Grace Alvino, Author at The Motley Fool Australia

Are CSL shares a buy, hold, or sell at their 52-week high?

Grace Alvino — Sat, 31 Oct 2026 23:00:00 +0000

CSL Ltd (ASX: CSL) shares have made an extraordinary recovery over the past few months.

After falling to a low of just $90 in June, the biotechnology giant has staged an impressive comeback.

Its shares reached a new 52-week high of $199 earlier this week and are trading around $197.50 on Friday.

That is quite a turnaround for a company that was only recently struggling to win over investors.

But after such a strong rally, is there still an opportunity for investors?

What's behind the recovery?

CSL's turnaround has been supported by improving confidence in the company's outlook.

After a challenging FY26, management has outlined plans to restore earnings growth through improved efficiency, stronger commercial performance, and continued investment in its core businesses.

Its latest guidance, announced alongside its FY26 results, points to approximately 5% underlying net profit growth in FY27 on a constant-currency basis, with demand for its immunoglobulin therapies remaining healthy.

The announcement this month of the appointment of Deborah Waterhouse as its next CEO has also brought fresh optimism about the company's direction.

However, CSL's recovery is also taking place against a much stronger backdrop for biotechnology shares globally.

According to CNBC, the iShares Biotechnology ETF (NASDAQ: IBB) had gained 24% in 2026 as of 23 October.

This reflects renewed enthusiasm for drug development, increased merger and acquisition activity, and advances in technologies such as artificial intelligence (AI) and genetic medicine.

Some commentators are even talking about a potential golden age for biotechnology, as new technologies open up opportunities to develop treatments for previously difficult-to-treat diseases.

CSL is therefore benefiting from a broader improvement in sentiment towards the sector, alongside growing confidence in its own recovery.

What about CSL shares' valuation?

The considerable recovery in CSL's share price means investors are now paying a higher price for its future earnings.

According to current CommSec consensus forecasts, CSL is expected to generate earnings per share (EPS) of $9.06 in FY27, $9.60 in FY28, and $10.14 in FY29.

At the current share price of around $197.50, this puts the company on a forward price-to-earnings (PE) ratio of approximately 21.8 times for FY27.

That falls to 20.6 times for FY28 and then 19.5 times for FY29.

Those multiples are certainly less attractive than they were when CSL shares were trading closer to $100.

Nevertheless, I still think the valuation is reasonable for a business with CSL's long-term prospects.

The company remains a global leader in plasma-derived therapies, with demand for immunoglobulin expected to grow as diagnosis and treatment rates improve.

CSL also has opportunities to improve manufacturing efficiency and plasma yields, which could support profitability as production increases.

Meanwhile, newer therapies such as ANDEMBRY and HEMGENIX provide additional growth opportunities.

If management can successfully execute its recovery strategy, I believe CSL could deliver stronger earnings growth over the longer term.

Of course, there are still challenges. Its Vifor business continues to face generic competition, while the company needs to demonstrate that its operational improvements can deliver sustainable results.

And after such a strong share price recovery, disappointing earnings could quickly dampen investor enthusiasm.

Foolish takeaway

For me, CSL shares remain a buy at around $197.50.

I certainly wouldn't describe them as the bargain they were earlier this year, but I still see plenty to like about its long-term prospects.

The recovery will depend on management delivering the improvements it has promised, and there may be setbacks along the way.

However, with its established market position, growing demand for its therapies, and opportunities to improve profitability, I believe CSL can continue rewarding patient investors.

The post Are CSL shares a buy, hold, or sell at their 52-week high? appeared first on The Motley Fool Australia.

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Motley Fool contributor Grace Alvino has positions in CSL. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL. The Motley Fool Australia has recommended CSL. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

3 ASX shares with a realistic shot at becoming the next $50 billion giant

Grace Alvino — Sat, 31 Oct 2026 20:00:00 +0000

Australia is home to some enormous businesses.

Take Goodman Group (ASX: GMG), which has grown into a global property powerhouse and is now worth approximately $56 billion.

Then there's Telstra Group Ltd (ASX: TLS), with a market capitalisation of around $55 billion, and Woolworths Group Ltd (ASX: WOW), which is valued at close to $50 billion.

These are businesses that have established themselves as major players in their respective industries.

But something I find fascinating is thinking about what they looked like before they became so large.

The opportunity to get in early

There was a time when these companies were worth a fraction of what they are today.

Goodman, for example, spent years expanding its international property portfolio, building relationships with major customers, and positioning itself to benefit from changing demand for logistics facilities.

More recently, its expansion into data centres has opened another significant growth opportunity.

Investors who recognised the potential in businesses like Goodman long before they became giants could have enjoyed substantial returns as their earnings and market capitalisations grew.

And those who held on gave themselves the opportunity to benefit from the power of compounding.

That's something I think is worth remembering. A successful investment doesn't necessarily deliver its best returns in the first year or two. Sometimes, the biggest rewards come from allowing a company to keep growing for a decade or longer.

Of course, getting there requires finding the right businesses. Plenty of promising companies struggle to translate their ambitions into sustainable profits, and even successful businesses can become disappointing investments if you pay too much for them.

But I think there are some ASX shares today that have a realistic opportunity to become much larger businesses.

I'm interested in companies that already have proven products or services, established market positions, and opportunities to expand well beyond their current operations.

And I've identified three that I believe could eventually join Australia's $50 billion club.

None is guaranteed to reach that milestone, and the journey could take many years. But I think the potential rewards make them worth investigating.

Here are the three businesses I'd be watching.

Sigma Healthcare Ltd (ASX: SIG)

My first ASX share pick might already be familiar to anyone who regularly visits Chemist Warehouse.

Following its merger with the pharmacy giant in 2025, Sigma has become one of Australia's largest healthcare businesses.

Its market capitalisation is currently around $31.5 billion, meaning it would need to grow approximately 60% to reach the $50 billion milestone.

I think that's a realistic possibility over the longer term. Especially given the opportunity to take Chemist Warehouse's successful Australian business model into international markets.

The company's combination of competitive pricing, extensive product ranges, and strong brand recognition has proved extremely successful locally.

And we're starting to see encouraging results overseas. In its October trading update, Sigma reported that Australian Chemist Warehouse branded store sales had increased 12.1% since July, while international sales grew 30.2% in constant currency during the period.

I think those figures demonstrate the strength of the business.

Sigma is continuing to expand its store network, including in New Zealand, Ireland, and the United Kingdom. If Chemist Warehouse can establish a much larger international presence, I believe its earnings could grow considerably.

There's also the opportunity to improve profitability through the merger. Management is targeting $100 million in annual integration synergies by FY29, while greater scale could strengthen its purchasing power and operating efficiency.

Of course, international expansion takes time, and competition will be strong in some markets. But I think Sigma has a genuine opportunity to build one of the world's major pharmacy retail networks.

Pro Medicus Ltd (ASX: PME)

My second ASX share pick has already created enormous wealth for long-term shareholders.

Pro Medicus has developed into a global leader in medical imaging software, helping hospitals and radiologists view, manage, and interpret complex medical scans.

The company currently has a market capitalisation of approximately $21 billion. That means reaching $50 billion would require its value to more than double.

I think it has an opportunity to achieve this through continued international expansion and the growing importance of medical imaging.

One of the biggest challenges facing healthcare systems is the increasing number of scans being performed. As populations age and medical technology improves, doctors are relying more heavily on diagnostic imaging to identify and monitor diseases.

At the same time, many countries are experiencing shortages of radiologists. That creates demand for software that helps medical professionals work more efficiently.

Pro Medicus is already winning major contracts with hospitals across North America through its industry-leading Visage imaging platform.

In FY26 alone, the company signed 10 new contracts worth a combined minimum of $407 million. And the momentum has continued.

Just this month, it announced to the ASX two additional seven-year contracts worth a combined $67 million. I think this demonstrates how much demand there is for its technology.

What makes Pro Medicus even more attractive is its profitability. The company reported an underlying EBIT margin of almost 75% in FY26, reflecting the attractive economics of its software business.

As it wins additional customers, I think revenue growth could translate into substantial earnings increases.

There are also opportunities to expand into areas such as cardiology, digital pathology, and artificial intelligence (AI).

Its valuation remains demanding, so the company will need to deliver significant earnings growth to justify a $50 billion market capitalisation.

But I believe it has the technology, market opportunity, and financial strength to make that ambition realistic.

WiseTech Global Ltd (ASX: WTC)

My final ASX share pick is WiseTech Global, which provides software used by logistics businesses to manage the movement of goods around the world.

With a market capitalisation of approximately $13.9 billion, WiseTech has the furthest to travel of my three selections. It would need to become almost four times as valuable to reach $50 billion.

That's a substantial challenge, but I think its global opportunity means it is possible in time.

WiseTech's CargoWise platform helps freight forwarders and logistics providers manage complicated international operations, including customs processes, shipments, and documentation.

Once businesses have integrated this software into their operations, replacing it can be expensive and disruptive. I think that gives WiseTech a valuable competitive position.

The company has also expanded significantly through acquisitions, most notably its purchase of e2open. This has broadened its exposure to global supply chain management and created opportunities to offer customers a wider range of services, potentially supporting margin expansion.

The company still needs to demonstrate that it can successfully integrate its acquisitions, manage debt, and address regulatory and governance concerns. But if WiseTech can strengthen its position as a leading global logistics software provider, I believe its current market capitalisation could eventually look quite modest.

Foolish takeaway

I believe all three ASX shares have the potential to become $50 billion companies over the next decade.

Each has a strong position in its market and plenty of opportunities to expand, which could support substantial earnings growth in the years ahead.

If they can continue delivering on that potential, I think patient shareholders could be well rewarded.

The post 3 ASX shares with a realistic shot at becoming the next $50 billion giant appeared first on The Motley Fool Australia.

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Motley Fool contributor Grace Alvino has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goodman Group and WiseTech Global. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Pro Medicus. The Motley Fool Australia has positions in and has recommended Goodman Group, Telstra Group, and WiseTech Global. The Motley Fool Australia has recommended Pro Medicus. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Is the Telstra share price good value or expensive?

Grace Alvino — Sat, 31 Oct 2026 00:00:00 +0000

Telstra Group Ltd (ASX: TLS) has long been a popular choice among Australian investors looking for reliable dividends and stability.

The telecommunications giant has delivered steady earnings growth in recent years, while continuing to invest in its network and increase shareholder returns.

But how does its current valuation stack up against its future earnings and dividends?

Let's take a closer look.

What are Telstra shares worth?

One way to assess Telstra's valuation is to look at how much investors are paying for its expected earnings.

According to CommSec consensus forecasts, Telstra is expected to generate earnings per share (EPS) of 20.8 cents in FY27, followed by 21.6 cents in FY28.

Based on its current share price of around $4.91, this puts Telstra on a forward price-to-earnings (PE) ratio of approximately 23.6 times for FY27.

That multiple falls slightly to 22.7 times for FY28 forecast earnings.

For a mature telecommunications business with relatively modest earnings growth expectations, I think those multiples are quite high.

However, earnings are only one consideration when assessing Telstra's valuation. The company's dividend outlook is also worth examining, especially given its popularity with income-focused investors.

According to CommSec consensus estimates, Telstra is forecast to pay fully franked dividends of 22 cents per share in FY27 and 22.5 cents in FY28.

At the current share price, those forecasts equate to forward dividend yields of approximately 4.5% and 4.6%, respectively.

And if those dividends are fully franked, eligible Australian investors could also benefit from valuable franking credits.

That is a respectable level of income, particularly from a business with Telstra's defensive characteristics.

Is the premium justified?

I think there are several reasons why investors may be willing to pay a higher earnings multiple for Telstra.

The first is the nature of its business. Telecommunications services have become essential for households and businesses, and demand for connectivity is unlikely to disappear during an economic downturn.

Telstra also benefits from its extensive mobile network, strong brand recognition, and large customer base.

These advantages give it a solid competitive position in the Australian market and help support relatively predictable earnings.

Its recent financial performance has also been encouraging. In FY26, Telstra delivered another financial year of underlying earnings growth, supported by its mobile and digital infrastructure businesses and ongoing cost reductions.

The company is now working through its Connected Future 30 strategy, which aims to strengthen its network leadership, improve efficiency, and create new opportunities from digital infrastructure.

I believe this should help Telstra continue growing earnings and cash flow over the coming years.

There are still challenges to consider. Competition remains strong, maintaining and expanding telecommunications networks requires significant investment, and Telstra needs to keep improving its financial performance to justify its valuation.

I would also keep an eye on dividend coverage. Forecast dividends are slightly higher than expected earnings per share in both years, so Telstra will need to maintain healthy cash generation to support those payments.

Overall, I think the company's defensive qualities, established market position, and potential for steady dividend growth help explain why investors are prepared to pay a premium.

Foolish takeaway

At around $4.91, I certainly wouldn't describe Telstra shares as cheap.

A forward earnings multiple above 23 times leaves relatively little room for disappointment, especially when earnings growth is expected to be modest.

Nevertheless, I can understand why investors are prepared to pay that price.

For someone looking to generate income from ASX shares, a potential dividend yield of around 4.5% is worth considering.

Add in Telstra's defensive characteristics and relatively dependable earnings, and I think its premium valuation is arguably justified.

I would be comfortable buying Telstra at current levels for income, although investors hoping for substantial capital growth may find better opportunities elsewhere.

The post Is the Telstra share price good value or expensive? appeared first on The Motley Fool Australia.

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

The 5 ASX shares I'd hold for the next 20 years, including one left-field pick

Grace Alvino — Fri, 30 Oct 2026 19:30:00 +0000

20 years is a long time to hold an ASX share, and a lot can change along the way.

But I believe some ASX shares have what it takes to keep growing and rewarding investors over that period.

With that in mind, I've picked out five shares that I would be happy to buy today and hold until 2046.

Most are businesses I have plenty of confidence in, but my final pick might come as a surprise.

Its shares have struggled this year, but I think it could prove to be a rewarding long-term investment.

Here's what's on my list and why.

Macquarie Group Ltd (ASX: MQG)

My first choice is Macquarie Group, which I think is one of the best financial services businesses on the ASX.

What I like about Macquarie is how it has developed multiple revenue streams across banking, asset management, commodities, and investment banking.

This gives the group exposure to different markets and opportunities around the world.

Its banking operations have continued to grow, while its global asset management business provides exposure to areas such as infrastructure, renewable energy, real estate, and private credit.

Macquarie also has considerable experience operating through difficult economic conditions.

Over a 20-year period, I would expect several recessions, market downturns, and periods of uncertainty. Having a business with a long history of managing risks and allocating capital carefully is something I value.

Of course, Macquarie's earnings can fluctuate significantly depending on market conditions and investment activity.

However, I believe its global reach, financial strength, and ability to keep developing its businesses give it an excellent chance of being considerably larger in 2046.

For these reasons, Macquarie would be an easy inclusion in my long-term portfolio.

What about the other four?

While Macquarie is a relatively straightforward choice, the remaining four offer exposure to some of the biggest growth opportunities I see over the coming decades.

They include businesses positioned to benefit from healthcare demand, Australia's growing wealth, and medical innovation.

But my final selection is perhaps the most interesting of the five. It operates in an industry where fortunes can change quickly, and its shares have fallen approximately 35% this year.

Despite that, I believe its competitive position could make it a rewarding investment for patient shareholders.

Here's why these four ASX shares would make my list along with Macquarie.

Sigma Healthcare Ltd (ASX: SIG)

Another business I would be comfortable holding for 20 years is Sigma Healthcare.

Following its merger with Chemist Warehouse, Sigma has become a major force in the Australian pharmacy industry, with a growing international presence.

I like the long-term outlook for this business because demand for medicines, healthcare products, and pharmacy services should continue to grow as populations age.

Chemist Warehouse also has a well-established brand and a retail model that has proven successful in Australia.

I think the opportunity to expand that model internationally could become an increasingly important source of growth. And we are already seeing encouraging progress, with the company's international operations growing strongly and its store network expanding.

There should also be benefits as Sigma continues integrating the two businesses, improving efficiency and expanding its range of owned and exclusive-label products.

The shares currently command a premium valuation at 36 times FY27 earnings according to CommSec, which is something investors need to consider. Nevertheless, I believe its defensive earnings, strong long-term growth potential, and market leadership justify this premium.

HUB24 Ltd (ASX: HUB)

HUB24 is another ASX share that I think could deliver excellent returns for long-term investors.

The company operates a leading investment and superannuation platform used by financial advisers to manage their clients' wealth.

Its growth opportunity is supported by Australia's expanding superannuation system and the increasing complexity of retirement planning.

As more Australians accumulate wealth and seek financial advice, I expect demand for sophisticated investment platforms to remain strong.

HUB24 has been taking advantage of this opportunity by winning business from competitors and attracting substantial inflows onto its platform.

For example, its first-quarter update for FY27 showed funds under administration had reached $168.6 billion, up 15% on the prior corresponding period.

As those assets increase, so does the revenue HUB24 can generate from administering them.

According to CommSec, HUB24 shares are trading on a PE ratio of 34 times FY28 earnings. That certainly is a premium valuation, but given its decades-long growth runway, it is a price I would be willing to pay.

Telix Pharmaceuticals Ltd (ASX: TLX)

The next ASX share I would happily hold until 2046 is Telix Pharmaceuticals.

I believe Telix has one of the most exciting long-term growth opportunities in the Australian healthcare sector.

The company specialises in radiopharmaceuticals, developing products that use radioactive substances to help diagnose and potentially treat serious diseases, including cancer.

Its commercial success with prostate cancer imaging products Illuccix and Gozellix has already demonstrated the demand for its technology.

And the opportunity extends well beyond these existing products. Telix is developing additional diagnostic products and cancer treatments, giving it several potential avenues for growth over the coming years.

The ASX announcement of the US approval of its brain cancer imaging product Pixclara in September is another encouraging development.

Looking ahead, I expect advances in medical technology and growing demand for more precise cancer diagnosis and treatment to create substantial opportunities for companies operating in this field.

There are risks to consider, particularly around clinical trials, regulatory approvals, competition, and the costs of developing new products. But with an established commercial business and an expanding pipeline, I believe Telix has the potential to become a much larger global healthcare company over the next two decades.

PLS Group Ltd (ASX: PLS)

My final ASX share is probably the one that will raise the most eyebrows.

I would be prepared to buy PLS shares today and hold them for the next 20 years.

That might sound surprising given the company's exposure to the notoriously volatile lithium market. And with its shares down approximately 35% year-to-date, investors have already had a reminder of how quickly sentiment can change.

However, I believe PLS has some important advantages that could help it prosper over the long term.

The first is its position as one of the world's leading lithium producers. Its flagship Pilgangoora operation in Western Australia is a large-scale, relatively low-cost asset with substantial resources.

In fact, the company recently increased its Pilgangoora ore reserve, which now supports more than 25 years of potential production. This gives PLS a strong starting point for a 20-year investment.

The company is also investing $1.9 billion in the P2000 project, which is expected to increase annual production capacity to approximately 2 million tonnes.

For context, this week PLS announced to the ASX record spodumene concentrate production of 267,600 tonnes in the September quarter, equivalent to just over 1 million tonnes annualised.

Beyond Australia, its acquisition of Latin Resources has given it ownership of the Colina lithium project in Brazil, creating another potential source of future production.

Of course, I would expect plenty of ups and downs over 20 years. Lithium prices will fluctuate, new supply will enter the market, and demand from electric vehicles and energy storage systems may develop unevenly.

Its expansion plans also require substantial investment, which increases the importance of careful financial management.

But I believe low operating costs, an enormous resource base, opportunities for further acquisitions, and strong cash-generating potential put PLS in a good position to navigate those challenges.

Foolish takeaway

Choosing ASX shares to hold for 20 years requires plenty of patience and a willingness to accept uncertainty.

Even outstanding businesses will encounter challenges over that period, and I would continue reviewing their progress to make sure the original investment case remains intact.

For me, these five companies offer a compelling combination of established market positions and opportunities to grow.

And while PLS might require the strongest stomach of the group, I think its long-term potential deserves serious consideration.

The post The 5 ASX shares I'd hold for the next 20 years, including one left-field pick appeared first on The Motley Fool Australia.

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Motley Fool contributor Grace Alvino has positions in Hub24. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group and Telix Pharmaceuticals. The Motley Fool Australia has recommended Hub24, Macquarie Group, and Telix Pharmaceuticals. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

DroneShield shares just hit a 52-week low: Should I buy?

Grace Alvino — Fri, 30 Oct 2026 03:25:44 +0000

DroneShield Ltd (ASX: DRO) shares are having a difficult year.

On Friday, the trend is continuing with the counter-drone technology company's shares falling to a 52-week low of $1.41.

That's a disappointing decline of approximately 71% from their 52-week high of $4.80.

With so much value wiped off the company's market capitalisation, investors may be wondering whether now is a good time to buy.

Why have DroneShield shares fallen so far?

I think a major reason for DroneShield's decline is that investor expectations had become extremely high.

Earlier this year, excitement around rising defence spending and the growing use of drones in modern warfare helped push its shares to high levels.

However, as the company has continued expanding, investors have become increasingly focused on how quickly it can translate its opportunities into sustainable profits.

DroneShield reported strong revenue growth in the first half of 2026, but its underlying EBITDA turned negative as the company invested heavily in expanding its operations.

And while its longer-term sales opportunities remain substantial, defence contracts can be unpredictable in their timing and size. This makes it difficult to forecast earnings with much confidence.

The company's valuation also remains a consideration. Despite its enormous share price decline, DroneShield still has a market capitalisation of approximately $1.3 billion.

Investors are therefore paying a lot for its future growth potential.

Why I remain positive

Despite these challenges, I think DroneShield has an exciting long-term opportunity.

The growing use of drones in military conflicts has demonstrated how important it is for governments to invest in technology that can detect and neutralise these threats.

And I expect demand for counter-drone systems to continue increasing as defence budgets grow and the technology becomes more widely adopted.

We are already seeing evidence of this. Earlier this year, NATO allies announced plans to invest more than US$40 billion in counter-drone capabilities over the next five years.

DroneShield is well-positioned to benefit from this trend, having established relationships with military and government customers around the world.

Its recent progress is also encouraging. Earlier this month, DroneShield released an ASX announcement that it had secured $261 million in committed revenue for FY26, with additional commitments extending into FY27 and beyond.

The company has also secured access to a US government procurement arrangement with a ceiling of US$500 million over three years.

Although this arrangement does not guarantee orders, it provides another opportunity to win significant business in the coming years.

As DroneShield expands its manufacturing capacity, develops new products, and grows its software offering, I believe it has an opportunity to become a much larger defence technology business.

Should I buy DroneShield shares?

At around $1.41, I think DroneShield shares are worth considering for investors with a high risk tolerance.

However, I would approach this investment with patience and realistic expectations.

Investor sentiment towards the company has deteriorated significantly, and it could take considerable time for confidence to return.

There is also nothing to suggest that the recent declines cannot continue, particularly if the company experiences contract delays or struggles to improve profitability.

For these reasons, I would only consider DroneShield as part of a balanced portfolio, with a relatively modest position that reflects its higher risk profile.

Foolish takeaway

I believe DroneShield shares could be a rewarding long-term investment at current levels.

The structural trends supporting demand for counter-drone technology are favourable, and I think the company has an opportunity to capture a meaningful share of this growing market.

Of course, the journey is unlikely to be smooth, and I wouldn't be surprised to see further volatility over the coming months.

The post DroneShield shares just hit a 52-week low: Should I buy? appeared first on The Motley Fool Australia.

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

ASX 200 gold share Catalyst Metals crashes 22%: Would I buy the dip?

Grace Alvino — Fri, 30 Oct 2026 02:37:28 +0000

Catalyst Metals Ltd (ASX: CYL) shares are having a disastrous finish to the week.

The gold producer's shares have crashed 22% to around $4.05 on Friday despite the S&P/ASX 200 Index (ASX: XJO) charging higher.

Could this sharp sell-off be a buying opportunity?

According to its ASX announcement, Catalyst Metals reported a challenging September quarter, with gold production falling to 22,231 ounces from 31,886 ounces in the previous quarter.

Production was affected by staffing shortages and an extended shutdown at its Plutonic processing plant.

This also put pressure on costs, with all-in sustaining costs per ounce of gold produced rising from $2,666 to $4,267.

However, the biggest disappointment was the company's revised production outlook. Catalyst now expects to produce between 90,000 and 105,000 ounces of gold in FY27.

That is a substantial reduction from the ASX 200 gold share's previous indicative guidance of 130,000 to 150,000 ounces.

The company also expects all-in sustaining costs of between $3,600 and $4,100 per ounce for the year. This is a substantial increase from $2,738 in FY26.

These changes reflect delays at two important growth projects, Trident and Old Highway. Trident's underground development has progressed more slowly than expected, while permitting delays have pushed back production at Old Highway.

As a result, both projects are now expected to contribute production in FY28 rather than FY27.

Management also acknowledged that the extent of the changes required to its development schedule is not yet clear. I suspect this uncertainty is a major reason why investors have reacted so negatively.

Is there any good news?

Despite the disappointing update, there were some positives from the ASX 200 gold share's update.

Catalyst generated $80 million in operating cash flow during the quarter and increased its cash and bullion holdings by $40 million to $371 million.

It also remains debt-free, with total available liquidity of $571 million. This gives the company considerable financial flexibility as it works through its development plans.

Its gold reserves have increased to 2 million ounces, supporting its longer-term production ambitions. Management also maintained its longer-term ambition of increasing annual production to approximately 200,000 ounces.

So, there is still an opportunity for Catalyst to become a substantially larger gold producer if it can successfully bring its new mines into production.

The challenge is determining how quickly that growth can be delivered and what it will cost.

Would I buy the dip?

I can certainly see why some investors might view today's decline as an opportunity.

Catalyst has a substantial gold resource base, a strong balance sheet, and the potential to increase production considerably over the coming years.

And following a 22% share price decline, investors are now paying significantly less for that potential.

However, I would be reluctant to buy at this stage. The combination of lower production, higher costs, and delayed projects creates considerable uncertainty around the company's near-term earnings.

I would also like to see more evidence that management can get its development program back on track before becoming more confident in its growth outlook.

With other ASX gold producers offering clearer production and cost expectations, I think investors have alternatives worth considering.

I think Catalyst Metals could recover strongly if it delivers on its longer-term production ambitions.

However, today's update has raised some serious questions about the timing and cost of that growth.

For now, I would classify Catalyst shares as a hold. I would prefer to look elsewhere in the gold sector for businesses with more predictable outlooks and greater confidence around their production plans.

The post ASX 200 gold share Catalyst Metals crashes 22%: Would I buy the dip? appeared first on The Motley Fool Australia.

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

Would I buy ResMed shares after today's results?

Grace Alvino — Fri, 30 Oct 2026 00:47:16 +0000

ResMed Inc (ASX: RMD) shares are having a positive finish to the week.

Shares in the sleep technology giant are up 2% to around $36.15 on Friday, following the release of the company's first-quarter results.

But are the results good enough to make ResMed shares a buy at current levels?

What did ResMed report?

According to its ASX announcement, ResMed delivered a solid start to FY27, reporting a 6% increase in revenue to US$1.41 billion for the first quarter.

On a core constant currency basis, revenue growth was slightly stronger at 7%.

Demand for its sleep and breathing health products remained healthy, with global sleep device revenue increasing 9% and masks and other products growing 10%. I think these are encouraging numbers.

There was also good news on profitability. The company's adjusted gross margin improved by 50 basis points to 62.5%, helped by ongoing productivity improvements.

This contributed to a 14% increase in adjusted earnings per share (EPS), comfortably ahead of revenue growth.

As for the outlook, management maintained its FY27 guidance. ResMed continues to expect reported revenue of US$5.75 billion to US$5.85 billion, with core constant currency revenue growth of 5% to 7%. Its adjusted earnings guidance was also left unchanged.

I think ResMed's first-quarter performance provides a solid start towards achieving those targets.

Would I buy ResMed shares?

I am positive on ResMed's long-term prospects, and today's results have reinforced that view.

The company has an excellent position in the global sleep health market, supported by its established brand, extensive product range, and continued investment in innovation.

Importantly, there is still a substantial opportunity to grow. Millions of people around the world are living with undiagnosed or untreated obstructive sleep apnoea, and I expect awareness and access to treatment to improve over time.

ResMed is well placed to benefit from this trend, especially as it continues expanding internationally and developing new products.

I also like the company's focus on improving efficiency, which could allow earnings to grow faster than revenue over the coming years.

And what about its valuation? Based on CommSec consensus forecasts at 30 October, ResMed shares are trading on a forward price-to-earnings (P/E) ratio of approximately 21.3 times FY27 earnings.

That reduces to 19.4 times for FY28, then to 17.5 times for FY29. It is also possible that consensus EPS estimates could change for the better following the company's encouraging start to the year, lowering these multiples a touch.

Of course, investors should keep in mind that this valuation assumes ResMed continues delivering earnings growth. Any slowdown or pressure on profitability could weigh on its share price.

Nevertheless, I think the current multiples look reasonable for a business with ResMed's market position and long-term growth opportunities.

Foolish takeaway

Today's results have given me another reason to feel confident about ResMed shares.

The company continues to grow, its profitability is improving, and there is still a substantial global market for its products.

At around $36.15, I think ResMed shares offer good value for long-term investors. In light of this, I would be happy to buy and give the company plenty of time to grow.

The post Would I buy ResMed shares after today's results? appeared first on The Motley Fool Australia.

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

Coles share price sinks 12%: Should I buy the dip?

Grace Alvino — Fri, 30 Oct 2026 00:09:02 +0000

The Coles Group Ltd (ASX: COL) share price is having a terrible finish to the week.

Shares in the supermarket giant have sunk 12% to $20.66 on Friday, following the release of the company's first-quarter trading update.

While there were some encouraging numbers in the release, investors appear concerned about the company's outlook.

But could this sharp sell-off be a buying opportunity?

What did Coles report?

According to the announcement, Coles reported group sales revenue of $11.2 billion for the first quarter of FY27, representing growth of 2.2%.

Its supermarket business performed better, with sales increasing 3.6% to $10.3 billion. Comparable sales growth came in at 2.7%.

There were also some encouraging developments beneath those numbers. Online supermarket sales jumped 22.9%, with eCommerce penetration reaching 15.7%. Meanwhile, Exclusive to Coles sales grew 4.3%, supported by a 13.3% increase in Coles Finest sales.

I think these are positive signs that the company's investments in online shopping and its own-brand ranges are delivering results.

However, there were some disappointments. Liquor sales declined 1.3%, continuing the weakness in that business.

More importantly, Coles appears to be losing sales momentum relative to its major rival.

Earlier this week, Woolworths Group Ltd (ASX: WOW) announced its first-quarter update and reported Australian Food sales growth of 6.9%, with comparable sales increasing 6.1%.

Admittedly, Woolworths benefited from its popular Ooshies promotion, which boosted sales during the quarter.

Nevertheless, the difference is significant and suggests Woolworths is currently doing a better job of attracting customers. This is something Coles will need to address.

I suspect the biggest concern for investors is the company's outlook.

Coles revealed that supermarket sales growth had moderated during the first four weeks of the second quarter as competition increased.

Management also warned that higher fuel prices would increase operating costs during the first half.

Combined with additional investment in customer value, this has led Coles to forecast broadly flat first-half supermarket earnings before interest and tax (EBIT).

That's disappointing after the company delivered strong earnings growth in FY26. It also raises questions about how quickly Coles can improve profitability while competing with a resurgent Woolworths.

The company advised that it is responding by investing in lower prices and relaunching its Every Day Price program, but these initiatives may take time to deliver stronger sales momentum.

Is this a buying opportunity?

Despite these challenges, I think the sharp decline in the Coles share price could be an opportunity for long-term investors.

One reason is its valuation. According to the latest CommSec consensus forecasts, Coles shares now trade on a forward price-to-earnings (P/E) ratio of approximately 21 times FY27 earnings.

That falls to around 19.7 times for FY28 and 18 times for FY29. It also compares favourably to Woolworths' FY27 forward P/E ratio of approximately 27 times.

I think that is attractive for a business with defensive qualities and a positive long-term growth outlook.

However, it is important to note that those forecasts were made before today's trading update. As a result, analysts could revise their earnings estimates lower in the coming days to reflect today's news.

Nevertheless, even if Coles delivered flat earnings per share (EPS) in FY27, it would only be trading on a P/E ratio of 22 times based on FY26's EPS of 93.8 cents.

Furthermore, I would focus less on the now and more on the long term. The supermarket giant has invested heavily in its automated distribution centres, online fulfilment capabilities, and store network.

I believe these investments should help improve efficiency and support profitability over time. And while Woolworths is currently enjoying stronger sales growth, competition between the two has always fluctuated.

Coles remains one of Australia's leading supermarket operators, with a large customer base and relatively defensive earnings.

Foolish takeaway

I think today's sell-off creates an opportunity to buy Coles shares at a more reasonable valuation.

The company clearly has some work ahead of it, particularly when it comes to improving sales momentum and protecting margins.

However, I remain confident in its long-term prospects and believe its operational investments can deliver further benefits.

There could be more volatility if analysts downgrade their forecasts, but at around $20.66, I think buyers are getting a good deal.

The post Coles share price sinks 12%: Should I buy the dip? appeared first on The Motley Fool Australia.

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

I narrowed my 2027 ASX watchlist to 3 shares. Then I picked a winner

Grace Alvino — Thu, 29 Oct 2026 23:44:16 +0000

With 2027 approaching, I've been thinking about which ASX shares I'd most like to own over the next few years.

I've settled on three different businesses whose prospects and valuations give me reasons to be optimistic. I would buy all of them today, although one stands above the others for me.

Here's how I arrived at my decision.

Qantas Airways Ltd (ASX: QAN)

My first pick is one I suspect some investors will find surprising. Airlines can be difficult investments. Fuel costs jump, demand weakens when the economy struggles, and aircraft are expensive.

But I think Qantas has more going for it than those challenges alone suggest. Its domestic position is strong, with Qantas serving full-service travellers and Jetstar targeting budget-conscious passengers. The loyalty business also generates earnings beyond selling seats.

As Qantas modernises its fleet, newer aircraft should lower operating costs and improve the passenger experience. Project Sunrise could also open new premium long-haul routes.

And importantly, I don't think Qantas shares are priced as though investors expect much of that to go right.

At current levels, Qantas trades on a P/E ratio of roughly eight times forecast FY27 earnings, falling to less than six times FY29 estimates. Analysts also expect a dividend yield of approximately 4.6% in FY27, potentially rising to 5.7% by FY29.

I wouldn't expect an airline to command the earnings multiples of a software company. But with the potential for stronger earnings as its fleet investment starts paying off, I think Qantas is being undervalued and is a buy.

That's one place on my watchlist filled. My other choices come from different industries, with different ways to grow.

One already dominates a market that millions of Australians use. The other is expanding internationally with technology I believe could become far more important.

And it's the second of those that ultimately wins my vote.

REA Group Ltd (ASX: REA)

Anyone who has searched for a home probably knows realestate.com.au. And I think that familiarity is one of REA's greatest strengths.

The platform attracts an enormous audience, reaching 11.8 million Australians in August alone.

That's valuable for real estate agents who want their properties seen by as many potential buyers as possible. And because REA has established such a strong position in the Australian property market, it can charge agents for premium listings and other services that help their properties stand out.

I think there's considerable potential to keep growing earnings from this business, especially as REA introduces new products and gives agents more reasons to spend on its platform.

I'm also interested in its expansion into mortgage services, which could allow the company to generate additional revenue as people move from searching for a property to buying one.

Of course, activity in the housing market will influence its performance. But I believe REA's position gives it an excellent opportunity to grow over the longer term.

The biggest consideration for me is how much to pay for that opportunity. At current levels, REA shares trade on approximately 27 times forecast FY27 earnings, falling to around 22 times FY29 estimates.

That's a premium valuation, but I think it's justified by the company's competitive position and potential for continued earnings growth.

There's also a modest dividend to enjoy along the way, with a potential FY27 yield of around 2.3%.

For me, REA is the kind of ASX share I'd be happy owning for many years. I think its dominance of Australia's online property market could continue rewarding shareholders well beyond 2027.

Pro Medicus Ltd (ASX: PME)

My winner is Pro Medicus, even though it's easily the most expensive of the three shares.

The company develops medical imaging software that helps radiologists examine scans and diagnose patients. And I think there's an enormous opportunity for its technology over the coming years.

One of the biggest challenges facing hospitals is the growing demand for medical imaging.

As populations age and doctors increasingly rely on scans to diagnose and monitor diseases, radiology departments are facing heavier workloads.

Unfortunately, the number of radiologists available to interpret those scans hasn't kept pace with demand, creating staffing shortages across many healthcare systems.

That's where Pro Medicus comes in. Its Visage software allows radiologists to access and examine medical images quickly and efficiently, helping them manage larger workloads.

And there's already strong evidence that hospitals want its technology. Pro Medicus signed 10 new contracts worth at least $407 million in FY26 and announced two additional US contracts this month, worth a combined $67 million.

I think those wins are impressive, especially considering the company estimates that it currently holds only around 11% of the US market.

That leaves considerable room to win business from hospitals still using older imaging systems. And as more customers adopt its technology, I think Pro Medicus could become substantially more profitable.

I'm also excited about its expansion into cardiology, which could bring its technology into additional hospital departments. Digital pathology offers another potential growth opportunity.

Despite all this potential, Pro Medicus shares have come under considerable pressure recently.

Concerns about how artificial intelligence (AI) could disrupt software businesses, alongside higher interest rates putting pressure on growth stock valuations, may help explain some of the weakness.

As a result, Pro Medicus shares are now trading around 30% below their 52-week high.

Of course, that doesn't automatically make them cheap. At current levels, the shares trade on approximately 108 times forecast FY27 earnings and 69 times FY29 estimates.

Those are substantial multiples, and there's considerable pressure on management to keep delivering strong growth.

But I'm optimistic about the company's future. I think AI could actually create further opportunities for Pro Medicus as hospitals look to integrate new diagnostic technologies into their existing imaging systems.

And with so much of the US market still available to pursue, I can see plenty of reasons why its earnings could continue growing strongly over the next decade and beyond.

For me, the recent share price weakness has created an opportunity to buy an exceptional business at a more reasonable valuation than investors were paying earlier this year.

That's why Pro Medicus would be my winner.

Foolish takeaway

I think all three ASX shares could reward investors over the coming years, and I'd be happy buying any of them ahead of 2027.

But if I'm choosing just one, Pro Medicus gets my vote. What excites me is how much room the company still has to grow. It's already winning major hospital contracts and generating exceptional profit margins, yet it has only captured a small portion of its potential market.

The valuation means there could be plenty of volatility along the way. But when I think about where Pro Medicus could be in another 10 years, I see a business that could be substantially larger than it is today.

And that's the opportunity I'd most like to own.

The post I narrowed my 2027 ASX watchlist to 3 shares. Then I picked a winner appeared first on The Motley Fool Australia.

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

Where could Megaport shares be in 12 months?

Grace Alvino — Thu, 29 Oct 2026 04:23:11 +0000

Megaport Ltd (ASX: MP1) has become one of the more interesting ways to invest in the artificial intelligence (AI) boom.

The technology company has been securing major contracts as demand for computing power continues to grow.

And with its shares trading around $18.13, some analysts believe there's considerable upside over the next 12 months.

So, just how high could Megaport shares climb?

Brokers tip major upside

Two leading brokers have recently expressed confidence in Megaport's growth prospects.

According to a note from Morgans this month, it has a buy rating and a $27 price target, suggesting potential upside of approximately 49%.

A note from Bell Potter in October reveals that it is almost as optimistic, with a buy recommendation and a $26 target. This implies a potential return of 43%.

I don't think it is hard to see why they are positive on Megaport shares. In September, the company announced three new AI infrastructure contracts worth approximately $1 billion.

These agreements involve providing computing power, networking, and storage services to customers developing and running AI applications.

And they have already prompted management to upgrade its earnings outlook.

Megaport raised its FY27 revenue guidance to between $720 million and $810 million, while increasing its expected EBITDA margin to between 42% and 44%.

I think that's encouraging evidence that its expansion into AI infrastructure is gaining momentum.

Why earnings could grow materially

What I arguably like most is how much additional revenue and profit Megaport could generate as its new contracts become operational.

The company has invested heavily in building its computing infrastructure, including expanding its capacity to provide customers with access to powerful graphics processing units (GPUs).

These are the specialised chips used to run demanding AI applications.

And according to Bell Potter, the opportunity could be substantial. The broker estimates Megaport's GPU pool could eventually generate approximately $200 million in annual underlying EBITDA when fully utilised.

With that business expected to ramp up during the first half of FY28, Bell Potter believes it could contribute around $100 million in that financial year.

Combined with Megaport's existing operations, the broker now expects FY28 underlying EBITDA of approximately $770 million.

Morgans is similarly enthusiastic, suggesting Megaport's expanding network and computing businesses provide a path towards annualised EBITDA exceeding $850 million.

I think those forecasts demonstrate how significantly Megaport's earnings could increase as its recent investments start delivering returns.

And with its established network services business continuing to grow, there are opportunities beyond its AI computing contracts.

What could go wrong for Megaport shares?

Of course, these expectations depend heavily on the continued expansion of AI infrastructure spending.

If enthusiasm for AI fades, or businesses begin cutting back their investment plans, demand for computing capacity could weaken.

That could put pressure on Megaport's growth forecasts and the valuation investors are prepared to pay for its shares.

There's also the substantial cost of building and maintaining this infrastructure. Megaport has increased its FY27 capital expenditure plans to as much as $1.88 billion, making it important that new contracts deliver sufficient returns.

And while EBITDA growth is encouraging, I would also want to see that investment eventually translate into stronger cash generation.

Foolish takeaway

I think both Morgans' $27 target and Bell Potter's $26 valuation are achievable over the next 12 months, although there's no guarantee the market will agree.

Megaport is building a much larger business, and its recent contract wins give me confidence that demand for its services is strong.

There could be considerable volatility if sentiment towards AI changes, but I believe the longer-term opportunity is worth pursuing.

At current levels, I would be happy buying Megaport shares and giving management time to deliver on its ambitious growth plans.

The post Where could Megaport shares be in 12 months? appeared first on The Motley Fool Australia.

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

Could NAB shares overtake CBA as my favourite bank investment?

Grace Alvino — Thu, 29 Oct 2026 03:38:46 +0000

I've long considered Commonwealth Bank of Australia (ASX: CBA) to be the standout investment in the banking sector.

But with interest rates rising and economic conditions becoming more challenging, I'm starting to think the competition is getting closer.

One of its biggest rivals is looking increasingly attractive, especially when you consider the difference in their valuations.

So, could it finally take the top spot on my buy list? Here's what I think.

National Australia Bank Ltd (ASX: NAB)

There are several reasons I think NAB shares deserve serious consideration right now.

The biggest is its position in Australian business banking, where it holds a market share of approximately 22%.

This is an enormous part of NAB's operations. In its FY26 half-year results, its Business and Private Banking division accounted for 52% of the group's cash earnings, excluding large notable items.

I think that puts NAB in a strong position to benefit as Australian businesses grow and invest.

And it's already seeing encouraging demand. In its third-quarter update for FY26, NAB reported that Australian business lending increased 2% during the period.

I'm also encouraged by its efforts to simplify operations and improve productivity, which could help turn that lending growth into stronger profits.

Of course, higher interest rates could make conditions more challenging for business borrowers. But I think NAB's established relationships with Australian businesses gives it a valuable position in this market.

And what makes the shares even more interesting to me today is their valuation. At approximately $41.17, NAB trades on a P/E ratio of approximately 16 times forecast FY28 earnings according to CommSec, with a potential fully-franked dividend yield of 4.2%.

I think that's a reasonable price for a major bank with NAB's market position and opportunities to improve profitability.

I'd be happy buying its shares at current levels.

Commonwealth Bank of Australia shares

CBA remains my favourite major bank, although I can understand why investors might be questioning whether its premium valuation is justified.

What keeps me interested is the strength of its underlying business. CBA has spent years investing in technology and making its banking services easier for customers to use.

And I think that investment has helped it build an enviable position in the Australian market.

The bank is the main financial institution for approximately one in three Australians, giving it an enormous customer base and a strong position in deposits and lending.

Its recent financial performance has also been impressive. In FY26, CBA increased cash profit by 7% to approximately $11 billion, demonstrating its ability to keep growing despite a challenging environment.

The difficulty is deciding how much to pay for that success.

At around $165.19, CBA shares trade on approximately 24 times forecast FY28 earnings according to CommSec, with a potential dividend yield of 3.2%.

That's considerably more expensive than NAB shares. And with economic uncertainty and interest rates remaining elevated, I think the valuation leaves less room for disappointment.

Nevertheless, I remain confident in CBA's ability to deliver for shareholders over the longer term.

Foolish takeaway

I think this is becoming a much closer decision than it was previously. NAB offers better value, a higher dividend yield, and opportunities to improve profitability.

In the current environment, I can see a strong argument for choosing it over CBA shares.

But if I had to pick just one, I'd still give CBA the edge. Its competitive position, technology investments, and track record give me slightly more confidence in its long-term prospects.

That said, I would be happy buying either bank today. I think both could be rewarding investments over the coming years.

The post Could NAB shares overtake CBA as my favourite bank investment? appeared first on The Motley Fool Australia.

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

Five ASX blue chips, five verdicts. One of them I wouldn't touch right now

Grace Alvino — Thu, 29 Oct 2026 02:20:57 +0000

Big companies can be comforting investments. They have familiar names, established customers, and a history of rewarding shareholders.

But I don't think being an ASX blue chip automatically makes a share a good buy.

Some are finding new ways to grow, while others face problems that could weigh on returns for years. The price investors pay also makes a difference.

I've looked at five popular ASX shares to decide which I'd buy today and which one I'd avoid altogether.

Let's start with a mining giant that's investing heavily in its future.

BHP Group Ltd (ASX: BHP)

BHP has long been associated with iron ore, and its Western Australian operations remain a major source of earnings and cash flow.

But I think the next stage of its growth will be shaped by the investments it has been making elsewhere.

Its copper operations provide exposure to expanding electricity networks and data centre infrastructure. Copper production was lower in the September quarter, but stronger prices helped offset some of that weakness. BHP also maintained its full-year production guidance, despite the mixed quarter.

Meanwhile, the Jansen potash project in Canada is approaching its first production, expected in mid-2027. This adds another commodity supported by the need to improve agricultural productivity.

At around $58.04, BHP trades on a P/E ratio of roughly 17.5 times forecast FY27 earnings. Analysts expect earnings per share (EPS) to rise to $4.06 by FY29, bringing that multiple down to around 14 times.

Commodity prices will influence the outcome, but established cash generation and projects nearing production make BHP a buy for me.

And that's my first verdict. What about the other four?

One is Australia's biggest bank. Another is showing signs of recovery, while a popular retailer keeps building on its strengths.

The final company is the one I wouldn't buy today. Here's my view on them all.

Commonwealth Bank of Australia (ASX: CBA)

Commonwealth Bank is rarely the cheapest banking share, but its competitive position is difficult to match.

Its scale in home lending and deposits is a major advantage, backed by years of investment in technology. It's the main financial institution for one in three Australians, giving it a powerful customer base.

That strength was evident in FY26, when cash profit rose 7% to around $11 billion.

At $163.01, the shares trade on about 24 times forecast FY27 earnings, with a forward dividend yield of 3.2%, before franking credits.

That's a demanding valuation for a bank, especially if credit losses increase or lending growth slows as interest rates rise.

But I would still buy CBA shares for the long term. I'm comfortable paying more for an ASX blue chip that has repeatedly demonstrated its ability to compete, attract deposits, and generate strong returns on equity.

Woolworths Group Ltd (ASX: WOW)

I've been watching Woolworths' recovery closely, and yesterday's sales update gave me more confidence that the supermarket giant is heading in the right direction.

Australian Food sales increased 6.9% in the first quarter of FY27, with shoppers responding to the company's efforts to offer better value.

Woolworths acknowledged that its Disney Ooshies promotion helped sales early in the quarter, but trading remained strong after it finished. I think that's encouraging for a business that has spent considerable time trying to rebuild its relationship with customers.

The next challenge is turning that stronger sales momentum into higher profits. There is still work to do at BIG W and in New Zealand, but I like the progress being made in its core Australian supermarket business.

At $40.82, Woolworths shares trade on approximately 23 times forecast FY29 earnings. That's a valuation that requires continued improvement, but analysts expect earnings to grow steadily over the next few years.

I believe Woolworths can deliver on those expectations, which is why I would be happy buying its shares today.

Wesfarmers Ltd (ASX: WES)

Wesfarmers is another ASX blue chip I'd be happy buying, although for a different reason.

What I like about Wesfarmers is how well it has positioned its businesses to benefit from changing consumer habits.

Bunnings has built an enormous presence in home improvement, while Kmart continues to demonstrate just how successful its focus on affordable products has become.

And I don't think either business has finished growing. There are opportunities to expand product ranges, improve digital services, and strengthen customer relationships.

I also like the way Wesfarmers can use the cash generated by its established operations to invest in new opportunities, including healthcare and lithium. One new business is Atomica, which is looking to leverage the increasing popularity of K-beauty brands.

Of course, those investments won't all deliver immediate returns, and some may disappoint. But I trust management's ability to make sensible decisions about where to allocate capital.

The biggest consideration for me is the valuation. At $77.14, Wesfarmers shares trade on a P/E ratio of approximately 27 times forecast FY28 earnings.

That's certainly a premium, but I think the quality of its retail businesses, combined with management's track record, goes a long way towards justifying it.

I'd be comfortable paying that price and giving Wesfarmers another decade to grow.

Fortescue Ltd (ASX: FMG)

Fortescue shares are where my enthusiasm comes to an end. The iron ore producer has created substantial wealth for shareholders over the years, and I can understand why investors might be interested in its shares at around $14.51.

But I struggle to see enough upside to make me want to buy today.

Its latest quarterly update highlighted some challenges, with iron ore sales falling below shipments amid ongoing negotiations with China Mineral Resources Group.

Fortescue is also spending heavily on its operations and future projects, putting additional demands on its cash flow. That's something I'd be more comfortable with if there were stronger earnings growth on the horizon.

Unfortunately, analysts aren't expecting much improvement. Consensus estimates suggest earnings per share of $1.05 in FY27 and $1.09 in FY29.

That leaves Fortescue trading on approximately 14 times FY27 earnings, with a potential dividend yield of 4.7%. I don't think that offers enough value for a business so exposed to fluctuations in iron ore prices.

And when I compare Fortescue with BHP, I'd much rather own the latter, given its growing exposure to copper and the upcoming contribution from potash.

Fortescue could certainly benefit from another rally in iron ore prices, but I wouldn't be buying this ASX blue chip at current levels.

Foolish takeaway

For me, being an ASX blue chip isn't enough to make a company worth buying. I want to feel confident about its future earnings and comfortable with the price I'm paying.

I can make a case for owning BHP, CBA, Woolworths, and Wesfarmers shares over the coming years. Fortescue is the exception.

Until I see a more convincing earnings outlook or a substantially better valuation, I'd prefer to put my money into one of the other four.

The post Five ASX blue chips, five verdicts. One of them I wouldn't touch right now appeared first on The Motley Fool Australia.

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Motley Fool contributor Grace Alvino has positions in Commonwealth Bank Of Australia and Wesfarmers. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Walt Disney and Wesfarmers. The Motley Fool Australia has recommended BHP Group, Walt Disney, and Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Is Rio Tinto becoming a better copper investment than BHP?

Grace Alvino — Thu, 29 Oct 2026 01:56:41 +0000

Copper is becoming an increasingly important commodity as the world invests in electricity networks, data centres, and new technologies.

And I think some of the biggest beneficiaries could be the mining companies capable of supplying more of it.

Two Australian mining giants stand out to me, with both investing heavily in expanding their copper operations.

But could one now offer a better investment opportunity than the other? Here's what I think.

Rio Tinto Ltd (ASX: RIO)

One of the biggest reasons I'm becoming more optimistic about Rio Tinto's copper outlook is the progress being made at its Oyu Tolgoi mine in Mongolia.

The company has spent years developing the mine's underground operations, and that investment is now starting to deliver significant production growth.

According to its October production update, Oyu Tolgoi produced 312,000 tonnes of copper during the first nine months of 2026, an increase of 29% compared with the same period last year.

And there's still plenty of room for production to grow. Rio Tinto expects Oyu Tolgoi to produce an average of approximately 500,000 tonnes of the red metal annually between 2028 and 2036.

I think that's an exciting prospect for a mine that is already operating and gradually increasing its output.

After years of heavy investment, Rio Tinto is approaching a period where Oyu Tolgoi could become a much larger contributor to its earnings, especially if copper prices remain strong.

Of course, production across the company's entire copper business isn't growing at the same pace. Group output increased just 1% during the first nine months of 2026.

But looking ahead, I think the continued expansion at Oyu Tolgoi gives the company a good opportunity to increase its copper earnings over the next few years.

And with BHP expecting lower copper production in FY27, that could give Rio an advantage in the near term.

BHP Group Ltd (ASX: BHP)

I'm also very bullish on BHP, which remains the world's largest copper producer.

In FY26, it produced approximately 1.95 million tonnes of copper, with the commodity contributing more than half of its underlying EBITDA.

That demonstrates how important the base metal has already become to the business.

But BHP is facing a period of lower production. Management expects copper output of between 1.65 million and 1.8 million tonnes in FY27, largely reflecting declining ore grades at its Escondida mine in Chile.

This is where I think Rio has an advantage over the shorter term. While Oyu Tolgoi continues ramping up, BHP is working through a period of weaker production before its next major investments begin contributing.

However, looking further ahead, there's plenty to like about BHP's plans. The company is progressing a new concentrator at Escondida and expanding its copper operations in South Australia.

In its FY26 results, management stated its belief that its development pipeline could increase attributable copper production by approximately 40% by FY35.

I think that's an enormous opportunity for a business already producing the red metal at such a substantial scale. And BHP's established iron ore operations provide considerable cash flow to help fund those ambitions.

Foolish takeaway

I would be happy buying both BHP and Rio Tinto shares today.

BHP remains one of my favourite long-term ASX investments, and I think its expanding copper business could become significantly more valuable over the next decade.

But if I were choosing based on copper production growth over the next three to five years, I might lean towards Rio Tinto.

Oyu Tolgoi is already delivering strong growth, and I think the next stage of its expansion could be rewarding for shareholders.

That gives Rio Tinto a slight edge for me today, although I'd be very comfortable owning both.

The post Is Rio Tinto becoming a better copper investment than BHP? appeared first on The Motley Fool Australia.

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

Is NDQ the best ETF to buy?

Grace Alvino — Thu, 29 Oct 2026 01:20:52 +0000

With so many excellent exchange-traded funds (ETFs) available on the ASX, choosing the best one isn't always straightforward.

Some investors want exposure to the world's fastest-growing companies, while others prefer something that provides a more balanced investment.

And then there are those who want to benefit from the enormous changes taking place in technology.

So, where does the popular NDQ ETF fit in? And could it be the best investment of the lot?

Why I rate the NDQ ETF so highly

The Betashares Nasdaq 100 ETF (ASX: NDQ) is one of my favourite ways to invest in the long-term growth of technology.

It tracks the Nasdaq-100 Index, providing investors with exposure to 100 of the largest non-financial companies listed on Nasdaq.

And some of those businesses are at the centre of the artificial intelligence (AI) revolution.

Take NVIDIA, for example. Its powerful chips have become essential for developing and running advanced AI systems, with demand coming from some of the world's largest technology companies.

Then there's Microsoft, which is investing heavily in AI while expanding its enormous cloud computing business.

These are two different businesses, but both have opportunities to benefit as AI becomes more widely adopted.

And they're far from alone. The NDQ ETF also owns companies developing advanced semiconductors, operating enormous digital platforms, and building the infrastructure needed to support new technologies.

I think that's an exciting collection of businesses to own.

Why the next decade could be rewarding

What I like about the NDQ ETF is that it gives investors exposure to companies shaping how the world operates.

Artificial intelligence is an obvious opportunity, but I think there's much more to the story.

Cloud computing, automation, digital advertising, ecommerce, and advances in semiconductor technology could all support earnings growth over the coming decade.

And many of the ETF's largest holdings already generate substantial profits, allowing them to keep investing in new opportunities.

Of course, that doesn't guarantee strong share price returns. Investors have high expectations for these businesses, and disappointing earnings or weaker enthusiasm for AI could cause significant volatility.

But I'm optimistic that technology will continue creating enormous wealth over time. And I think the NDQ ETF is exceptionally well-positioned to participate in that growth.

Is it the best ETF for everyone?

This is where I think the answer depends on what you're trying to achieve. The NDQ ETF has a significant concentration in technology and related sectors, with its largest holdings accounting for a substantial portion of the portfolio.

That's something I'd happily accept if my goal were to gain meaningful exposure to AI and technology.

But someone wanting a more balanced investment might prefer the Vanguard MSCI Index International Shares ETF (ASX: VGS).

It spreads investments across a much wider range of companies and industries in developed markets.

Alternatively, the Vanguard Diversified High Growth Index ETF (ASX: VDHG) offers a mixture of Australian and international shares, alongside a smaller allocation to bonds.

Both provide exposure to successful technology businesses while spreading investments more widely.

Foolish takeaway

I think the NDQ ETF deserves to be considered one of the best ETFs available to Australian investors.

If I wanted to invest in the AI revolution and the continued expansion of the world's leading technology companies, it would be near the top of my shopping list.

For someone seeking a more balanced investment, I'd probably look elsewhere. But for long-term technology exposure, I think the NDQ ETF is very difficult to beat.

The post Is NDQ the best ETF to buy? appeared first on The Motley Fool Australia.

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Are NDQ and these Betashares ETFs buys for Australian investors?

Motley Fool contributor Grace Alvino has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended BetaShares Nasdaq 100 ETF, Microsoft, and Nvidia. The Motley Fool Australia has positions in and has recommended BetaShares Nasdaq 100 ETF. The Motley Fool Australia has recommended Microsoft, Nvidia, and Vanguard Msci Index International Shares ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

3 reasons I would buy Xero shares in November

Grace Alvino — Thu, 29 Oct 2026 01:09:58 +0000

November could be an interesting month for Xero Ltd (ASX: XRO) shares.

The accounting software company is due to release its half-year results on 12 November, giving investors another chance to see how its international expansion is progressing.

But I'm interested in owning Xero for much longer than the next reporting season.

Here are three reasons I'd be happy buying its shares.

A business customers rely on

Running a small business involves plenty of financial administration, from sending invoices and paying staff to managing bills and preparing tax returns.

Xero makes these jobs easier by bringing them together in one platform. And once a business has become accustomed to using the software, changing to another provider can be a major inconvenience.

I think that puts Xero in a strong position to retain its customers, giving it a dependable source of revenue as it continues expanding.

The company finished FY26 with 4.92 million customers, having added more than half a million during the year. That's an impressive customer base, and I think there's an opportunity to generate considerably more revenue from it over time.

As Xero introduces new features and services, it can give existing customers more reasons to use its platform and potentially spend more.

For me, the combination of a growing customer base and opportunities to increase revenue from existing customers could support earnings growth for many years.

The US opportunity is taking shape

Xero has built strong positions in Australia and New Zealand, but the United States could become a much larger source of growth.

The acquisition of payments specialist Melio gives it a better way to compete there.

US businesses can now manage their accounting and pay suppliers directly through Xero, bringing two everyday financial tasks into one place.

That could help Xero attract new customers while generating payment revenue from existing ones.

And there's evidence of progress. The US added 58,000 customers in FY26, excluding those acquired through Melio, compared with 42,000 the year before.

Melio is a significant investment, and integrating the business will take time. But I think it could give Xero a much stronger offering in a market where it still has plenty of room to expand.

AI could make the software more valuable

I'm also encouraged by how Xero is putting artificial intelligence (AI) into its products.

Its JAX technology can help automate tasks such as matching bank transactions, reducing the time business owners and accountants spend on routine administration.

That's the kind of improvement I think customers will actually notice.

And the benefits could go beyond saving time. As Xero develops better tools for understanding cash flow and managing finances, businesses may have more reasons to use the platform for everyday decisions.

Management is already looking at ways to charge for additional AI capabilities.

There is competition, and new technology can change markets quickly. But I think Xero has an advantage in the financial information its customers already trust it to manage.

Foolish takeaway

I'll be interested to see what November's results reveal about Xero's progress in the US and its investment in new products.

But the bigger opportunity for me is how much more valuable its platform could become to small businesses over time.

I would be happy buying Xero shares in November and giving it the opportunity to develop over the years.

The post 3 reasons I would buy Xero shares in November appeared first on The Motley Fool Australia.

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

Would it be a smart investment to buy the VEU ETF?

Grace Alvino — Wed, 28 Oct 2026 01:36:22 +0000

When it comes to investing internationally, it is easy to spend most of your time looking at the United States.

After all, America is home to some of the world's most successful businesses, and its share market has delivered impressive returns over the years.

But I think investors could be missing some excellent opportunities by concentrating too heavily on one country.

That's why I've been taking a closer look at an exchange-traded fund (ETF) that deliberately leaves the US out.

So, would I buy this popular fund?

What does the VEU ETF offer?

The Vanguard All-World ex-US Shares Index ETF (ASX: VEU) invests in companies across developed and emerging markets around the world, excluding the United States.

It tracks the FTSE All-World ex US Index and provides exposure to approximately 3,800 companies.

And the geographical spread is impressive. Japan, Taiwan, the United Kingdom, Canada, China, and South Korea are among its largest country exposures.

There's also exposure to Australia, India, and numerous European economies.

What I like about this is how many different types of businesses are represented. Japan is home to major industrial and manufacturing companies, Europe has established healthcare and consumer businesses, while Taiwan and South Korea are central to the global semiconductor industry.

I think there's considerable potential for successful companies across these markets to grow their earnings over the coming decades. And the VEU ETF allows investors to participate in that growth through a single investment.

Why I'd consider buying it

One reason I'd be interested in the VEU ETF is the opportunity to look beyond the companies that dominate global investment discussions.

US technology giants have attracted enormous amounts of investor attention, especially because of artificial intelligence (AI). And while I remain optimistic about their long-term prospects, I don't expect America to produce every great investment success story.

Other countries have world-leading businesses, innovative technologies, and industries that could benefit from changing global demand.

I also like that the VEU ETF includes emerging markets. Countries such as India have opportunities to benefit from rising incomes and growing consumer spending, while others are becoming increasingly important in global manufacturing and technology.

Another positive is the cost. Vanguard charges an annual management fee of just 0.04%, making this an inexpensive way to access thousands of international companies.

Foolish takeaway

I think the VEU ETF would be a smart investment for someone wanting greater exposure to businesses outside the United States.

I'd be happy buying it as a long-term investment, especially alongside an ETF like the iShares S&P 500 ETF (ASX: IVV) that already provides US exposure.

There are some outstanding businesses operating across Asia, Europe, and other international markets. And I think giving myself the chance to benefit from their future success could be a rewarding decision over the next decade and beyond.

The post Would it be a smart investment to buy the VEU ETF? appeared first on The Motley Fool Australia.

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Motley Fool contributor Grace Alvino has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Vanguard International Equity Index Funds – Vanguard Ftse All-World ex-US ETF and iShares S&P 500 ETF. The Motley Fool Australia has recommended iShares S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Should I buy Cochlear and Mesoblast shares with $5,000?

Grace Alvino — Wed, 28 Oct 2026 01:35:48 +0000

If I had $5,000 to invest in ASX healthcare shares, I'd be looking for businesses with the potential to become considerably more valuable over time.

And there are two companies that I think deserve a closer look.

Both are developing treatments that could make a real difference to patients, and both have opportunities to grow over the coming years.

But would I buy their shares today? Here's my view.

Cochlear Ltd (ASX: COH)

Cochlear has had a difficult time recently, but I remain confident about its long-term future.

The company is a global leader in hearing implants, helping people with severe hearing loss regain access to sound.

And despite its international success, there's still an enormous number of people who could benefit from its technology. Cochlear estimates that fewer than 5% of eligible adults in developed markets currently receive a cochlear implant.

I think that suggests the company could keep growing for many years simply by helping more people access treatments that are already available.

Of course, reaching those patients takes time. Many people are unaware that they could benefit from an implant, while others face delays in diagnosis and referrals.

That's why I like Cochlear's efforts to improve awareness and make it easier for patients to receive treatment.

The company is also continuing to invest in better technology. Its newer Nucleus Nexa implant has been well received, while work on a fully implantable hearing system could eventually make treatment even more convenient.

And there's some encouraging news on the earnings front. At Monday's annual general meeting, management reaffirmed its FY27 underlying net profit guidance of $330 million to $350 million, up from $322 million in FY26.

Although the recovery is expected to be gradual, I think Cochlear has the technology and market position to deliver much stronger earnings over the longer term.

For me, this is a business I'd be happy to buy today and hold for the next decade.

Mesoblast Ltd (ASX: MSB)

Mesoblast shares are a more complicated investment. After years of clinical trials, regulatory setbacks, and substantial spending, the biotechnology company has finally achieved something investors have long awaited.

It has a treatment generating meaningful commercial revenue. Its first approved product, Ryoncil, treats children with a serious complication of bone marrow transplants, in which the donor's immune cells attack the patient's body.

And the early sales figures have been encouraging. In the September quarter, Ryoncil generated US$28 million in revenue, an increase of 44% compared with a year earlier.

I think that's a significant achievement for a company that has spent so long working towards commercialisation. And there's an opportunity for the business to become much larger.

Mesoblast is seeking to expand Ryoncil into adult patients and has other treatments in development for conditions including chronic lower back pain and heart failure. Success with these programmes could transform its earnings potential.

But I'm still hesitant about buying the shares. Mesoblast reported a net loss of US$57.5 million in FY26, and it remains to be seen how quickly growing sales can translate into sustainable profits.

Further clinical trials and regulatory approvals will also be expensive, with no guarantee of success.

I can certainly see the potential for substantial returns if everything goes well. But I'd prefer to see more evidence that Mesoblast can build a consistently profitable business before investing.

For now, I would rate its shares as a hold.

Foolish takeaway

If I had $5,000 available to invest today, Cochlear shares would be my choice of the two.

I think the company's position in hearing healthcare gives it an excellent opportunity to grow over the next decade, especially as more patients gain access to treatment.

Mesoblast shares could also have a bright future, and I'll be interested to see how the company's commercial progress develops.

But I'm happy to be patient with this one. I'd rather see the company establish a stronger earnings record before deciding whether it deserves a place in my portfolio.

The post Should I buy Cochlear and Mesoblast shares with $5,000? appeared first on The Motley Fool Australia.

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

Up 10%! Does today's big news make NEXTDC shares a buy?

Grace Alvino — Wed, 28 Oct 2026 01:30:23 +0000

NEXTDC Ltd (ASX: NXT) shares have finally given investors something to cheer about.

The data centre operator's shares have jumped 10% to around $6.35 on Wednesday after releasing an update addressing concerns about its financial position.

Even after that rally, the shares remain approximately 62% below their 52-week high of $16.78.

So, is today's news enough to make them a buy?

Why investors have been worried

Last week, NEXTDC stunned the market by revealing that electricity supplier Jemena had delayed infrastructure upgrades needed to power its M3 Melbourne data centre.

With some contracted capacity unable to come online as planned, NEXTDC cut its FY27 underlying EBITDA guidance from $385 million to $410 million to between $245 million and $265 million.

I can understand the concern. NEXTDC is spending billions expanding its data centre network, and delays in getting customers connected mean it has to wait longer to start collecting revenue.

Investors have also been questioning whether the setbacks could affect the company's ability to meet its debt obligations.

Today's announcement goes some way towards addressing that concern.

What did NEXTDC reveal?

NEXTDC confirmed it met both financial covenants at 30 June, its latest completed testing date.

Its gearing ratio was just 8.2%, comfortably below the maximum allowed level of 60%. It also reported a pro forma interest cover ratio of 5.91 times, compared with the required minimum of 1.5 times.

In simple terms, those figures suggest the company had considerable room before breaching its lenders' financial limits at that date.

And there was an important detail. NEXTDC excluded the expected earnings from M3 customer contracts affected by the power delay when preparing its pro forma figures.

The interest cover calculation does include expected earnings from other contracted capacity, so it shouldn't be confused with profits already flowing into the bank.

Management also expects to remain compliant at the next covenant test in December.

NEXTDC reported $8.675 billion in liquidity at September's end, although only $1.275 billion was cash. The remainder was undrawn financing, with access subject to conditions and future covenant compliance.

I think that is encouraging information for investors who feared the M3 problems could quickly turn into a financing crisis.

Would I buy NEXTDC shares today's rally?

I would be happy buying NEXTDC shares at current levels, although I'd expect plenty of volatility.

The power delay hasn't disappeared. Management still expects the relevant supply upgrade during FY28, and further setbacks could delay revenue even longer.

Affected customers also have contractual rights that could lead to compensation or cancellations. But I remain optimistic about NEXTDC's longer-term opportunity.

It has secured substantial demand for data centre capacity at a time when cloud computing and artificial intelligence (AI) are increasing the need for reliable digital infrastructure.

If the company can deliver that capacity and start billing customers, earnings could look very different a few years from now.

Foolish takeaway

Today's announcement is a welcome sign that NEXTDC has financial breathing room while it works through the M3 setback.

There is still plenty for management to prove, especially around power delivery and the timing of customer revenue.

But with shares so far below their previous high, I think patient investors have an opportunity to buy into the company's long-term growth at a much lower price.

The post Up 10%! Does today's big news make NEXTDC shares a buy? appeared first on The Motley Fool Australia.

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

Are ResMed shares a strong buy before its results on Friday?

Grace Alvino — Wed, 28 Oct 2026 01:05:25 +0000

ResMed Inc (ASX: RMD) shares haven't had the easiest 12 months.

The sleep health giant's shares are trading around $35.50 on Wednesday, leaving them approximately 10% lower than this time last year.

And with the company set to report its first-quarter FY27 results on Friday, investors will soon have another opportunity to see how the business is performing.

So, could now be a good time to buy? Here's what I think.

What should investors expect on Friday?

Analysts are expecting a relatively modest start to the financial year. Revenue is forecast to increase approximately 4% to US$1.39 billion, with adjusted earnings expected to improve by around 5.5%.

That would represent slower sales growth than ResMed delivered last financial year, when revenue increased 10%.

But I think there's a good reason to look beyond the overall sales figure.

ResMed has sold its MatrixCare software business, while sales of its Astral ventilators have been suspended following a safety issue. These developments could weigh on its reported growth.

What I'll be most interested in is whether demand for its sleep apnoea treatments remains strong.

Analysts expect ResMed's sleep and breathing health business to deliver revenue growth of around 6% for the quarter. I think that would be an encouraging result, especially as the company continues working to reach more patients.

I'll also be watching profitability. Higher freight and component costs have created some challenges, but ResMed has a strong record of managing its expenses while growing.

If that continues, I think shareholders will have plenty to be pleased about.

Why I remain optimistic

The biggest reason I like ResMed shares is the sheer number of people who could benefit from its products.

Sleep apnoea affects hundreds of millions of people worldwide, yet many don't even know they have it.

According to ResMed's estimates, fewer than 20% of people with the condition in the United States have been diagnosed or treated. And the situation is even worse in many other countries.

I think that gives ResMed a huge opportunity to grow over the coming decades.

The company is investing in technologies that make sleep apnoea easier to diagnose, including home testing solutions that could help people access treatment sooner.

As awareness improves and more patients seek help, I expect demand for its devices to increase.

Management is aiming for high-single-digit annual revenue growth over the coming years, with earnings growing even faster.

I think that's an encouraging ambition for a company with so much room to expand.

Are ResMed shares good value?

At $35.50, ResMed shares are trading on a PE ratio of approximately 21 times forecast FY27 earnings and 19 times FY28 estimates.

I think that's a reasonable valuation for a global healthcare leader with strong profitability and considerable growth potential.

There are challenges to consider, including competition from new sleep apnoea treatments and the need to keep developing better products.

But I believe ResMed is well-placed to continue expanding its business as more people receive diagnoses and treatment.

And at this valuation, I think investors are getting an opportunity to buy a strong business at a sensible price.

Foolish takeaway

I would be happy buying ResMed shares before Friday's announcement.

The results could bring some volatility, especially if earnings fall short of expectations. But I'm much more interested in where ResMed could be in five or ten years.

With millions of potential patients still waiting to be diagnosed and treated, I think the company has an enormous opportunity ahead.

And at around 19 times FY28 earnings, I'd be comfortable buying shares today and giving ResMed plenty of time to grow.

The post Are ResMed shares a strong buy before its results on Friday? appeared first on The Motley Fool Australia.

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

DroneShield shares: How much profit would justify a $2 valuation?

Grace Alvino — Tue, 27 Oct 2026 23:36:52 +0000

DroneShield Ltd (ASX: DRO) shares have experienced a change in fortunes over the past year.

After attracting enormous enthusiasm from investors, the counter-drone technology company's shares have fallen sharply as questions surrounding its valuation and profitability have grown.

With DroneShield shares trading around $1.47 on Wednesday, a return to $2 would represent an increase of approximately 36%.

But what would the company actually need to earn to justify that valuation? Let's take a closer look.

DroneShield currently has approximately 924 million shares on issue. At $2 per share, that would give the company a market capitalisation of around $1.85 billion.

That's a substantial valuation for a business still working towards sustainable profitability.

To determine whether it could be justified, we need to consider how much DroneShield might earn as its operations expand.

For example, if investors were prepared to value the company at 30 times annual earnings, DroneShield would need to generate approximately $62 million in net profit.

At a more conservative price-to-earnings (P/E) ratio of 20 times, that figure increases to around $92 million.

Both scenarios assume DroneShield becomes profitable and can sustain those earnings. So, how realistic are those figures?

Could DroneShield generate those profits?

I think there are good reasons to be optimistic about the company's growth prospects. DroneShield operates in an industry experiencing considerable demand as governments and military organisations invest in protecting themselves against drones.

The growing use of drones in modern warfare has demonstrated the importance of effective detection and countermeasure systems.

And DroneShield is already benefiting from this demand. During the first half of 2026, revenue increased 74% to $125.8 million.

Management is now targeting full-year revenue of between $250 million and $270 million.

There is considerable potential for further expansion as defence organisations increase spending on counter-drone technology.

For example, DroneShield recently secured access to a US government procurement arrangement with a maximum value of US$500 million.

This doesn't guarantee orders, but it could provide another avenue for securing substantial contracts.

I'm also encouraged by the company's growing software and subscription business. Recurring revenue increased 229% to $11.5 million during the first half.

Although this remains a relatively small part of the business, I think it could become increasingly important as DroneShield expands its installed customer base.

A larger contribution from software and subscriptions could provide more predictable revenue between major equipment orders and support profitability over time.

Turning revenue into profits

Of course, growing sales is only part of the challenge. DroneShield reported a statutory net loss of $32.2 million during the first half of 2026, reflecting the significant costs associated with expanding its operations.

I think there's an opportunity for profitability to improve as revenue grows and the company benefits from its investments in technology and manufacturing capacity.

And with software and subscriptions potentially becoming a larger contributor, the business could gradually become less dependent on winning major new contracts to support earnings.

To illustrate what might be possible, imagine DroneShield eventually generates $500 million in annual revenue.

At a net profit margin of 12.4%, that would produce approximately $62 million in earnings. That's enough to support a $2 share price at a P/E ratio of 30 times.

This is an illustrative scenario rather than a forecast, and achieving that level of profitability would require a substantial improvement from today's position.

But I think it demonstrates how DroneShield could eventually grow into a much higher valuation if management can successfully scale the business.

Foolish takeaway

I think a $2 valuation for DroneShield is achievable over time, and I would be comfortable buying shares at current levels.

The company has demonstrated impressive revenue growth, and I believe its market opportunity could support considerably more expansion.

But justifying a higher share price will ultimately depend on how much of that growth reaches the bottom line.

If DroneShield can continue winning contracts, improve its profit margins, and build a more consistent earnings base, I think investors could have good reason to value the business at $2 or more.

The post DroneShield shares: How much profit would justify a $2 valuation? appeared first on The Motley Fool Australia.

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Grace Alvino, Author at The Motley Fool Australia

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