labs.

According to CMC Markets, six analysts are divided into three groups of two rating the stock as strong buy, hold and strong sell respectively.

The post 'Bright outlook': Expert picks 2 ASX shares that touch Aussies everyday appeared first on The Motley Fool Australia.

We're well and truly in the thick of ASX reporting season. The biggest names in the All Ordinaries Index (ASX: XAO) are unveiling their financial results. And many are declaring lucrative dividends.

With that comes an important date: the ex-dividend date.

Taken from Latin, ex-dividend means 'without dividend'. So, you guessed it, it's the date that a company's shares no longer trade with the upcoming dividend payment attached to it.

Beyond determining who's entitled to dividends, the ex-dividend date has another important implication. 

When a company's ex-dividend date rolls around, its shares typically drop in value.

This is because the money paid out in dividends no longer belongs to the company. With its cash reserves reduced, the value of the company is diminished.

So, with that in mind, here are three ASX All Ords shares trading ex-dividend today.

While the ASX All Ords index is down 0.55%, these three shares are dropping more than the market.

Australian Clinical Labs Ltd (ASX: ACL)

This ASX COVID beneficiary is trading without its bumper FY22 final dividend today.

Unsurprisingly, this is putting downwards pressure on the Australian Clinical Labs share price. At the time of writing, shares have tumbled 9.07% to $4.31, a drop of 43 cents.

The ASX healthcare share recently released its FY22 results and declared a fully franked final dividend of 41 cents. 

This takes Australian Clinical Labs' total FY22 dividend payments to 53 cents. Meaning, Australian Clinical Labs shares were sporting a hefty dividend yield of 11.2% as of yesterday's close.

It's worth noting that this is a trailing dividend yield, with Australian Clinical Labs unlikely to replicate these dividends in the current financial year.

After all, the company was a big COVID beneficiary, playing a vital role in facilitating testing across the country. The company experienced 49% revenue growth in FY22, with 42% of total revenue relating to COVID activities. 

In any case, investors who were on the company's share registry as of yesterday's close should see this juicy final dividend hit their accounts on 15 September.

Domain Holdings Australia Ltd (ASX: DHG)

Domain is another ASX All Ords share trading ex-dividend today. At the time of writing, the Domain share price has dropped 1.25%.

The property marketplace recently declared a final fully franked dividend of 4 cents per share, taking total FY22 payments to 6 cents, up 50% on the prior year.

As of yesterday's close, this put Domain shares on a trailing dividend yield of 1.7%. Throwing in franking credits, this bumps up to 2.4%.

If you held shares in Domain when the market closed yesterday, you should see this final dividend land in your account on 13 September.

Shares in Domain's rival REA Group Limited (ASX: REA) are set to trade ex-dividend on Thursday. The leading online property business recently declared a record final dividend of 89 cents, spinning up a trailing dividend yield of 1.3%.

Qualitas Ltd (ASX: QAL)

Last but not least, shares in this alternative real estate investment manager are also trading ex-dividend today. At the time of writing, the Qualitas share price has edged 1.35% lower to $2.20.

Qualitas is an alternative fund manager focused on private credit and equity across the commercial real estate sector.

Qualitas announced its FY22 results last week, declaring its first dividend since joining the ASX at the end of 2021.

Its fully franked final dividend of 4 cents put Qualitas shares on a trailing dividend yield of 1.8% when the market closed yesterday. The dividend has been pencilled in to be paid on 8 September.

Annualising this payment results in a 3% yield based on the company's IPO price of $2.50, which is in line with its prospectus forecasts.

The post 3 ASX All Ordinaries shares trading ex-dividend today appeared first on The Motley Fool Australia.

Four ASX shares that have defied the odds and pushed higher are listed below. Here's why they are rising:

Australian Clinical Labs Ltd (ASX: ACL)

The Australian Clinical Labs share price is up 1% to $4.62. Last week Goldman Sachs reiterated its buy rating and $6.50 price target on this pathology services company's shares. Its analysts believe that the company's longer term earnings power is still underappreciated by the market.

Lake Resources N.L. (ASX: LKE)

The Lake Resources share price is up 5% to $1.47. This is despite there being no news out of the lithium developer. However, it is worth noting that Lake Resources is being added to the ASX 200 index at the next rebalance later this month.

PolyNovo Ltd (ASX: PNV)

The PolyNovo share price is up 2% to $1.18. While there's been no news out of the medical device company, its chairman has been buying shares ferociously in recent weeks. It's possible that he has been in the market again, taking advantage of recent weakness. Mr Williams' last purchase was on 7 June, with the acquisition of 21,456 shares.

ResApp Health Ltd (ASX: RAP)

The ResApp share price is rocketing 55% higher to 17 cents. This follows news that the terms of its potential acquisition by Pfizer have been improved. The pharmaceutical giant has agreed to increase its offer from 11.5 cents per share in cash to either 14.6 cents or 20.7 cents per share. The ultimate price will depend on the success of a clinical validation study. It is being undertaken to confirm that ResApp's COVID-19 cough-based detection tool performs at or around the sensitivity and specificity reported in its pilot study.

The post Why Australian Clinical Labs, Lake Resources, PolyNovo, and ResApp are rising appeared first on The Motley Fool Australia.

The federal budget has, understandably, been the talk of the town today, with many market watchers questioning which shares will be budget winners and which might be less fortunate. And while ASX stocks in the retail, fuel, and automotive sectors have been in focus for various reasons, one broker is flagging a win for healthcare shares.  

So, why are ASX healthcare shares Sonic Healthcare Limited (ASX: SHL), Healius Ltd (ASX: HLS), and Australian Clinical Labs Ltd (ASX: ACL) in the post-budget spotlight? Let's take a look.

These 3 ASX healthcare shares might benefit from the budget

Broker RBC Capital Markets believes ASX healthcare shares could get a boost from extra spending on Medicare announced in the 2022/23 budget, as reported by the Australian Financial Review.

The broker is keeping an eye on ASX pathology giants on the back of a $546 million commitment to Medicare Benefits Schedule items used to conduct PCR tests.

The funding is intended to support Australia's pandemic response. However, it surprised the broker. RBC Capital Markets was quoted as saying:

The Government has extended the Medicare schedule for COVID testing.

However, the amount budgeted for 2022-23 suggests upside to our [financial year 2023] COVID testing forecasts if the budget assumptions eventuate.

Of course, more testing is likely good news for the pathology giants. Though, it might be slightly offset by more free Rapid Antigen Tests (RATs).

The government has also committed to spend another $1.6 billion to ensure all Australians have equitable access to RATs.

The broker's rose-coloured prediction didn't manage to boost the ASX healthcare giants' share prices on Wednesday.

None of the three pathology stocks significantly beat the S&P/ASX 200 Index (ASX: XJO)'s 0.67% gain.

At market close, the Sonic Healthcare share price is 0.17% higher at $35.79.

Meantime, Australian Clinical Labs ended the day in the green, gaining 0.2% to close at $5.11.

Finally, the Healius share price slightly outperformed the ASX 200 today. It rose 0.68% to finish at $4.43.

The post Why these 3 ASX healthcare shares could get a boost from the federal budget appeared first on The Motley Fool Australia.

The company's shares ended the day 3.5% lower at $4.85.

Australian Clinical Labs share price lower despite strong growth

• Total revenue up 61.2% to $538 million
• EBITDA up 112.1% to $239.3 million
• Net profit after tax up 200% to $130.3 million
• Fully franked interim dividend of 12 cents per share

What happened during the first half?

For the six months ended 31 December, Australian Clinical Labs delivered a 61.2% increase in revenue to $538 million. This strong growth was driven by significant demand for COVID testing and a rapid and substantial increase in capacity to capture it.

This was also supported by modest growth from its non-COVID operations, which reported a 2.8% increase in revenue over the prior corresponding period.

Thanks to significant operating leverage, the company's EBIT margin increased from 20.5% to 35.5%, which ultimately underpinned a net profit after tax of $130.3 million. This was triple what it achieved a year earlier and ahead of its upgraded guidance of $116.3 million to $128 million. It was also 4% ahead of consensus estimates.

Management commentary

Australian Clinical Labs' Chief Executive Officer and Executive Director, Melinda McGrath, was pleased with the company's performance in a challenging operating environment..

She said: "During the past two years, Clinical Labs has played an essential role in Australia's response to COVID during what was at times a challenging operating environment. At the same time the team have delivered growth in our core business, driven operational improvements across the organisation while simultaneously completing two acquisitions. These achievements are a testament to the commitment and resilience of the ACL team."

"The strong result achieved in 1H FY22 demonstrates the value of the significant prior investment in the business which resulted in further operating leverage, efficiencies, improved productivity and increased automation and digitisation. There exist several opportunities to continue to grow the business including via our commercial offering and our established clinical trials business. We have strong foundations in technology and systems and a highly experienced performance-driven management team to execute our well-defined growth strategy."

Outlook

Due to high levels of uncertainty, no guidance has been given for the remainder of FY 2022.

However, management has provided an idea on what it expects to occur in respect to testing volumes during the second half.

It explained: "During the 2H FY22, ACL anticipates testing for COVID to continue to moderate as the response to COVID transitions to an endemic virus. The pace with which COVID testing moderates will depend on several factors including future outbreaks, new variants, vaccination take up and effectiveness and government policy relating to lockdowns and travel."

"Assuming no significant outbreaks, ACL anticipates the rebound in non-COVID testing to continue as restrictions on essential surgeries ease and hospitals return to full capacity," it concluded.

The post Australian Clinical Labs (ASX:ACL) share price falls despite tripling profits and beating guidance appeared first on The Motley Fool Australia.

Key points

• The benchmark index has started the year well after a choppy period these past few months
• The team at RBC Capital Markets reckon these three ASX shares are poised to deliver upside in 2022
• Analysts at the firm recently upgraded each company to outperform in updates today

The S&P/ASX 200 Index (ASX: XJO) has started the day up and is now trading 0.24% in the green at 7,435 points.

With the new year now well underway, the team at RBC Capital Markets has tipped these 3 ASX shares to outperform in 2022. Interestingly, each company has exposure to COVID-19 testing in some way.

The broker believes this could benefit their clinical diagnostics segments. Let's take a look.

Sonic Healthcare Ltd (ASX: SHL)

Sonic Healthcare came into the new year trading down, falling from closing highs of $46.70 on 30 December.

This drop has occurred in tandem with the broader S&P/ASX 200 Health Care Index (ASX: XHJ) which has plunged almost 7% since 2022.

Hence, in the absence of any price-sensitive information from the company, weakness in the sector appears to be impacting Sonic Healthcare's share price.

Shares in the $19 billion company by market cap outperformed last year, benefitting from the earnings surprise in the company's Q1 FY22 trading update.

However, support fell away in December with government policy shifting away from Sonic's COVID-19 test offerings in favour of rapid antigen testing (RAT). This was a development analysts at Credit Suisse recently highlighted.

Despite these potential headwinds, RBC Capital Markets disagrees and is bullish on the direction of Sonic's share price.

The broker initiated coverage of Sonic Healthcare with a 'buy' today and values the company at $47 per share, implying an upside potential of 15% at the time of writing.

The team at Morgan Stanley agrees with RBC and also raised its price target by around 4% to a valuation of $48.10 today.

Healius Ltd (ASX: HLS)

Shares in healthcare player Healius also took a beating during the transition into the new year. The company's share price has plunged more than 15% since 29 December.

Healius was boosted by the demand for COVID-19 testing during the last 2 years. The company recently noted it was completing more than 40,000 tests a day. This helped it recognise a 179% year on year gain in after-tax profits.

However, as with Sonic Healthcare, new language from the government in pushing RATs is weighing on the outlook for Healius' shares.

As such, the Helius share price has come off a high of $5.52 last year and is now trading sideways so far on Tuesday. At the time of writing, it is $4.705, a gain of 0.53% on yesterday's close.

Nevertheless, the team at RBC Capital Markets has initiated coverage on the ASX share with a 'sector perform' recommendation. It values the company at $5 a share.

At the time of writing, this implies an approximate 6.2% upside potential should the broker's forecast be correct.

Analysts at fellow brokers Morgan Stanley and Jefferies concur with this sentiment. Both raised their price targets — Morgan Stanley by 4% to $5.10 and Jefferies by 2.5% to $6.40 respectively.

Australian Clinical Labs Ltd (ASX: ACL)

Shares in Australian Clinical Labs gained considerable momentum in December and the pulse of investor buying has continued into 2022.

Over the last month, shares have climbed almost 14%, even after falling from an all-time closing high of $6.20 on the first trading day of 2022.

Underpinning ACL's share price performance is the guidance upgrade released to the market last month. Management now forecasts net profit after tax (NPAT) of between $116.3-$128 million. That's a 35-36% upward revision on previous guidance.

It now also expects revenue to rise by another 13-14% on top of previous estimates. It's looking at $497-$517 million at the top versus its previous guidance of $437-$455 million.

Management notes the uptick in sales is underscored by strong COVID-19 testing demand.

Despite the move towards RAT, the company is optimistic around its COVID-19 testing, anticipating "heightened volumes of COVID-19 testing to continue during the remainder of FY22 due to the impact of new variants and outbreaks".

RBC Capital Markets agrees and has given the company a $6.50 per share valuation, indicating its bullish stance.

At the time of writing, this price target signifies a 15% upside potential. Goldman Sachs also recently rated Australian Clinical Labs as a buy with a $6.60 price target.

The post Top broker just rated these 3 ASX shares as buys appeared first on The Motley Fool Australia.

Key points

• Fund manager Wilson Asset Management (WAM) has outlined two ASX shares with potential
• The first stock is pathology business Australian Clinical Labs which is benefiting from the high level of COVID testing
• The second company is building and restoration services Johns Lyng which is growing market share and opening up new growth opportunities

Leading fund manager Wilson Asset Management (WAM) has named two ASX shares in its portfolios that it thinks are buys.

Every month, WAM talks about some of the businesses that have performed well and outlines the bullish factors for thinking about the stocks.

Two of the featured ASX shares this month comes from WAM Research Limited (ASX: WAX) and WAM Capital Limited (ASX: WAM), which sometimes target opportunities from the smaller end of the ASX, like these two:

Australian Clinical Labs Ltd (ASX: ACL)

Australian Clinical Labs is described as a leading provider of pathology services in Australia, with 86 accredited laboratories performing services for more than 8 million people annually.

In December, Australian Clinical Labs upgraded its expectations for the FY22 first-half net profit after tax (NPAT) to between $116.3 million to $128 million. This was increased from the previous guidance of between $86.3 million to $94.9 million.

The fund manager notes that the ASX share is experiencing strong demand for coronavirus testing, particularly during the Omicron variant outbreak and recently completed the acquisition of Medlab Pathology, doubling its market share to 20.4% in New South Wales.

WAM thinks that Australian Clinical Labs is a high-quality pathology business that can continue to grow organically through market share gains, due to its "superior technology and processes". The fund manager notes that Australian Clinical Labs has a very strong balance sheet and it also sees the potential for acquisitions in the future that can add to profit.

Johns Lyng Group Ltd (ASX: JLG)

Another ASX share that WAM likes is Johns Lyng which provides building and restoration services across Australia for properties and contents damaged by insurable events, including impact, weather, and fire events.

It operates in all major metropolitan areas and in high-risk regional areas, such as Far North Queensland.

WAM pointed out that in December, the company announced the acceleration of its US growth strategy through the acquisition of Reconstruction Experts, a leading provider of insurance-focused vendor managed repairs services for US$144 million.

This acquisition, considered highly strategic, adds to the company's earnings per share (EPS) and equated to 7.8x earnings before interest, tax, depreciation and amortisation (EBITDA) for the 12 months to 30 June 2021.

The fund manager decided to invest in Johns Lyng Group based on the view that as the largest and most sophisticated provider of emergency building works, the company will continue to grow through market share gains and acquisition.

WAM believes that with the recent acquisition, the company has added another material growth pillar that will underpin longer-term aspirations and earnings growth.

The post This top fund manager just called these leading ASX shares a buy appeared first on The Motley Fool Australia.

A few key providers are providing millions of tests, such as Sonic Healthcare Ltd (ASX: SHL) and Healius Ltd (ASX: HLS). The smaller, non-ASX 200 business Australian Clinical Labs Ltd (ASX: ACL) is also involved in testing.

How is testing benefiting the ASX 200 healthcare shares?

According to reporting by The Australian there has been a total of more than 55 million PCR tests done. The testing providers are now receiving a $85 million Medicare rebate for every test, which has gone up from $28.65 per test at the start of pandemic.

On 18 November 2021, Sonic disclosed that it had conducted 36 million COVID-19 PCR tests in total to date, though Sonic operates in several northern hemisphere countries like the USA, Germany, the UK and Switzerland.

Sonic also performs vaccinations. It had provided more than 1 million vaccinations when it announced a trading update in mid-November.  

Whilst rapid antigen tests are quickly becoming a key part of the testing system, it's still thought that PCR testing will continue for the next couple of years at least.

Healius noted at its recent annual general meeting (AGM) (in October, before the Omicron surge) that it was doing more than 40,000 COVID tests per working day with commercial COVID testing performing "well" in industries like sports and film production. The ASX 200 share's underlying net profit after tax almost tripled from $53.1 million to $148.4 million.

Healius said that it expected COVID PCR testing to be part of the health landscape for years.

How are investors seeing the situation?

The Australian reported that Citi is expecting more COVID testing in FY22 and FY23, as well as a continuation of testing going into FY24.

Investors have sent the share prices of the three companies mentioned much higher in recent times.

The Sonic Healthcare share price has risen 24% over the last six months and 39% over the last year at the time of writing.

Over the last six months the Healius share price has risen by 13% and it has increased by 36% in the past year.

The Australian Clinical Labs share price has surged 37% in just the last month and over the past six months it has soared 75%.

Are those ASX 200 shares still opportunities?

The broker Morgans has rated both Healius and Sonic Healthcare as buys with price targets that are approximately 10% higher than where they are now. It noted that both businesses are also making bolt-on acquisitions to boost earnings over the longer-term.

The post 2 ASX 200 shares benefitting from the surge in COVID tests appeared first on The Motley Fool Australia.

Returns in the ASX healthcare basket were fairly robust throughout 2021. Sector earnings saw a return to pre-COVID levels as patient and service volumes began to normalise as well.

The S&P/ASX 200 Health Care Index (ASX: XHJ) has climbed almost 9% in the past 12 months. That's a good sign of the strength in the broad sector. It closed the year out with support after knocking some froth off its November highs.

With this in mind, we've picked five of the top performers in the ASX healthcare basket in 2021. Here's the lowdown on each.

Sonic Healthcare Limited (ASX: SHL)

Shares in ASX healthcare giant Sonic Healthcare finished the last 12 months of trading almost 40% up after a fairly strong year on the chart.

In November, Sonic's share price turned sharply and sunk to a two-month low of $38.51. This was alongside the broad index, before December saw both recover swiftly.

Investors began rewarding the company on the release of its Q1 FY22 trading update. Sonic grew revenue 5% year over year (YOY) to $3.08 billion and earnings before interest, tax, depreciation and amortisation (EBITDA) by 16% in the same time.

Given that many analysts were calling for Sonic's revenue to decline in FY22, this was a positive surprise for investors to realise some price discovery.

Sonic also revealed it had acquired Texas-based anatomical pathology company ProPath last month. The acquisition builds in another $110 million in revenue to Sonic's top line. It also builds on the company's plan to integrate anatomical pathology and clinical laboratory services.

Not only that, high demand for COVID-19 testing continues to be a short-term catalyst for the company's share price, given it is Australia's largest provider of pathology services.

In the last month, Sonic has garnered attention once more. In that time investors have bid up the Sonic share price another 9%.

Actinogen Medical Ltd (ASX: ACW)

Shares in Australian biotech Actinogen were a substantial outperformer across the ASX healthcare universe. This small cap jumped more than 733% in 2021, but not without its fair share of volatility.

For instance, shares traded as high as 19 cents and as low as 2.2 cents last year, a substantial spread in pricing. However, the company closed out the year well after announcing a research agreement with Oxford University.

Under the agreement, Actinogen will supply its Xanamem label to the team of researchers. The research is investigating Xanamem's therapeutic potential as a treatment in mild autonomous cortisol secretion (MACS).

Investors were late to the party following the announcement but caught on eventually. In the days afterwards, the company's share price was rewarded.

At the same time, the broad index bounced hard off a three-month low in mid-December. The impulse of which carried through to the majority of ASX healthcare names.

As such, the company finished the year near its 52-week highs after gaining more than 33% in the final week of 2021.

Race Oncology Ltd (ASX: RAC)

Shares in precision oncology company Race Oncology held the fort across 2021. Race finished the year more than 95% in the green.

Most of Race's share price movement came in January and February after it announced its quarterly activities report and half-yearly financial statements.

Shares shot up from a low of $1.72 to a closing high of $4.07 in a matter of two months. They managed to hold this line for the entire year.

At the time of writing, investors are paying $3.65 apiece for Race shares after a small gain of around 3% in the past five days of trading.

Race Oncology also advised that it successfully completed a share purchase plan (SPP) in December. Race raised $29.7 million after a scale back. The SPP resulted in the creation of 9.9 million new shares at $3 each.

Shortly afterwards, Race announced that its lead drug candidate, Zantrene, was shown to be protective for heart muscle fibres against cellular death that can be induced from anti-cancer drug Carfilzomib.

Compounding the findings is that Zantrene showed this ability whilst also improving its ability to kill cancer cells. As such, Race is seeking patent protection over Zantrene's use as a heart protectant in patients receiving oncology treatment.

Both announcements have sent Race's share price 11% higher in the last month of trading.

ResMed Inc (ASX: RMD)

Shares in medical devices player ResMed landed around 30% in the green last year. The ResMed share price offered investors a low-volatility solution to capture some upside in 2021.

At the time of writing, investors are paying $34.90 apiece for ResMed – fairly consistent with its levels since October last year.

ResMed shares traded in a narrow channel the entire way, with most growth occurring mid-year. That's when key competitor Philips announced the voluntary recall of 3.5 million ventilation systems used for managing sleep apnoea.

Philips cited potential user risks from compounds used in the makeup of the device when recalling the ventilators.

ResMed shares popped on the news and remained top heavy for the remainder of the year. This was relevant as Philips' decision was likely to take several months for full effect.

With its positioning as Philips' competitor, it stands to reason that ResMed may capture additional market share and product placements with the recall.

Aside from that, it was business as usual last year for ResMed. The company had another solid year of operations that was reflected in the performance of its share price.

Australian Clinical Labs Ltd (ASX: ACL)

Shares in Australian Clinical Labs are a notable mention given their performance towards the back end of 2021.

For the majority of the time, ACL was trading in a fairly lacklustre and narrow range. It had a peak of $4.50 and a bottom of around $4.10 per share.

Yet, shares in the pathology and diagnostics provider shrugged off weakness in the broader ASX healthcare sector and held onto gains in December, before exploding to close out the year after upgrading its 1H FY22 guidance.

ACL now forecasts a range of $497.3 million to $517.2 million in revenue and net profit after tax (NPAT) of $116.3 million to $128 million.

This calls for a lift of around 14% and 35% for sales and NPAT guidance, respectively. Similarly to its peers, the company noted tailwinds from strong COVID-19 testing demand volumes as the reason for the upgrade.

As legendary investors Warren Buffet and Peter Lynch note in their writings, the market prices securities based on a combination of past earnings history and future earnings expectations.

Hence, an earnings upgrade such as ACL's recent announcement is likely to be viewed positively by the market, inflecting positively on its share price.

Positive effects from COVID-19 testing demand is likely to remain in situ across the remainder of FY22, according to the company's CEO Melinda McGrath.

The post In the green: Here are the 5 best ASX healthcare shares of 2021 appeared first on The Motley Fool Australia.

The Australian Clinical Labs Ltd (ASX: ACL) share price is tumbling today, but it's had a whopping run lately.

At the time of writing, the Australian Clinical Labs share price is $5.87. That's 1.51% lower than its previous close but 38% higher than it was at the end of last month.

Additionally, it reached a new 52-week high in yesterday's session, hitting $6.39 in intraday trade.

Let's take a look at what's been driving the company's stock lately.

Australian Clinical Labs share price soars in December

Australian Clinical Labs' stock took off last week after the company upgraded its guidance for the first half of financial year 2022 (FY22).

It now expects to bring in between $497.3 million and $517.2 million of revenue and net profits after tax of $116.3 million to $128 million.

The boosted expectations followed continuous strong demand for COVID-19 testing, particularly in New South Wales and Victoria. The company's revenue is also being helped along by the resilience of its non-COVID business.

The company's CEO Melinda McGrath commented on the company's new outlook, saying:

We anticipate heightened volumes of COVID-19 testing to continue during the remainder of FY22 due to the impact of new variants and outbreaks, the lifting of travel restrictions and increased demand for both commercial and travel testing.

Thus, this week's case numbers might have brought the stock some extra attention.

Over the 7 days to 8pm last night, New South Wales had reported 52,775 new cases of COVID-19. Of those, 12,226 were recorded in the previous 24 hours.

Victoria also announced a new record number of new daily cases today, with 5,137 of the state's residents testing positive for the virus.

While the month so far has been a good one for the Australian Clinical Labs share price, today seems to be telling a different story. The company's stock is tumbling for no obvious reason this morning.

However, despite the slump, it's still in the long-term green. Right now, the Australian Clinical Labs share price is 72% higher than it was at the start of 2021.

Additionally, it isn't alone in its recent gains. Fellow pathology companies, Healius Ltd (ASX: HLS) and Sonic Healthcare Limited (ASX: SHL) have seen their share prices increase 13% and 9% respectively this month.

The post What's going on with the Australian Clinical Labs (ASX:ACL) share price lately? appeared first on The Motley Fool Australia.

Three broker buy ratings that you might want to know more about are summarised below. Here's why brokers think these ASX shares are in the buy zone:

Australian Clinical Labs Ltd (ASX: ACL)

According to a note out of Goldman Sachs, its analysts have retained their buy rating and increased their price target on this pathology company's shares to $6.60. Goldman notes that Australian Clinical Labs has upgraded its first half guidance for the fourth time thanks to strong demand for COVID-19 testing and a solid performance from its base business. The broker believes testing volumes could remain high for some time yet and expects the company to benefit greatly. The Australian Clinical Labs share price is trading at $5.81 on Thursday.

Lovisa Holdings Ltd (ASX: LOV)

A note out of UBS reveals that its analysts have initiated coverage on this fashion jewellery retailer's shares with a buy rating and $21.25 price target. The broker likes Lovisa due to its strong position in a fragmented market. Furthermore, UBS expects the company to benefit from reopening tailwinds, operating leverage, and its store expansion. In respect to the latter, UBS sees significant room for Lovisa to expand its store network globally in the future. The Lovisa share price is fetching $19.47 this afternoon.

Rio Tinto Limited (ASX: RIO)

Analysts at Citi have retained their buy rating and $115.00 price target on this mining giant's shares. This follows news that Rio Tinto has acquired the Rincon Lithium project in Argentina for US$825 million. Citi notes that the project has the potential to be a low cost, low carbon footprint brine project of 50ktpa LCE. The broker appears to be a fan of the move and feels it confirms Rio Tinto's ambition to be a serious player in lithium/battery materials. The Rio Tinto share price is trading at $99.32 today.

The post Brokers name 3 ASX shares to buy today appeared first on The Motley Fool Australia.

Four ASX shares that are climbing more than most today are listed below. Here's why they are racing higher:

Australian Clinical Labs Ltd (ASX: ACL)

The Australian Clinical Labs share price is up a sizeable 11% to $5.56. This morning the pathology services provider upgraded its earnings guidance for the first half. Thanks largely to strong demand for COVID-19 testing, Australian Clinical Labs' net profit after tax (NPAT) is expected to come in at between $116.3 million and $128 million during the half. At the mid-point, this represents a 35% increase over its previous first half NPAT guidance of $86.3 million to $94.9 million.

Magellan Financial Group Ltd (ASX: MFG)

The Magellan share price is up 3% to $20.27. Investors may have been buying this fund manager's shares on the belief that they were oversold on Monday after a 30% decline following the loss of a major contract. Alternatively, short sellers could be buying shares to close out their positions.

Sandfire Resources Ltd (ASX: SFR)

The Sandfire share price is up 4% to $6.36. This morning analysts at UBS slapped a buy rating and $8.00 price target on this copper producer's shares. The broker is a fan of Sandfire's acquisition of MATSA and sees a pathway for the company to achieve copper production of greater than 150kt per annum.

Telix Pharmaceuticals Ltd (ASX: TLX)

The Telix share price has jumped 8% to $8.02. This morning Bell Potter retained its speculative buy rating and lifted its price target on this biopharmaceutical company's shares to $9.65. The broker made the move in response to Telix gaining US FDA approval for its Illuccix product. Bell Potter notes that this puts the company in a position to launch the product in the US next month.

The post Why Australian Clinical Labs, Magellan, Sandfire, and Telix shares are rising appeared first on The Motley Fool Australia.

At the time of writing, the pathology services provider's shares are up 10% to $5.47.

Why is the Australian Clinical Labs share price charging higher?

Investors have been bidding the Australian Clinical Labs share price higher this morning after it upgraded its guidance for the first half of FY 2022.

According to the release, the company expects its first half revenue to be between $497.3 million and $517.2 million. And on the bottom line, Australian Clinical Labs' net profit after tax (NPAT) is expected to come in at between $116.3 million and $128 million.

As a comparison, the company's previous guidance was revenue of $437.5 million to $454.9 million and NPAT of $86.3 million to $94.9 million.

At the mid-point of all ranges, this represents an upgrade of 13.7% for its revenue guidance and 35% for its NPAT guidance.

What drove the upgrade?

Management advised that the revenue guidance upgrade reflects continued strong demand for COVID-19 testing, particularly in VIC and NSW, as well as a sustained resilient performance of the non-COVID-19 business.

Whereas the profit guidance upgrade was driven by a combination of revenue growth and expanding margins from increased scale and operating leverage.

Positively, while the company has not provided guidance for the full year, management appears confident demand for testing will remain strong in the second half.

Australian Clinical Labs' Chief Executive Officer, Melinda McGrath, commented: "We anticipate heightened volumes of COVID-19 testing to continue during the remainder of FY22 due to the impact of new variants and outbreaks, the lifting of travel restrictions and increased demand for both commercial and travel testing."

The post Why the Australian Clinical Labs (ASX:ACL) share price is up 10% to a record high appeared first on The Motley Fool Australia.