However, many of the large-cap companies we consider blue-chip stocks today once started out as humble penny stocks. 

Following earnings season, brokers have updated their guidance on plenty of ASX shares, including penny stocks.

Here are two that have attracted optimistic price targets from broker Morgans.

Peoplein Ltd (ASX: PPE)

Peoplein is a workforce solutions company operating in Australia and New Zealand. The company's services include recruiting, contracting, onboarding, rostering, timesheet management, payroll, and workplace health and safety management.

According to Morgans, FY25 was a challenging year for the company, with normalised EBITDA down 10% (vs pcp).

The broker said that while several operational metrics look to be stabilising, the result was light on forward guidance, although management did note that it remained well-positioned to benefit from a potential Queensland infrastructure boom. 

On Monday, Morgans said that this ASX penny stock's financial position is getting stronger, with debt down to $27.4 million. 

The stock looks comparatively cheap, trading at about 9 times earnings, and profits may be near their lowest point, suggesting potential for improvement. 

To this end, we see earnings growth driving share price appreciation through FY27/28, with any turnaround unlikely to be visible until 4QFY26. Hence we reiterate our Speculative Buy rating with a $1.00/sh price target.

Should this penny stock reach the $1.00 price target, that would be a 42% rise from yesterday's closing price of $0.70. 

Kina Securities Ltd (ASX: KSL)

Kina Securities provides diversified financial products and services. The company offers banking services, personal and commercial loans, money market operations, provision of share brokerage, fund administration, investment management services, asset financing, and corporate advice.

The company delivered 1H25 results in line with Morgans' predictions. 

Its 1H25 underlying NPAT (A$57m) was +16% on the pcp.  

Morgans described this as a clean, solid result. The only slight negative was that underlying cost growth remained high (+10% on the pcp), but this was matched by revenue growth.  

The broker has lowered FY25F/FY26F EPS by 1% to 5% on slightly higher cost growth than previously forecast. 

Despite this our valuation rises to A$1.67 (previously A$1.46) with our earnings changes offset by a valuation roll-forward, we maintain our BUY recommendation. 

From yesterday's closing price of $1.32, this indicates an upside of approximately 26% for this ASX penny stock.

The post Morgans says these ASX penny stocks can rise 40%! appeared first on The Motley Fool Australia.

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

Beach Energy Ltd (ASX: BPT)

The Beach Energy share price is down 2.5% to $1.53. This is despite oil prices rising overnight and the release of the energy producer's strategic review this morning. In respect to the latter, Beach Energy has laid out a plan that it believes will result in operating cost and capital reductions totalling ~$135 million. This will come from a 23% headcount reduction, ~$35 million field operating cost savings, and a ~$100 million sustaining capital expenditure reduction. Management believes that this will help it deliver leading shareholder returns through the sustainable supply of energy.

Fortescue Ltd (ASX: FMG)

The Fortescue share price is down 4.5% to $21.95. This has been driven by news that a major block trade has taken place at a decent discount to yesterday's close price. It remains unclear who is selling, but there are reports that a large institutional investor offloaded $1.1 billion worth of the iron ore miner's shares through a block trade this morning. These shares were sold at $21.60 per share, which is a 6% discount to where Fortescue's shares ended yesterday's session.

Kina Securities Ltd (ASX: KSL)

The Kina Securities share price is down 7.5% to 88 cents. This morning, this Papa New Guinea-based financial services provider revealed that it has identified a recent instance of fraud impacting several accounts belonging to a small number of customers. The amount involved is the subject of ongoing investigation. However, the aggregate loss is expected to be in the range of PGK12 million to PGK15 million (A$4.74 million to A$5.9 million) on a pre-tax basis. Through root cause analysis, certain system vulnerabilities were identified and promptly addressed. Kina Securities has downgraded its guidance to reflect this.

Melbana Energy Ltd (ASX: MAY)

The Melbana Energy share price is down 36% to 4.3 cents. This follows news that the appraisal of the Alameda-3 well in Cuba wasn't successful. Two attempts were made at flowing the well, however in both cases the complete removal of drilling mud and downhole fluids from the test string was not achieved and oil did not flow to surface. Preparations for testing of the shallower Alameda formation now underway.

The post Why Beach Energy, Fortescue, Kina Securities, and Melbana Energy shares are dropping today appeared first on The Motley Fool Australia.

In morning trade, the banking giant's shares are down almost 1% to $20.88.

Why is the Westpac share price falling?

Today's decline is likely to have been driven by a couple of factors.

The first is broad market weakness following a sell-off on Wall Street overnight. This has seen all of the big four banks tumble into the red today.

Also potentially weighing on the Westpac share price today has been the release of the announcement relating to its Pacific operations.

What did the bank announce?

According to the release, Westpac has ended the sales process for its Pacific banking businesses after failing to find a suitable buyer.

It appears that Westpac struggled to find an alternative after Papua New Guinea's Independent Consumer and Competition Commission (ICCC) denied authorisation for the proposed sale to Kina Securities Limited (ASX: KSL).

As a result, the bank will be retaining its Westpac Fiji and Westpac Bank PNG businesses.

Westpac also advised that it will continue to support local businesses, improve digital and service capabilities for customers, and deliver important community programs in financial literacy and education.

Should you buy the dip?

Analysts at Morgans are likely to see the dip in the Westpac share price as a buying opportunity.

The broker currently has an add rating and $22.58 price target on its shares. This implies almost 8% upside for investors from current levels.

And with Morgans forecasting a fully franked dividend of $1.47 in FY 2024, which equates to a 7% dividend yield, the total return on offer stretches to approximately 15%.

The post Why is the Westpac share price falling on Wednesday? appeared first on The Motley Fool Australia.

Morgans analyst Andrew Tang, who has been keeping an eye on all the action, named his last set of stocks to buy for the February reporting season:

Back in 2021 no one thought coal would become the new black

When Dalrymple Bay Infrastructure Ltd (ASX: DBI) listed on the ASX in December 2020, more than one pundit questioned how it would survive as a public company.

After all, it is the owner and operator of a coal export terminal.

But no one saw what was coming next — an energy crisis in 2022 sending any stock related to coal production soaring.

Now Dalrymple Bay shareholders are laughing, with the share price up in excess of 18.5% since the first day on the ASX, all while delivering an 8% dividend yield.

"The FY22 result delivered the substantial earnings growth we were expecting following finalisation of terminal infrastructure charge (TIC) negotiations in 2H22," Tang said on the Morgans blog. 

"Dividend per share guidance had already been provided and was unchanged (albeit the growth outlook was not reaffirmed)."

The stock is a buy for Morgans, especially considering a "forward cash yield of mid-8% and circa 6% price growth potential".

Reporting season 'easily beat our expectations'

On the same theme, coal explorer and producer Stanmore Resources Ltd (ASX: SMR) is also a buy for Tang's team, based on a sensational report to the market.

"Key CY22 financials easily beat our expectations on higher PCI [pulverised coal injection] price realisations," said Tang.

"We now forecast Stanmore to reach a net cash position during 1H23."

The Stanmore share price has more than tripled over the past 12 months, but incredibly still represents excellent value for those willing to buy now.

"Stanmore looks too cheap trading on a +25% free cash flow yield, with +30% capital upside and upside to tight/buoyant hard coking coal pricing," said Tang.

"Stanmore enjoys clear M&A advantages in the Bowen Basin and we think positioning for possible acquisitions will far out-rank dividends through 2023."

'Growing profits gets much easier from here'

Captioning technology and services provider Ai-Media Technologies Ltd (ASX: AIM) has been on a hiding to nothing the last few years.

The stock price has sunk more than 73% over the past five years. Over the past 12 months, it has seen a 40.7% decline.

However, Tang feels like it has turned a corner after seeing its software-as-a-service (SaaS) arm contribute more than 50% of the total profit growth.

"Since it's nearly double the margin of legacy and growing much faster, this means Ai-Media has cleared the critical [inflection] point in its transition to a SaaS business," he said.

"Growing profits gets much easier from here."

The business' gross profit grew both on a year-on-year basis and half-on-half.

"The company booked revenue of $29.7 million for the year, in line with our $29.5 million forecast and 8% below consensus expectations."

13.8% dividend yield? Yes, please

Kina Securities Ltd (ASX: KSL) is not a name often heard when financial stocks are discussed.

The Papua New Guinean bank incredibly pays out a 13.8% dividend yield.

Tang said its February report was "broadly solid", with a lid kept on bad debts and "an impressive ~18% FY22 return on investment".

"Kina Securities' FY22 Underlying net profit after tax (PGK106 million) was +10% on the prior comparable period and in-line with Morgans' expectations."

One headwind that the bank faces is "the lingering Papua New Guinea corporate tax issue".

But the stock is still an add for Morgans analysts, with the low share price seemingly pricing in headwinds.

"Kina Securities continues to deliver solid underlying profit growth, and trading on ~6x FY23F earnings and a >10% dividend yield, we see the stock as too cheap."

The post 4 ASX shares to stock up on after a bright reporting season: Morgans appeared first on The Motley Fool Australia.