With much uncertainty about interest rates, the economy, and geopolitics still weighing on investors, it makes sense to focus on reliable and stable ASX shares.

Smaller and more speculative stocks can flop very quickly on further bad news, which is known as high-beta among the professionals.

So for a true long-term investor, sound businesses with undeniable growth drivers could be the go for the coming period.

Baker Young managed portfolio analyst Toby Grimm this week named two S&P/ASX 200 Index (ASX: XJO) shares that have seen vastly different fortunes over the past year.

But he recommended buying both, as they have irresistible tailwinds in the long run:

That's enough punishment

Over the past 12 months, James Hardie Industries plc (ASX: JHX) has, despite backing from many fund managers, seen its share price plummet almost 30%.

"This building products company recently announced a second full year 2023 profit downgrade to between US$600 million and US$620 million," Grimm told The Bull.

"It was 8.1% below market consensus."

The stock has struggled from both the perception and reality that steeply rising interest rates are killing the US housing market.

But Grimm is convinced the slaughter is now done and that James Hardie shares can only move up from here.

"With US interest rates likely to peak during the first half of calendar year 2023, we see potential for a share price recovery later this year," he said.

"In our view, the shares offer long-term value at current levels."

Grimm's peers generally agree with him. 

According to CMC Markets, 11 out of 16 analysts currently recommend James Hardie as a buy. Ten of those professionals say it is a strong buy.

'Confidence in improving profitability'

After going sideways for much of the COVID-19 pandemic, the last year has been more fruitful for CSL Limited (ASX: CSL) shareholders.

The share price has gained a tidy 13.6%.

And its trading conditions are only improving as we speak.

"Plasma collection levels and revenues across all divisions were ahead of expectations in the first half of fiscal year 2023."

The recovery in this business is already delivering real results for investors.

"Although operating costs remain elevated, this blood products group still delivered a better than anticipated interim dividend of US$1.07 a share," said Grimm.

"In our view, this signals confidence in improving profitability moving forward."

CSL is a darling among professional investors at the moment. An incredible 16 out of 19 analysts currently surveyed on CMC Markets would buy.

The post 'Long-term value': Expert names 2 ASX 200 shares to buy for years to come appeared first on The Motley Fool Australia.

The James Hardie Industries plc (ASX: JHX) share price is up 3.03% to $31.32, while the S&P/ASX 200 Index (ASX: XJO) is in the red this morning, down 0.53%.

The James Hardie share price took a hammering yesterday after the company released weak Q3 FY23 results.

As we reported, the ASX 200 share tumbled by 8% in early trading before recovering and closing down 4.25%. Over the past 12 months, the James Hardie share price has dropped by 34.36%.

But one broker is looking through the bad news, seeing a long-term opportunity with the ASX 200 share.

Weak Q3 result 'a buying event' for ASX 200 share

The housing downturns in the United States and Australia have taken a toll on the building materials supplier.

James Hardie reported a 4% dip in sales in Q3 FY23 compared to Q3 FY22 and a 19% drop in adjusted earnings before interest and taxes (EBIT).

The weak result prompted James Hardie to lower its FY23 full-year guidance considerably.

The company now expects adjusted net income in the range of US$600 million to US$620 million. This is down from the previous guidance of US$650 million to US$710 million.

According to reporting in The Australian today, Citi analyst Samuel Seow says the company is "attractive", trading on an FY24 "trough earnings" multiple of 19 times.

Seow said:

Following a weaker than expected result, we believe the market will be looking for the last downgrade and we think this could be it.

Ironically, we see [the Q3] result as a buying event and the total shareholder return outlook should be positive from here.

Seow says the ASX 200 share is "close to an inflection". He points to the improvement in United States mortgage applications and the 30-year fixed rate "appearing to settle".

Seow maintains a buy rating on James Hardie but has lowered his 12-month share price target by 6.5% to $34.60.

What did James Hardie management say about Q3?

James Hardie CEO Aaron Erter said the company saw the current period "as an opportunity".

He said they were cutting costs while continuing to "significantly invest in strategic growth initiatives".

Erter commented:

We are managing quickly and decisively to accelerate our competitive advantages through this market downturn and we view this time as an opportunity.

… we remain aggressive, and we are laser focused on driving profitable volume share gain in every region and segment we do business in.

The post Down 35% in a year, this ASX 200 share offers 'a buying event' right now: Citi appeared first on The Motley Fool Australia.

The James Hardie Industries plc (ASX: JHX) share price is diving after the company released its Q3 FY23 results this morning.

The James Hardie share price opened at $29.49 and fell quickly to a low of $28.975, down 8.7% on yesterday's close.

Let's see what the global building materials giant reported.

James Hardie share price tanks on falling sales

Here are key points for the three-month period ending 31 December 2022:

• Net sales down 4% to US$860.8 million on the prior corresponding period (pcp) of Q3 FY22
• Adjusted earnings before interest and taxes (EBIT) down 19% to US$165.4 million pcp
• Adjusted EBIT margin of 19.2%, down from 22.7% pcp
• Adjusted net income down 16% pcp to US$129.2 million

Given the housing downturns in the US and Asia-Pacific, it was a tough quarter for the company. The James Hardie share price fell by 14.4% over the three months to 31 December 2022.

However, if we look at the full fiscal year 2023, taking in the nine months to 31 December, net sales from ordinary activities are up 8% and the profit after tax attributable to shareholders is up 6%.

Additionally, the net tangible assets per share are up 35% to US$2.76.

What did management say?

James Hardie CEO Aaron Erter commented on the full fiscal year results:

Our team executed in the face of significant challenges to deliver strong financial results in fiscal year 2023.

The team's performance is reflected in strong Price/Mix growth in all three regions, including North America Price/Mix growth of +10%, Asia Pacific Price/Mix growth of +6% and Europe Price/Mix growth of +14%.

We are managing quickly and decisively to accelerate our competitive advantages through this market downturn and we view this time as an opportunity.

What's next?

Erter said the company had lowered costs by reducing staff and spending while continuing to "significantly invest in strategic growth initiatives".

He said:

Most importantly we remain aggressive, and we are laser focused on driving profitable volume share gain in every region and segment we do business in.

We are being agile and adaptive in responding to significant changes in market conditions, but we are also being thoughtful and focused on where we can accelerate our competitive advantages

FY23 guidance lowered

James Hardie has lowered its adjusted net income guidance for the full-year 2023 to a range of US$600 million to US$620 million. This is down from the previous guidance of US$650 million to US$710 million.

For comparison, the company reported an adjusted net income of US$620.7 million in FY22.

The FY23 guidance was lowered due to "lower than expected second half volume results in both North America and APAC and restructuring charges incurred in the second half", according to the company's statement.

James Hardie share price snapshot

On 29 December, the James Hardie share price hit a new 52-week low of $25.84. It has since rebounded by 12%. The S&P/ASX 200 Index (ASX: XJO) is up 7.6% in the year to date.

The post James Hardie share price tumbles 8% as housing market downturn impacts sales appeared first on The Motley Fool Australia.

In its recent monthly update for the listed investment company (LIC) L1 Long Short Fund Ltd (ASX: LSF), the fund manager said it's relatively cautious about the outlook because of the "lagged impact of the significant interest rate hikes, weakness in leading economic indicators, gradually increasing pressure on corporate earnings and tail-risk from geopolitical tensions".

L1 Capital suggested that ongoing market volatility remains likely as investors reassess their outlook for the economy, interest rates, and corporate profits. However, the fund manager believes there are "numerous mispriced stocks" that can deliver "attractive long-term returns".

Below are three of the names that were picked out.

James Hardie Industries plc (ASX: JHX)

The James Hardie share price had a strong performance in January 2023, rising by 19% as housing sentiment improved for US homebuilders. The US market has noted a "sharp increase" in new housing demand in January while the US 30-year fixed mortgage rates fell back to 6% after peaking above 7% in November 2022.

For investors who don't know what James Hardie does, it's described as the market leader in fibre cement siding and has been increasing its market share in the US for the last two decades.

Around two-thirds of its revenue comes from repair and remodelling exposure, while the rest is from new housing.

The fund manager believes James Hardie is well-placed to manage a period of "softer" new housing demand. After this period, it could "grow at an above-market rate for many years to come".

BlueScope Steel Limited (ASX: BSL)

BlueScope steel is a sizeable steel business with operations in Australia and the US. The BlueScope share price went up 16% in January amid a recovery for US steel spreads, providing a "tailwind for the company's second-half earnings expectations".

The fund manager pointed out that the ASX 300 share is focused on growing its US operations with 850kt per annum capacity expansion at the North Star facility in Ohio. This follows the acquisition of the US's second-largest metal coating/painting company.

BlueScope is also focused on the establishment of BlueScope Recycling from its acquisition of the MetalX recycling business.

Even though the BlueScope Steel share price has risen, L1 Capital thinks the market "significantly undervalues BlueScope's unique and strategic asset base".

Imdex Limited (ASX: IMD)

The Imdex share price went up 16% last month after the company announced a first-half result that beat market expectations.

The ASX 300 share also announced the acquisition of Devico, a leading global mining technology company based in Norway.

The fund manager believes the acquisition is "strategic and value accretive and will accelerate the company's global growth strategy".

L1 Capital pointed out that Imdex raised $224 million to fund the acquisition, which was "well-supported" by the market. The fund manager concluded with the following thoughts on the business:

We believe Imdex is well-positioned for long-term growth as it is in the early stages of launching the industry's best suite of new and improved products.

The post These 3 ASX 300 shares are 'significantly undervalued': fund manager 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:

CSL Limited (ASX: CSL)

According to a note out of Morgan Stanley, its analysts have retained their overweight rating and $354.00 price target on this biotherapeutics giant's shares. This follows the release of an update from rival Takeda, which appears to indicate that the immunoglobulins market is strengthening. As a result, the broker believes that the key CSL Behring business is well-placed to deliver strong top line growth in FY 2023. The CSL share price is trading at $312.71 on Friday.

James Hardie Industries plc (ASX: JHX)

Analysts at Goldman Sachs have initiated coverage on this building products company's shares with a buy rating and $40.50 price target. While Goldman notes that near-term risks remain skewed to the downside, it believes the market has already priced in a trough in James Hardie's earnings in FY 2024. Its analysts feel that this provides cyclical upside to the current share price. The James Hardie share price is fetching $34.56 today.

Megaport Ltd (ASX: MP1)

A note out of Morgans reveals that its analysts have retained their add rating on this network as a service company's shares with a trimmed price target of $8.25. While Morgans acknowledges that it is difficult to know if the current declining sales momentum will persist, it appears optimistic it will only be a short term thing. In light of this, it sees value in Megaport's shares for those with a higher risk profile. The Megaport share price is trading at $5.99 this afternoon.

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

The S&P/ASX 200 Index (ASX: XJO) shot to a nine-month high of 7,537.7 points today. However, by the time the market closed it was sitting at 7,501.7 points – marking a 0.33% gain.

And leading the way was the S&P/ASX 200 Real Estate Index (ASX: XRE). It rose 1.4% today.

Meanwhile, the S&P/ASX 200 Materials Index (ASX: XMJ) lifted 0.7% as the iron ore price hit a seven-month high of US$123.37 a tonne.

The S&P/ASX 200 Health Care Index (ASX: XHJ) also gained, jumping 0.6%.

But the S&P/ASX 200 Energy Index (ASX: XEJ) didn't get in on the upwards swing. It slipped 1.2% despite a mixed night for oil prices. Brent crude oil fell 0.5% overnight to US$84.49 a barrel while US Nymex crude oil rose 1.2% to US$78.87 a barrel.

So, with all that in mind, take a stab at which ASX 200 share might have outperformed all others on Wednesday.

Top 10 ASX 200 shares today

If you guessed Flight Centre Travel Group Ltd (ASX: FLT), congratulations!

Shares in the travel agent took off today, lifting 8.1% to close at $17.11 after completing a $180 million placement, the proceeds of which will go towards buying luxury travel brand Scott Dunn.

These shares made today's biggest gains:

Our top 10 shares countdown is a recurring end-of-day summary to let you know which companies were making big moves on the day. Check in at Fool.com.au after the weekday market closes to see which stocks make the countdown.

The post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.

The ASX 200 has done so well that it's close to its all-time high.

However, I'd largely put that down to the two sectors that make up a significant part of the index – banks and resources.

With higher interest rates and a higher iron ore price, it's good times for names like BHP Group Ltd (ASX: BHP), Rio Tinto Limited (ASX: RIO), Fortescue Metals Group Limited (ASX: FMG), Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB), Westpac Banking Corp (ASX: WBC) and ANZ Group Holdings Ltd (ASX: ANZ).

Still plenty of opportunities out there

While ASX's biggest industries are doing well, the share prices of (at least) three other areas still look promising.

ASX tech shares were smashed in 2022, so I think those names that have been hit heavily represent much better buying. For example, compared to their peak prices, the Xero Limited (ASX: XRO) share price, the REA Group Limited (ASX: REA) share price and the Seek Ltd (ASX: SEK) share price are all down materially.

Fintechs are also down, despite elevated earnings on the cash they hold, such as Hub24 Ltd (ASX: HUB) and Netwealth Group Ltd (ASX: NWL).

Higher interest rates do reduce asset prices, in theory. But, they're still the same businesses they were before. So, I think the much lower price we're seeing with these names is giving us opportunities to invest at a cheaper price.

There are some areas within the ASX 200 that may see an earnings hit in 2023, but I believe the lower share prices make up for that, though some share prices have risen a fair bit.

Retail and building products could be interesting hunting grounds to look at. Over the next three to five years, I think ASX 200 shares like Brickworks Limited (ASX: BKW), James Hardie Industries plc (ASX: JHX), CSR Limited (ASX: CSR), Wesfarmers Ltd (ASX: WES), JB Hi-Fi Limited (ASX: JBH), Premier Investments Limited (ASX: PMV) and Metcash Limited (ASX: MTS) could also perform well.

Ready to keep investing

I think that a number of these shares will surpass their former heights in the coming years as they grow their underlying operations.

While some industries do go through cycles, I think the lower point of the cycle is a good time to invest in retailers, building product businesses and ASX tech shares.

I'm going to be putting more money to work this year, which will hopefully accelerate my wealth-building efforts in the coming years. Buying at a lower price also means that I'm getting a higher dividend yield from my investments.

I will probably write an article about the next ASX 200 share that I buy, so keep an eye out for that.

The post The ASX 200 is still full of cheap shares despite this year's surge and I'm ready to buy more appeared first on The Motley Fool Australia.

The S&P/ASX 200 Index (ASX: XJO) traded in the red for just the fourth time this year today, falling 0.3% to close at 7,468.3 points.

And no prizes to those who can guess why. Market experts were shocked by the latest Australian inflation data, released late this morning.

The Australian Bureau of Statistics (ABS) found the Consumer Price Index (CPI) rose 1.9% in the December quarter and  7.8% over the course of 2022. Those figures were notably higher than consensus forecasts of 1.6% and 7.6%, respectively.

The likelihood the Reserve Bank of Australia could begin easing rates next month likely diminished on the findings, thereby disappointing investors.

On a more positive note, the S&P/ASX 200 Financials Index (ASX: XFJ) outperformed despite the inflation read today. It gained 0.3%.

Interestingly, the S&P/ASX 200 Consumer Discretionary Index (ASX: XDJ) also gained, rising 0.4%, while the S&P/ASX 200 Utilities Index (ASX: XUJ) led the market, lifting 0.5%.

Meanwhile, the rates-sensitive S&P/ASX 200 Information Technology Index (ASX: XIJ) fell 1.2% and the S&P/ASX 200 Energy Index (ASX: XEJ) dropped 1.2%.

But enough of that. Let's take a look at the 10 shares that posted the ASX 200's biggest gains on Wednesday.

Top 10 ASX 200 shares countdown

Today's top performing share on the index was News Corp (ASX: NWS).

The stock jumped 6% to close at $29.93 after the company revealed it won't be merging with Fox Corporation and confirmed it's in talks to sell its Move, Inc business.

These shares made today's biggest gains:

Our top 10 shares countdown is a recurring end-of-day summary to let you know which companies were making big moves on the day. Check in at Fool.com.au after the weekday market closes to see which stocks make the countdown.

The post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.

At this time of the year, there are many predictions and forecasts from experts to wade through.

However, you can't invest directly in macroeconomic trends. And those predictions might be incorrect, or the expert's timing might be off.

So it's much more helpful if the pundits actually mention specific S&P/ASX 200 Index (ASX: XJO) stocks that they're backing.

That way, the fund managers are putting their money where their mouth is, and you can consider buying stocks on the basis of the company's potential rather than ethereal economic drivers.

The ECP Growth Companies Fund did exactly this recently, naming three ASX shares that had mixed fortunes last month but are worth holding for the long term:

'A high-quality business'

The share price for building materials provider James Hardie Industries plc (ASX: JHX) tanked almost 10% in December.

In fact, with interest rates rising steeply, the past year has been pretty unpleasant for investors, with the stock plunging more than 40%.

"The slowdown in housing continues to weigh on investment appetite, particularly the rate of deterioration in volume outlook and lack of visibility," read ECP analysts' memo to clients.

"Growing their economic footprint may be challenging in the near term."

​​

Despite these short-term pressures, the fund is sticking with James Hardie because of its excellent prospects in the longer run.

"James Hardie remains a high-quality business demonstrating its commitment to managing supply and demand, with a clear focus on product mix," the memo read.

"Colourplus growth remains strong, with 31% volume growth in 2Q23, which should support average selling price and margins."

'Strongly positioned' to grow in 'structurally attractive' market

Financial services software maker Netwealth Group Ltd (ASX: NWL) had a pretty ordinary Christmas too, with the share price plummeting 12% last month.

According to ECP analysts, there was no news from the company to justify the de-rating.

"Short-term investor sentiment has remained focused [on] the cadence of in-flows to wealth platforms with advisors regaining client consolidation momentum as markets have stabilised."

​​

Despite the short-term hiccups, the ECP team is keeping the faith in Netwealth. 

"Notwithstanding variable quarterly flow results, we continue to believe Netwealth is strongly positioned to continue gaining market share in the structurally attractive wealth platform market."

Netwealth shares have dipped 21% over the past 12 months.

China could be ramping up

December was a different story for the stock price of mining giant Rio Tinto Ltd (ASX: RIO), as it soared more than 6%.

The ECP team attributed this to China's COVID-19 reopening triggering a rocket under iron ore prices.

"The Chinese government has also been making positive noises in relation to economic growth and have signalled that they plan to address issues related to residential property prices," read the memo.

"Infrastructure spending is also likely to be a focus."

The Rio Tinto share price has been on a wild rollercoaster over the past year, dipping as low as $87.60 and flying as high as $128.55.

​​

The post 3 all-star ASX 200 shares ECP is going all-in on appeared first on The Motley Fool Australia.

The S&P/ASX 200 Index (ASX: XJO) traded in the green on Monday, closing 0.59% higher at 7,151.3 points.

It followed a strong Friday session on Wall Street. The Dow Jones Industrial Average Index (DJX: .DJI) closed last week with a 2.1% gain, the S&P 500 Index (SP: .INX) lifted 2.3%, while the tech-heavy Nasdaq Composite Index (NASDAQ: .IXIC) rose 2.6%.

Interestingly, however, the S&P/ASX 200 Information Technology Index (ASX: XIJ) dragged on the Aussie bourse today. It fell 0.6% amid a 5.5% tumble posted by the Computershare Limited (ASX: CPU) share price.

On the other hand, the S&P/ASX 200 Energy Index (ASX: XEJ) posted a 1.4% gain, while the S&P/ASX 200 Materials Index (ASX: XMJ) lifted 1%.

All in all, nine of the ASX 200's 11 sectors closed higher on Monday. But which stock posted the biggest gain? Let's take a look.

Top 10 ASX 200 shares countdown

Today's top-performing ASX 200 share was Paladin Energy Ltd (ASX: PDN).

Stock in the uranium explorer and producer gained 9.9% today to close at 74.8 cents despite the company's silence.

These shares made today's biggest gains:

Our top 10 shares countdown is a recurring end-of-day summary to let you know which companies were making big moves on the day. Check in at Fool.com.au after the weekday market closes to see which stocks make the countdown.

The post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.

If you're out buying a pair of trousers, you'd likely want to buy ones on sale.

After all, why would you pay full price when you can pick up the same item for less money?

Helpfully, the team at QVG Capital this week profiled two ASX shares that have plunged in recent weeks that they are holding with glee.

Maybe 2023 will be slower, but this is a long-term winner

Gambling hardware and software provider Aristocrat Leisure Limited (ASX: ALL) has seen its share price fall more than 9.2% since the middle of last month.

As far as QVG analysts are concerned, the business is going gangbusters in the post-COVID era.

"Aristocrat delivered 27% earnings growth for their financial year," read their memo to clients.

"This was driven by their North American land-based games with outright sales growing 66% as customer capex recovered."

The team noted that it's maintained "strong market share and product outperformance" through continual investment in research and development.

"In addition, Aristocrat's net cash balance sheet enables them to further juice earnings per share growth with the buyback of their shares and reinvestment into adjacencies like 'real money gaming'."

So perhaps the recent sell-off is a reflection of investor fears that the coming year won't be as good as the one just finished?

The QVG team, though, has no such concerns.

"Whilst every good year significantly raises the hurdle for the future, we are happy holders going into a year of slower growth," read the memo.

"Aristocrat has a diversified set [of] initiatives that will continue the growth in value of this business over the long term."

The ASX share going for half price

It has been a pretty ordinary year for the James Hardie Industries plc (ASX: JHX) share price.

The building materials stock has halved so far this year, and even dropped in excess of 14.4% over the past month.

This sell-off was triggered by an unflattering second-quarter result, which forced management to downgrade its current financial year earnings forecast by 10%.

"Prices for inputs such as pulp, natural gas, shipping and labour have weighed on margin which hasn't been fully recovered with price rises," read the memo.

"Additionally, rapidly rising mortgage costs in the US has resulted in a sharp slowdown in new construction activity, meaning James Hardie has worked through its backlog of orders faster than anticipated."

Consumers weighed down with ballooning home loan repayments is not a theme that will disappear anytime soon.

And the QVG Capital team insisted chasing "cyclicals with near-term headwinds" is not its usual modus operandi.

"However, Hardies has long term structural growth underlying their cyclicality and the valuation is already comparable to a GFC scenario," read the QVG memo.

"Additionally, Hardie's balance sheet looks fine with debt not due until 2026, which has allowed them to use some of their capacity to buy back shares at attractive prices as they did in the last downturn."

The post Down but not out: Expert names 2 slaughtered ASX shares to buy right now appeared first on The Motley Fool Australia.

The BHP Group Ltd (ASX: BHP) share price is up around 1% today to $43.89 and 15% higher over the past 12 months.

Dubbed 'The Big Australian', BHP is now the biggest share of the S&P/ASX 200 Index (ASX: XJO) by market capitalisation.

Over the long term, it is probably considered to be among the bluest of blue-chip shares. It is certainly a cornerstone of many retirees' portfolios.

So, why is BHP among a bunch of ASX 200 shares kicked out of Macquarie's model investment portfolios?

Macquarie turfs BHP from model portfolios

Brokers publish model portfolios to help their clients keep their investments up-to-date and growing.

However, changes to model portfolios do not indicate an official buy, sell, or hold recommendation.

According to The Australian, Macquarie has dropped several high-profile ASX 200 shares from its model holdings.

On the out is BHP and fellow ASX mining share South32 Ltd (ASX: S32). Also gone are ASX travel shares Flight Centre Travel Group Ltd (ASX: FLT) and Qantas Airways Limited (ASX: QAN).

Also turfed is Australia and New Zealand Banking Group Ltd (ASX: ANZ), Tabcorp Holdings Ltd (ASX: TAH), James Hardie Industries plc (ASX: JHX), and Seven Group Holdings Ltd (ASX: SVW).

Macquarie is forecasting a United States recession in 2023. It thinks the bottom of the market in Australia is six or seven months away.

Macquarie's Matthew Brooks explains that the changes to the model portfolios were made to "reduce exposure to earnings risks, while still trying to minimise exposure to highly valued stocks".

There was no specific commentary on BHP shares from the broker.

Morgans says buy the BHP share price

Another top broker, Morgans, has just named BHP shares among its best ideas again this month.

As my Fool colleague James reported yesterday, Morgans likes BHP for its dividends, operational diversity, and strong balance sheet.

Morgans has an add rating on BHP and a $47 share price target.

Morgans commented:

We view BHP as relatively low risk given its superior diversification relative to its major global mining peers.

The spread of BHP's operations also supplies some defence against direct COVID-19 impact on earnings contributors.

While there are more leveraged plays sensitive to a global recovery scenario, we see BHP as holding an attractive combination of upside sensitivity, balance sheet strength and resilient dividend profile.

The broker is tipping fully franked dividends of approximately $2.96 per share in FY23 and $2.99 in FY24.

The post Macquarie is cooling off on its outlook for BHP shares. Should you? appeared first on The Motley Fool Australia.

The S&P/ASX 200 Index (ASX: XJO) is up 0.67% today but remains down 5.3% over the year to date.

That's better than where it was in mid-June — down 15% — when the market appeared to turn.

So, where to from here? Are we at, or close to, the bottom for ASX 200 shares?

Are ASX 200 shares close to the bottom?

According to The Australian, top broker Macquarie thinks the bottom is at least six months away.

Macquarie's Matthew Brooks says ASX shares are more likely near the end of a bear market rally. That's very different to being at the start of a bull market rally.

Standing in the way of an ASX 200 shares comeback is a forecasted United States recession in 2023.

Brooks said:

We may emerge from the shadow of a boom in 2023 but a lot of water needs to flow under the
bridge before then — our best guess is a market bottom around July 2023.

To this end, the broker has kicked a bunch of high-profile ASX 200 shares out of its model portfolios.

Which ASX 200 shares is Macquarie dumping?

Brokers publish model portfolios to help their clients keep their ASX shares portfolios up-to-date and growing.

However, changes to the model portfolios do not indicate an official buy, sell or hold recommendation.

The companies kicked out of Macquarie's model portfolios include ASX travel shares Flight Centre Travel Group Ltd (ASX: FLT) and Qantas Airways Limited (ASX: QAN).

Also dismissed: Australia and New Zealand Banking Group Ltd (ASX: ANZ), Tabcorp Holdings Ltd (ASX: TAH), South32 Ltd (ASX: S32), James Hardie Industries plc (ASX: JHX), and Seven Group Holdings Ltd (ASX: SVW).

Macquarie has also reduced its model portfolio holdings in Suncorp Group Ltd (ASX: SUN), National Australia Bank Ltd (ASX: NAB), Insurance Australia Group Ltd (ASX: IAG), BHP Group Ltd (ASX: BHP), Woodside Energy Group Ltd (ASX: WDS), Pilbara Minerals Ltd (ASX: PLS) and Computershare Limited (ASX: CPU).

Which ASX 200 shares is Macquarie backing?

On the other side of the coin, the ASX 200 shares Macquarie is adding to its model portfolios are Commonwealth Bank of Australia (ASX: CBA), Transurban Group (ASX: TCL), APA Group (ASX: APA), Orora Ltd (ASX: ORA), and ASX Ltd (ASX: ASX).

The broker has also increased its holdings in CSL Limited (ASX: CSL) and Ramsay Health Care Limited (ASX: RHC).

Brooks explains:

The portfolio changes we have made are done to reduce exposure to earnings risks, while still trying to minimise exposure to highly valued stocks.

We also reduce exposure to stocks that benefit from higher bond yields and rotate to 'bond proxies'. Our changes are also informed by what worked in past recessions.

What happens in America follows in Australia

The Australian Financial Review (AFR) reports that two other brokers think the key to a market pivot for the S&P 500 Index (SP: .INX) lies in the US Federal Reserve ceasing its interest rate rises.

These comments are relevant to ASX 200 shares because the Australian stock market tends to follow US market trends.

LPL Financial's Adam Turnquist and Marc Zabicki said:

If you factor in the fed funds futures timeline of a May or June peak in the terminal rate, you could see around an 11 per cent second half rally on the S&P 500 (based on six-month average returns).

Will growth stage a comeback? History shows growth and value trading higher but largely in line during the six-month period after a Fed pivot.

However … growth outperformance typically becomes more pronounced after the six-month post-pivot window. One of the catalysts driving growth's relative strength likely stems from falling interest rates and inflation during this period.

With a potential peak in interest rates occurring near a Fed pivot, we suspect growth could make a comeback during the back half of 2023.

Mike Wilson, a US equity strategist at Morgan Stanley, said his team expects the S&P 500 to continue rallying for a short while.

Wilson said:

We still expect higher highs for this tactical rally before the deteriorating fundamentals take us to lower bear market lows next year.

The post Will ASX 200 shares bottom before the year is out? Here's Macquarie's 'best guess' 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:

Baby Bunting Group Ltd (ASX: BBN)

The Baby Bunting share price is down 4.5% to $2.55. This morning Macquarie downgraded this baby products retailer's shares to a neutral rating and slashed the price target on them to $2.80. The broker has reduced its margin estimates to reflect the company's trading update at its recent annual general meeting.

James Hardie Industries plc (ASX: JHX)

The James Hardie share price has sunk 14% to $28.63. Investors have been selling this building products company's shares following the release of its half year update. Although James Hardie delivered solid top and bottom line growth, it downgraded its full year guidance. It also scrapped its dividend in favour of a share buyback.

Sims Ltd (ASX: SGM)

The Sims share price is down 9% to $11.65. This follows the release of the scrap metal company's trading update at its annual general meeting. Sims advised that tough trading conditions have tightened trading margins in both percentage and dollar per tonne terms. As a result, it expects first half underlying EBIT to be in the range of $65 million to $75 million. This is a significant decline on the underlying EBIT of $361.7 million that it reported during the first half of FY 2022.

Temple & Webster Group Ltd (ASX: TPW)

The Temple & Webster share price is down 3.5% to $5.35. This also appears to have been driven by a Macquarie downgrade. Its analysts have downgraded the online furniture retailer's shares to an underperform rating and cut the price target on them to $4.00. Macquarie has concerns about trading conditions given the housing market downturn and rising rates.

The post Why Baby Bunting, James Hardie, Sims, and Temple & Webster shares are dropping appeared first on The Motley Fool Australia.

In morning trade, the building products company's shares are down 11% to $28.49.

Why is the James Hardie share price falling?

Investors have been selling down the James Hardie share price today after the release of the company's half year update.

For the six months ended 30 September, the company reported a 14% increase in sales to US$1,998.5 million and a 22% jump in net profit to US$330.5 million.

While strong on paper, its sales and profit growth has slowed from 19% and 34%, respectively, during the first quarter.

Nevertheless, James Hardie's CEO, Aaron Erter, was pleased with the second quarter. He said:

I am proud to report that the James Hardie team has continued to deliver strong execution of our global strategy that produced record Q2 results. The team's performance is reflected in strong Price/Mix growth in all three regions, including North America Price/Mix growth of +14%, Asia Pacific Price/Mix growth of +11% and Europe Price/Mix growth of +12%.

However, the company notes that over the past 45 days, it has seen a significant change to the outlook of housing market activity for the second half. As a result, management has downgraded its guidance for FY 2023. It explained:

Based on the challenging macro-economic conditions, and housing market uncertainty, management has adjusted the fiscal year 2023 Adjusted Net Income guidance range. The updated 2023 Adjusted Net Income guidance range is US$650 million to US$710 million, changed from the prior range of US$730 million and US$780 million, due to a decline in volume expectations. The comparable prior year Adjusted Net Income for fiscal year 2022 was US$620.7 million.

Share buyback announced but dividend scrapped

This morning James Hardie also announced a major share buyback. However, it will come at the expense of its dividend.

As part of its continued focus on deploying excess capital to shareholders, the company announced the replacement of its unfranked dividend with an on-market share buyback program to acquire up to US$200 million (A$309 million) of shares.

James Hardie CFO, Jason Miele, explained why the company is scrapping its dividend. He said:

Today we adjusted our Capital Allocation Framework to better match who we are: a growth company. The number one and primary focus of our Capital Allocation Framework is to invest in organic growth; our 5-year average Adjusted ROCE of 36% is proof that investing in our growth should be our number one use of capital.

Returning excess capital to shareholders via a share buyback rather than a dividend provides a growth company the optimal flexibility to ensure investment in organic growth is prioritized while maintaining financial strength and flexibility through cycles. Through these cycles we will target an average leverage ratio below 2.0x. Finally, today, we announce the replacement of our unfranked ordinary dividend with a share buyback program, which was approved by our Board of Directors for an amount up to US$200 million from today through 31 October 2023.

The post Why is the James Hardie share price crashing 11% today? appeared first on The Motley Fool Australia.

With seven consecutive interest rate rises now under the belt, some Australian investors are looking ahead to next year when the Reserve Bank perhaps will sit still.

If you think this outlook has some merit, then it's worth paying attention to ASX shares that professional investors reckon might have already reached the bottom.

Here are two such stocks that were mentioned this week:

'Well positioned' for recovery

As a construction materials provider, James Hardie Industries plc (ASX: JHX) shares have suffered from recent uncertainty about housing markets.

The stock has plunged more than 41% year to date.

But Fairmont Equities managing director Michael Gable reckons James Hardie has now "potentially bottomed".

"If the recent share price fall is already pricing in tough times, then we believe it's time to consider buying JHX," Gable told The Bull.

"This global building materials supplier is well positioned to benefit when slowing economies recover."

Gable pointed out that the James Hardie share price started the year at $56.80. With it closing Monday at $33.39, he reckons it's a bargain waiting to be taken.

He's not the only one thinking along those lines. 

According to CMC Markets, a remarkable 13 out of 14 analysts currently recommend James Hardie as a buy, with 11 of those labelling it a strong buy.

This stock has sold off too much

Grange Resources Limited (ASX: GRR) is not a household name among Australian investors, but Spotee Connect chief Chris Batchelor reckons it ought to be.

"The producer sells iron ore pellets from its Savage River mine in Tasmania."

He pointed out that the iron ore price has been declining in recent months due to worries about an economic slowdown in China.

The Grange stock price has hence dropped a disastrous 61% since 8 June, which Batchelor thinks is overdone.

"We believe the Grange share price fall has been excessive given the higher quality ore it produces," he said.

"Therefore, we rate Grange Resources a buy at these levels."

The post 'Potentially bottomed': 2 ASX shares experts reckon can't get any cheaper appeared first on The Motley Fool Australia.

After a tough year, more than one expert reckons ASX shares will follow the historical pattern and shoot upwards heading into Christmas.

The reasoning is that the market can finally see the light at the end of the tunnel. There is optimism that inflation can be tamed and interest rises could slow or stop sometime next year.

Considering this, Shaw and Partners portfolio manager James Gerrish was recently asked for his best stocks to buy to take advantage of the Santa rally:

A warning before the picks

As a preamble, Gerrish reminded investors that short-term predictions are fraught with danger.

"This is a scary question to answer because with potentially high returns comes high risk," he said in a Market Matters Q&A.

Gerrish said 10 days ago he would have named Megaport Ltd (ASX: MP1) as one to buy for the Christmas rally. But over last Wednesday and Thursday it fell more than 31%.

"It produced a very sobering experience."

The best bets for the Santa Rally

Getting back to the question, Gerrish's team feels like the technology stocks are due for a recovery as we wait for Santa to come.

After all, the S&P/ASX All Technology Index (ASX: XTX) has sunk almost 36% over the past 12 months.

The prediction has disappointed so far, though.

"The underlying theme is we're looking for a recovery in the tech sector but this has proved elusive 3-weeks into October."

But the team is sticking with the theory, as Gerrish picked five stocks he thought would rally the fastest and furthest heading into the new year:

• Seek Limited (ASX: SEK)
• REA Group Limited (ASX: REA)
• Hub24 Ltd (ASX: HUB)
• Altium Limited (ASX: ALU)
• James Hardie Industries plc (ASX: JHX)

These are point-in-time picks, he warned.

"This list is likely to change over the ensuing weeks. But at this stage, I would go with some of our most recent purchases plus older existing holdings and one we are currently stalking."

Seek shares are down 37% so far this year, while giving out a 2% dividend yield. Fellow online classifieds provider REA Group is almost 30% lower than when 2022 started, while paying out a 1.36% yield.

The Hub24 share price has only lost 16.85% year to date, while Altium is down 22%. 

James Hardie is painfully 41% lower than the start of the year, while handing out a 2.9% dividend yield.

The post 5 ASX shares to buy for the Christmas rally: expert appeared first on The Motley Fool Australia.

Ask A Fund Manager

The Motley Fool chats with the best in the industry so that you can get an insight into how the professionals think. In this edition, Alphinity Investment Management portfolio manager Elfreda Jonker shows us her strategy for buying three devastated ASX shares.

Cut or keep?

The Motley Fool: We'll now examine three ASX shares that have plunged recently, to get your thoughts on whether they're a bargain or if you'd stay well away.

The first one is Goodman Group (ASX: GMG), which has fallen about 40% year to date. What do you reckon?

Elfreda Jonker: Well, it's a stock that we currently own. We do still have an overweight position in it currently, but it is a stock that we've also owned for 10 years. So it's probably one of those that, in our view, is a stock that is going to be a long-term winner. 

Modern logistics is a theme of the future — fantastic business, fantastic management team, and it's a very strong capital position. But there are certain times in the cycle — and we're currently in one of them — when yields continue to rise, any real estate company will, generally speaking, be under pressure because they're seen as bond proxies. So what you've seen in this 40% [fall in share price] that you're referring to is really very much driven by the fact that yields have continued to increase. For example, in the US, the bond yield that's gone from 1.5% at the start of the year when it reached the peak to almost 4% currently.

So that has really been the key issue with Goodmans. Underlying business fundamentals are still very, very strong in our view. We think there's been a lot of fear around [major customer] Amazon.com Inc (NASDAQ: AMZN) slowing and that's going to spill over into Goodman. Amazon has only really given up [a] marginal amount of space and the demand from other customers has still remained really strong. We still see good earnings growth coming through and a strong balance sheet… We think this is a business that you can hold for the long term.

That being said, we do think that it's a bit early to add more at this point in time until you get to the point where you feel that the interest rate hikes have run their course. The market's priced in that higher yield, the market's always forward-looking, but we think there are more interest rate hikes coming. The Fed's been very obvious about it and here at the RBA probably as well, just to a lesser extent. In that environment, you need to be careful to really bolster your real estate's exposure too much. So we'll wait, but we definitely will be adding once we're in a better interest rate cycle.

MF: The next one is semi-related as it plays in the housing sector. James Hardie Industries plc (ASX: JHX) has also fallen about 40% this year?

EJ: James Hardie is a company that we used to own, but we actually sold out on the back of all the pressures that are currently happening in the US housing markets. 

As you know, they manufacture building products for new home construction as well as remodelling of existing homes, and that's a 35/65 split. Currently what we've seen is that we still see ongoing pressure in that space. 

The stock is quite cheap, but we are concerned around what's going to happen to the earnings into 2023, 2024. So at the moment, if you look at it, the US housing starts — the new builds — that's continuing to reduce, mortgage rates are still going up. It's now 7.2% versus 3% a year ago. And there's still a lot of evidence in the leading indicators that that market continues to soften. 

The recent update in the US — our portfolio manager was actually there just after their results — was in August. They talked a pretty good story from a medium-term target's perspective, but shorter term they continued to downgrade revenue targets as well as margins on the back of increased costs. Then, also obviously, the overall demand has continued to decline. 

So for us, we think it's too early to buy. We think it's good to just wait a little bit longer until you see some indicators on the mortgage rates or the housing starts need to improve — and we need to see signs of that staying there and improving for a while before we would be willing to get in. 

As I've mentioned at the start, we invest in companies in an earnings upgrade cycle and currently James Hardie is still in an earnings downgrade cycle. So a bit too early for us, but overall another fantastic business that we wouldn't mind owning again in the future.

MF: The last ASX share pays a pretty decent 7.4% dividend yield, but it's in the retail space with some clouds over the economy. What are your thoughts on Super Retail Group Ltd (ASX: SUL), down about a quarter year to date?

EJ: Super Retail, we currently do have a small overweight position. Our view at the moment is that Super Retail is probably a little bit more shielded to a very big consumer meltdown. 

We don't expect that, but we certainly are in an environment where the economy is softening and consumer spend has remained strong despite rates going up. You haven't really seen the impact of higher mortgages and high inflation really hitting the consumer massively in Australia just yet. So we are definitely a bit concerned that you can still see that coming through. 

That being said, we think a business, particularly Supercheap Auto on the auto side, Macpac, Rebel, BCF, these are all businesses where we think from an inventory point of view, it's easier to manage these inventories that you can buy and hold in a warehouse, it's not necessarily super high fashion that you have to churn consistently.

In the past, one of the things that really stood out for us in Super Retail Group is the fact that they manage their inventory incredibly well. Even at the last update we had from them is that they have increased their inventory, but they're not too concerned. They wanted to do that given the supply chain constraints. 

At this point in time for us, we would probably hold our position currently and wait to see how the consumer really plays out. From our perspective, we'd rather hold Super Retail Group and many of its peers just given that we think it's definitely on the more defensive side of the consumer space. But we think it's also a bit early to add too much at this point in time until we see what the real impact is. 

We'll keep an eye on it, happy to hold it and could potentially add later on when we get more clarity.

The post 3 ASX 200 shares I'd pounce on when the clouds clear: expert appeared first on The Motley Fool Australia.

L1 Capital is a fund manager that operates the listed investment company (LIC) L1 Long Short Fund Ltd (ASX: LSF).

The fund manager thinks the recent market sell-off is presenting some "exceptional opportunities". At present, its median portfolio investment now has a projected FY23 price/earnings (P/E) ratio of 9.7 times, according to its monthly update for September.

L1 said:

While these periods of heightened market volatility can be unnerving, we continue to believe that taking a 2-year view and focusing on enduring investment fundamentals (cash flows, industry structure, management, operating trends and balance sheet) will deliver strong absolute and relative returns.

We continue to find both safety and value in low P/E stocks with undergeared balance sheets and strong cashflow generation. In contrast, we believe high P/E stocks and 'expensive defensives' look crowded, risky and unappealing.

What are some examples of the ASX shares L1 is talking about?

The fund manager also outlined some of the companies in its portfolio.

Here are three of the names the fund manager noted:

BlueScope Steel Limited (ASX: BSL)

BlueScope is a steelmaking business in Australia and the US. Steel 'spreads' have been falling, but are still "healthy" and starting to "stabilise as the arbitrage on importing steel has now largely been eroded", according to L1 Capital.

The fund manager pointed to the positives of BlueScope's plan to grow its US operations with the company planning a capacity expansion. It also noted the acquisition of the US's second-largest metal coating/painting company Coil Coatings and the establishment of BlueScope Recycling from its acquisition of the MetalX recycling business.

The fund manager pointed out that it has a "strong net cash balance sheet", so its share buyback is expected to continue, as well as investment in the US and Australian businesses.

L1 said that BlueScope is valued at just six times FY23's consensus estimated earnings. 'Consensus' means the collective average of different expert projections. The fund manager thinks the market is "significantly" undervaluing the business.

Sandfire Resources Ltd (ASX: SFR)

L1 pointed out copper prices are under pressure because of a weaker global economic backdrop. That's despite the physical copper market continuing to remain "tight". The fund manager attributes the supply issues to ongoing production challenges in Chile, the number one global producer. This ASX share has seen a decline over the past few months. Indeed, the Sandfire Resources share price is down 30% over the last six months.

In February, Sandfire completed the "transformational" acquisition of the MATSA mine in the south of Spain and is currently developing the Motheo copper mine in Botswana.

L1 said:

We believe the commencement of Motheo production in FY24 will deliver a step-change in free cash flow for the company as capital expenditure declines and the operating cash flow from the mine expands. We see compelling value upside in Sandfire with the company currently trading at a discount to the acquisition price of MATSA alone, before factoring in any value for its other mining assets, including Motheo.

James Hardie Industries plc (ASX: JHX)

Another pick was this ASX building materials company that also has a big presence in the US. L1 describes it as the US market leader in fibre cement siding.

The fund manager attributed its recent share price decline to the expectation that US housing demand is going to drop because of higher interest rates.

Around 65% of the group's revenue comes from repair and remodelling, while 35% is from new housing.

L1 is confident in James Hardie's ability to continue to grow market share "for many years to come".

The fund manager said about the ASX share:

We believe the market correction has provided us the opportunity to invest in a very high-quality company with a decade of structural growth ahead of it at a very attractive valuation. James Hardie currently trades on a FY23 consensus P/E of only ~13x relative to its long-term average of 20x-25x. While we expect US housing starts to be negatively impacted by the steep rise in interest rates, at this valuation, we believe the market is implicitly assuming a ~40% decline in James Hardie earnings. This would be a similar impact to what the company suffered during the GFC, however, the business mix at that time was much more cyclical, with a ~60-65% skew to new housing.

The post 3 beaten-up ASX shares this fund manager thinks are 'compelling' buys appeared first on The Motley Fool Australia.

The S&P/ASX 200 Index (ASX: XJO) recovered further from its September rout today. The index closed 1.74% higher at 6,815.70 points on Wednesday.

It followed a strong session on Wall Street overnight that saw the Dow Jones Industrial Average Index (DJX: .DJI) gain 2.8%. Meanwhile, the S&P 500 Index (SP: .INX) lifted 3% and the tech-heavy Nasdaq Composite Index (NASDAQ: .IXIC) rose 3.3%.

It likely comes as no surprise, then, that the S&P/ASX 200 Information Technology Index (ASX: XIJ) led the way today. It closed 3.8% higher.

The S&P/ASX 200 Consumer Discretionary Index (ASX: XDJ) and the S&P/ASX 200 Consumer Staples Index (ASX: XSJ), meanwhile, traded in different directions. The former posted a 2.7% gain while the latter slumped 0.04% – making it today's worst performing sector.

Many ASX 200 miners also posted gains, driving the S&P/ASX 200 Materials Index (ASX: XMJ) to rise 1.4%.

Finally, the S&P/ASX 200 Energy Index (ASX: XEJ) lifted 1.2% following a good night for oil prices.

The Brent crude oil price lifted 3.3% to US$91.80 a barrel and the US Nymex crude oil price gained 3.5% to US$86.52 a barrel.

But which ASX 200 share outperformed all others on Wednesday? Keep reading to find out.

Top 10 ASX 200 shares countdown

The Telix Pharmaceuticals Ltd (ASX: TLX) share price topped the index today, gaining close to 12% despite the company's silence.

Today's biggest gains were made by these shares:

Our top 10 ASX 200 shares countdown is a recurring end-of-day summary to let you know which companies were making big moves on the day. Check in at Fool.com.au after the weekday market closes to see which stocks make the countdown.

The post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.