Key points

• Altium and Bapcor are both seen as industry leaders, but are these ASX shares buys?
• Bapcor is the automotive parts experts with multiple brands. However, it recently lost its boss
• Altium is a global leader in the electronics PCB design world. But, the business is getting caught up in the tech sell-off

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There are some strong ASX shares that are leaders in the industries that they work in.

Sometimes it can be a bit difficult to know which business is the sector leader. But others can point to much larger market shares like REA Group Limited (ASX: REA) and Telstra Corporation Ltd (ASX: TLS).

It can also be telling which business is improving its competitive position when it comes to the direction of the company’s market share or customer preference. Is that strength growing?

The below two ASX shares are industry leaders. Are they buys?

Bapcor Ltd (ASX: BAP)

Bapcor describes itself as Australasia’s premier provider of automotive aftermarket parts, accessories, automotive equipment, and services in trade, retail, wholesaling and so on.

Some businesses it operates includes Burson Auto Parts, Autobarn, Autopro, BNT, Truckline and Midas.

Over the past two months the Bapcor share price has fallen by 16.5%.

Two months ago, investors learned that the retirement of CEO and managing director Darryl Abotomey was being accelerated because of a marked deterioration in the relationship between the board and Mr Abotomey, making his position untenable.

The ASX share’s board said that the leadership transition would enable Bapcor to install a more contemporary leadership and management approach to drive the company’s growth while also ensuring consistency with changing stakeholders’ expectations, an appropriate governance and oversight framework remains in place.

The Bapcor share price is currently rated as a buy by the broker Credit Suisse. This broker thinks the decline is an opportunity, though the loss of Mr Abotomey does reduce the fair value of the business. But it thinks Bapcor can go through a recovery.

Credit Suisse puts Bapcor shares at 18x FY22’s estimated earnings. Bapcor is planning to add hundreds of more outlets across its different brands over the next few years to grow its scale, whilst also becoming more efficient. It also has plans to keep growing in Asia through its Burson network and the Tye Soon investment.

Altium Limited (ASX: ALU)

Altium is one of the world leaders when it comes to electronic PCB design. It also has other divisions including the electronic part search engine business called Octopart.

The business has been a takeover target in the past year, but it then went on to an even higher share price. However, Altium has been caught up in the recent tech sell-off – it’s down 15% this year, which is only three weeks old.

This ASX share is benefiting from the growth of the internet of things, where there is a large rise in the number of ‘intelligent’ products and the wide increase of electronics. That trend is being accelerated by 5G and edge computing.

A key part of the company’s planned growth is Altium 365, its cloud software platform. It’s benefiting from those electronic growth trends.

Altium is targeting $500 million of revenue in the next few years, whilst also looking to grow profit margins. In FY22, it’s expecting to grow revenue by 16% to 20% whilst increasing annualised recurring revenue (ARR) by 23% to 27%. The first four months of FY22 have been strong “across the entire Altium group”. Octopart is apparently outperforming and Altium 365 adoption is accelerating. China and Nexus are also performing well.

By 2025, it’s expecting to be in a position where it’s transforming the global industry.

Altimade is expected to be launched in the first quarter of 2022, which is being built on top of Altium 365 and incorporates the delivery of a design to realisation experience – the whole process – which has never been seen before in electronics.

Management are confident about the future. The broker Citi rates Altium as a buy, noting the strong performance by Octopart and the compelling future of Altimade. However, the price target is only $35.40, which is 6% lower than where it is today.

Citi thinks the current Altium share price is valued at 64x FY23’s estimated earnings.

The post Are these 2 industry-leading ASX shares too good to ignore and now buys? appeared first on The Motley Fool Australia.

More reading

• 2 explosive ASX growth shares analysts love right now
• Why did the Altium (ASX:ALU) share price gain 33% in a year?
• 2 ASX shares with growing fully franked dividends
• Here’s why ASX 200 tech shares (ASX:XTX) outperformed today
• Down 10% already in 2022. Is the Altium (ASX:ALU) share price now a buy?

Motley Fool contributor Tristan Harrison owns Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Altium. The Motley Fool Australia owns and has recommended Telstra Corporation Limited. The Motley Fool Australia has recommended Bapcor and REA Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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If you’re a fan of growth shares like I am, then you may want to look closely at the two shares listed below.

Here’s why these could be growth shares to buy:

Breville Group Ltd (ASX: BRG)

The first ASX growth share to look at is Breville. is one of the world’s leading appliance manufacturers behind a range of brands including the eponymous Breville brand and Sage. Breville has been consistently solid performer over the last decade and has generated strong returns for investors. The good news is that it looks well-placed to continue this trend over the next decade. This is thanks to the popularity of its brands, its international expansion, acquisitions, favourable consumer trends, and its continued investment in R&D.

Morgans is very positive on the company’s future. Its analysts have an add rating and $34.00 price target on Breville’s shares. This compares to the latest Breville share price of $26.99.

Domino’s Pizza Enterprises Ltd (ASX: DMP)

Another ASX growth share to look at is this pizza chain operator. Like Breville, Domino’s has also been growing at a consistently solid rate for over a decade. This is thanks to the popularity of its offering and the expansion of its footprint. And also like Breville, this positive trend looks set to continue over the next decade thanks to its bold expansion plans, strong offering, and equally strong balance sheet. The latter provides opportunities for further strategic acquisitions. And while food inflation could be weighing on costs at present, this is only likely to be temporary. In light of this, investors may be best being patient and focusing on the bigger picture.

Goldman Sachs is positive on Domino’s. It currently has a buy rating and $147.00 price target on the pizza chain operator’s shares. This compares to the latest Domino’s share price of $100.88.

The post 2 stellar ASX growth shares analysts rate as buys appeared first on The Motley Fool Australia.

More reading

• 2 consumer ASX shares ready to pop
• 3 buy-rated ASX shares
• Analysts name 2 excellent ASX growth shares to buy right now
• Why Domino’s, Fortescue, Medibank, and Metcash shares are falling
• ASX 200 (ASX:XJO) midday update: Afterpay-Block deal approved, Fortescue downgraded

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Dominos Pizza Enterprises Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Key points

• Westpac is the first major bank to increase its interest rate in 2022
• Its fixed rate has been increased by up to 0.20% for owner-occupiers and investors
• Brokers think that the Westpac share price can benefit from rising rates

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The Westpac Banking Corp (ASX: WBC) share price is in focus after the big four bank decided to raise its interest rate again.

Westpac and its other major peers – Commonwealth Bank of Australia (ASX: CBA), Australia and New Zealand Banking Group Ltd (ASX: ANZ) and National Australia Bank Ltd (ASX: NAB) – have been increasing interest rates.

But Westpac has decided to be first move and raise its interest rate first in 2022.

How much has Westpac increased the interest rate?

According to reporting by Ratecity.com.au, Westpac decided to increase its fixed interest rate by up to 0.20%. The increases were for owner-occupiers as well as investors. It apparently includes all of Westpac’s divisions including the Bank of St George, Bank of Melbourne and BankSA.

Different time periods of loan lengths saw different increases.

The one-year fixed rate saw an increase of 5 basis points from 2.34% to 2.39%, the two-year fixed rate saw an increase of 10 basis points from 2.49% to 2.59%, the three-year fixed rate rose by 15 basis points to 3.04%, the four-year fixed rate increased 15 basis points to 3.34% and the five-year fixed rate went up 20 basis points to 3.59%.

Why did the interest rate increase?

Ratecity explained that Westpac decided to increase the interest rate because of the rising cost of fixed rate funding and expectations that the Federal Reserve in the United States is going to increase interest rates “faster and more aggressively” than previously thought.

The financial site is expecting many more lenders to increase interest rates this year.

Ratecity’s Research director, Sally Tindall, said:

Westpac is the first big four bank to hike fixed rates in 2022 but certainly won’t be the last.

The cost of fixed-term funding is rising with inflation in the US hitting its fastest pace in nearly four decades.

We expect other banks to follow within days on the back of sharp increases to the cost of wholesale funding.     

Mortgage holders who were fortunate enough to lock in a record-low fixed rate over the last couple of years are immune to these hikes, but only for the duration of their fixed rate term.

Anyone who fixed at the start of the pandemic for two years should start thinking about what their next step might be. When they come off their fixed rate, they’ll be looking at a very different market.

What could this mean for the Westpac net interest margin (NIM)?

When Westpac released its FY21 result, it said that its margins were being challenged in a competitive, low-rate environment.

Margins were being pushed lower to attract and retain customers. It was also being impacted by the portfolio mix – with more people choosing the lower-costing fixed rate loans.

In terms of the outlook, given in November 2021, it said that loan growth was expected to be sound as the economy rebounds, although net interest margins would be under pressure from the low interest rates and competition.

However, with banks now quickly increasing rates, it will be interesting to see how that plays out with wholesale costs rising too.

Westpac share price rating

One of the latest brokers to have their say on Westpac was Morgan Stanley. It currently rates the bank as a hold/’equal-weight’ with a price target of $22.70. It thinks that higher interest rates could be a positive for Westpac.

The post Westpac (ASX:WBC) share price in focus after raising loan interest rates again appeared first on The Motley Fool Australia.

More reading

• Does the NAB (ASX:NAB) share price make it the best value bank right now?
• Westpac (ASX:WBC) share price wobbles, bank predicts 5 rate hikes in 2022-24
• How are ASX bank shares performing today?
• What to expect from Westpac (ASX:WBC) during earnings season
• Is the NAB (ASX:NAB) share price an undervalued smart buy for dividends?

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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If you’d like to invest in a large number of shares but aren’t sure which ones to buy, you could look at the two exchange traded funds (ETFs) listed below instead.

These ETFs allow investors to buy and collection of shares through a single investment. Here’s what you need to know about them:

VanEck Vectors Video Gaming and eSports ETF (ASX: ESPO)

The first ETF to consider is the VanEck Vectors Video Gaming and eSports ETF. This ETF gives investors exposure to many of the largest companies involved in video game development, eSports, and gaming related hardware and software.

Among the companies you’ll be owning are game developers Activision Blizzard (which Microsoft is hoping to acquire), Take-Two, and Electronic Arts, as well as graphics processing unit (GPU) developer Nvidia. These companies appear well-placed for

growth thanks to the popularity of video games and eSports.

One of the companies in the fund is Take-Two. It is the game developer behind the Grand Theft Auto (GTA) and Red Dead franchises. These games, and GTA in particular, continue to generate significant revenues long after their releases thanks to micro transactions on their online versions.

As for Nvidia, it is the world’s leading GPU developer and sits at the forefront of modern technologies. Its GPU deep learning ignited modern artificial intelligence and is used by cryptocurrency miners.

Vanguard MSCI Index International Shares ETF (ASX: VGS)

Another ETF to look at is the Vanguard MSCI Index International Shares ETF. This ETF provides investors with exposure to many of the world’s largest listed companies.

In fact, the ETF currently has a total of ~1500 shares in its portfolio. These include companies from all sectors and almost all geographies. This allows investors to participate in the long-term growth potential of the global economy.

Among its holdings are the likes of Amazon, Apple, Berkshire Hathaway, Facebook (Meta), Johnson & Johnson, Nestle, Shopify, Tesla, and Toyota.

Vanguard believes this ETF would be suitable for “buy and hold investors seeking long-term capital growth, some income, international diversification, and with a higher tolerance for the risks associated with share market volatility.”

In respect to income, the ETF currently provides investors with a dividend yield of 1.5%.

The post Why Vanguard MSCI Index International Shares and this ETF could give your portfolio a boost appeared first on The Motley Fool Australia.

More reading

• 2 ASX ETFs with strong growth potential
• The VanEck Video Gaming and Esports ETF (ASX:ESPO) looks set for a major shakeup. Here’s why
• 2 market-beating ETFs for ASX investors in January
• Here are 2 ASX tech ETFs to buy after recent weakness
• Is the Vanguard MSCI Index International Shares ETF (ASX:VGS) the most diversified ETF on the market?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Vanguard MSCI Index International Shares ETF. The Motley Fool Australia has recommended VanEck Vectors ETF Trust – VanEck Vectors Video Gaming and eSports ETF 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 Bruce Jackson.

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