Up 45% so far in 2022, is it too late to buy Woodside shares?

A man holds his hand out and yells for a train to wait for him on a train platform with the train in the background.A man holds his hand out and yells for a train to wait for him on a train platform with the train in the background.

The Woodside Energy Group Ltd (ASX: WDS) share price has been a strong performer in 2022 for shareholders.

In 2022 year to date, Woodside has gone up by more than 40%. The oil and gas business has been one of the leading performers in the S&P/ASX 200 Index (ASX: XJO).

However, there’s now a question of whether, at the current Woodside share price, it represents good value to buy.

As a resource business, it’s not surprising that the company has risen amid a jump in the oil price after the Russian invasion of Ukraine.

But, what’s the likelihood of the oil price rising further from here? How juicy are the Woodside dividends going to be in FY22 and perhaps FY23?

Talking to Livewire Markets, fund manager Michael Maughan from Tyndall Asset Management named Woodside as an ASX share that he’s excited about, leading into reporting season. His fund’s focus is income.

Thoughts on the current situation

A lot of investors are focused on inflation and rising interest rates right now. Maughan suggests that some businesses could hurt from inflation because they aren’t able to pass on those cost increases to consumers.

However, some of the biggest ASX 200 shares could benefit from inflation and rising interest rates. According to Maughan:

I think rates have been more of a factor for the market in terms of price to earnings (p/e) ratios and multiples that people are willing to pay for companies. We’ve seen that change in leadership in the market. But inflation is obviously a massive issue.

What we’re seeing going into reporting season is that — in terms of dividends — the big payers are probably on the right side of inflation. If you think about the miners, commodity prices have been benefitting. Food inflation helps the supermarkets, for example. And even in the case of the banks, they’ve got positive tailwinds in terms of their margins.

So, we see positive tailwinds for the majority of the dividend payers in the market, while smaller parts of the market are going to be more affected by inflation.

The best stock for this situation?

Maughan noted potential uncertainty relating to China for the miners.

He’s much more interested in the energy space, with an ASX share like Woodside. The business has “really changed in its nature” since the acquisition of the BHP oil and gas segment. The fund manager pointed out that Woodside is now self-funded in terms of its growth.

Maughan said to Livewire:

I think what people are starting to realise is that Woodside and Santos Ltd (ASX: STO) and gas, more generally, are an important part of the energy transition. And so I think these types of companies won’t need to hide their light under a bushel going forward.

Woodside share price snapshot

Over the last month, the Woodside share price has risen by 5%.

The post Up 45% so far in 2022, is it too late to buy Woodside shares? appeared first on The Motley Fool Australia.

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More reading

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 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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