The Australian share market is home to a large number of ASX 200 blue chip shares. But which ones are in the buy zone right now?

Two that have just been tipped as buys are listed below. Here’s what analysts are saying:

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

The first blue chip ASX 200 share that analysts are positive on is ANZ Bank. It is of course one of Australia’s big four banks.

It has been tipped as a buy by analysts at Macquarie. The broker currently has an overweight rating and $34.00 price target on the bank’s shares. This compares very favourably to the latest ANZ share price of $21.16, which suggests potential upside of 60% for investors.

Macquarie believes that the banks could get a boost to their margins from customers that don’t chase new term deposit rates. It explained:

While competition for ‘hot’ term deposits (TDs) is intensifying, banks’ ‘lazy’ customers (who are not chasing ‘special rates’ offered by banks) contribute to margin upside. We estimate that ‘lazy’ term deposits are currently one of the more profitable bank segments and should provide [approximately] 4-9bps [basis points] tailwind over the next twelve months.

Cochlear Limited (ASX: COH)

Another blue chip ASX 200 share that is rated as a buy is hearing solutions company Cochlear.

The team at Goldman Sachs are bullish and have a buy rating and $237.00 price target on its shares. This compares to the latest Cochlear share price of $188.98, which implies potential upside of 25% for investors.

The broker believes that Cochlear is well-placed to at least meet its guidance in FY 2022. It explained:

Whilst the recovery [from the pandemic] will still be mixed, we believe the steady declines in hospitalisation rates across key markets, supportive backlog volumes and improved margin trajectory support a much improved picture from here. [..] As such, we believe current targets for FY22 offer the best chance in several years for COH to deliver at/above the top-end of its guided range (GSe: A$297m).

The post Experts rate these ASX 200 blue chip shares as buys appeared first on The Motley Fool Australia.

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More reading

• Is the ANZ share price and dividend yield too good to ignore?
• 3 ASX 200 bank shares slide to 52-week lows on Friday
• ASX 200 bank shares languish on Thursday despite market lift
• Here’s why JP Morgan sees more than 30% upside in the ANZ share price
• Top brokers name 3 ASX shares to buy today

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 positions in and has recommended Cochlear Ltd. The Motley Fool Australia has recommended Cochlear Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

With the Core Consumer Price Index (CPI) rising by 8.6% over the past 12 months, inflation is the word of the year, and many portfolios aren’t fully ready for it. Rising costs give way to thinner margins, and growth-stage companies are getting hit by the market’s reaction particularly hard. 

But you aren’t powerless in the face of inflation. Understanding how to hunt down inflation-resistant stocks is half the battle, and they’re more common than you might think. Let’s take a look at three things to look for when you’re scouting for the stocks that’ll anchor your portfolio’s value during the ongoing inflationary storm. 

1. How necessary are the products for potential buyers?

The first thing to look for when you’re evaluating a stock’s ability to hold value through a patch of inflation is whether its products are something that buyers will be able to do without. For instance, CVS Health (NYSE: CVS) sells a huge number of consumer health items that people need no matter their cost, like contact lens fluid and antacids. That means even if prices rise, consumers will still be buying the products, though they may look for substitutes or cheaper alternatives than what CVS might carry.

Another good example of highly necessary products are many of the life-saving prescription medicines made by Pfizer (NYSE: PFE). In Pfizer’s case, its customers are pharmacies like CVS as well as healthcare systems, which in the U.S. are counterparties to insurers.

If Pfizer hikes the price of a drug that it sells to hospitals to keep pace with inflation, the hospitals can then pass the additional cost on to insurers. What this means is that the company’s primary customers aren’t about to balk at a higher price point for the medicines they need to treat patients, so its base of revenue is unlikely to budge by much.

2. Steady cash flows over time

Stable businesses can weather different economic environments without significant negative impacts to their cash flows. The best way to find a business with steady cash flows is to look at a company with a highly needed group of products and examine its financial performance over a very long period. Take a look at this chart. 

CVS Revenue (Annual) data by YCharts

As you can see, CVS’ revenue and free cash flow (FCF) smoothly and slowly increased over the last 30 years. There were a trio of recessions in that period, as indicated by the shading on the chart, and plenty of different economic forces (including inflation) affecting it over time — but none of that stopped the company’s upward march for very long. And all that needed to happen was executing on its business model of building out retail pharmacies and then selling consumer health goods to people who go there to get their prescriptions filled. 

3. Having a clever plan to deal with inflation

Companies that have an inflation strategy are better equipped to deal with rising input prices and potential softening of demand than those that don’t. For many, the strategy may simply be to “increase prices as much as our customers will tolerate,” but that could easily end up destroying demand and causing revenue to fall.

One innovative strategy used by Costco (NASDAQ: COST) is to keep certain prices, like the price of its hot dog and soda combo in its food court, at a fixed level that doesn’t change in response to inflation, but to let other prices float as needed. Since the 1980s, the combo costs only $1.50, and there are no plans to change that amount.

While it’s true that this means the business will have an ever-poorer margin on the combo, which still faces rising supplier costs, it helps to mitigate the sticker shock that customers experience when buying something familiar. And when competitors are unashamedly hiking prices by significant amounts, it makes those that don’t hike 100% of their prices look all the better — even if some products do end up being marked up. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post 3 things to look for with inflation-fighting stocks appeared first on The Motley Fool Australia.

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Alex Carchidi has positions in Costco Wholesale. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Costco Wholesale. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended CVS Health. 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. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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It’s been, frankly, a horror end to the trading week this Friday, in what has been in itself a horrible week to have been invested in ASX shares. At market close, the S&P/ASX 200 Index (ASX: XJO) lost another painful 1.77%. That puts the ASX 200’s falls for the past week at a depressing 7.76%.

But is this the bottom for ASX 200 shares? After all, the old saying goes that it is always darkest before the dawn. And it certainly feels dark on the ASX right now.

Well according to reporting in the Australian Financial Review (AFR) today, one analyst reckons we could indeed be near the bottom of this market correction. That’s Fundstrat Global technical strategist Mark Newton.

Is the ASX close to a bottom yet?

Newton reckons that last night’s (our time) sell-off on the US markets has brought share prices closer to a bottom. He also added the following:

Evidence of bearishness turning to capitulation has been growing, and I’m confident that markets are nearing a bottoming process which should be in place by the end of June… Cycles, counter-trend exhaustion tools, and very bearish sentiment are all coming together, suggesting markets can make a low in the near future, despite evidence of downward earnings revisions starting to just begin to ramp up…

While a choppy period over the next month might need to happen before a larger rally can happen, it looks right to position long into end of month, and initial lows could be in place by next Friday.

So this is certainly good news for ASX shares if Newton’s predictions turn out to be accurate. The US markets and the ASX are closely correlated, and it’s highly likely that if the US markets started to recover, the ASX would be close behind.

Inflation concerns continue to weigh on the share market

This sentiment is not universal though. The AFR also reported on another, less-bullish outlook, this time from AMP Ltd (ASX: AMP) chief economist Shane Oliver. Oliver reckons there is still a 50-50 chance of a global recession in the next 12 months thanks to the actions of central banks around the world in raising interest rates. “Either way it’s still too early to say that shares have bottomed,” he told the AFR. Here’s some more of what Oliver said:

Energy prices – particularly for oil – are yet to put in a decisive top and it’s hard to be confident that the worst is over for inflation until they decisively stop rising…

When combined with the surge in fixed mortgage rates, it would likely cause real problems for consumer spending, a big spike in mortgage stress and push property prices down by 20 to 30 per cent… which indicates it’s unlikely to happen as it would crash the economy and ultimately push inflation back well below the RBA’s target.

So some divergent outlooks on the ASX share market going forward. No doubt investors will be hoping it’s the former opinion that prevails over 2022 and into next year. But we shall have to wait and see what happens.

The post Have ASX 200 shares bottomed? Experts weigh in appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen 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.

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If you’re looking for dividend shares with attractive yields to buy, then you may want to look at the two listed below.

Here’s why analysts rate these dividend shares highly:

Charter Hall Long WALE REIT (ASX: CLW)

Charter Hall Long Wale REIT could be an ASX dividend share to buy. It is a property company with a focus on office, industrial, and retail sectors.

Its portfolio includes 78 hotel properties leased to ALH Group that were acquired from ALE Property with Hostplus for ~$1.7 billion earlier this year. Combined with its other properties, the company now has a lengthy weighted average lease expiry (WALE) of 12.2 years.

One broker that is particularly positive on Charter Hall Long Wale REIT is Citi. It currently has a buy rating and $5.71 price target on its shares. Citi likes the company due to “the appeal of secure income in uncertain times.”

As for dividends, the broker is forecasting dividends per share of 30.8 cents in FY 2022 and 30.9 cents in FY 2023. Based on the current Charter Hall Long Wale REIT share price of $4.25, this will mean yields of ~7.2%.

Coles Group Ltd (ASX: COL)

Another ASX dividend share for income investors to consider is Coles. It is of course one of Australia’s big two supermarket operators.

It could be a top option due to its defensive qualities and the positive outlook of its sprawling network of supermarket, convenience stores, and liquor stores. The latter is being supported by its refreshed strategy, which is focusing on cutting costs through automation and efficiencies.

Morgans is a fan of Coles and has an add rating and $20.65 price target on its shares.

In respect to dividends, the broker is expecting fully franked dividends of 61 cents per share in FY 2022 and 64 cents per share in FY 2023. Based on the latest Coles share price of $16.76, this will mean yields of 3.6% and 3.8%, respectively.

The post Analysts name 2 ASX dividend shares with attractive yields to buy next week appeared first on The Motley Fool Australia.

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More reading

• Why is the Coles share price getting off lightly today?
• 2 defensive ASX dividend shares with good yields that analysts rate as buys
• Why are these ASX 200 retail shares lagging the market today?
• Why I think these 2 ASX dividend shares are ideal for income investors
• Analysts name 2 ASX dividend shares to buy to combat inflation

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 positions in and has recommended COLESGROUP DEF SET. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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