Month: October 2022

2022, for investors at least, will be remembered as a weird one.

The year has seen seemingly contradictory forces come together to produce results that are entirely different from conventional wisdom.

One such oddity has been depressed gold prices and gold shares.

Usually investors associate gold as a “safe haven” during times of high inflation. The idea is that the precious metal retains value far better while other assets depreciate.

Rampant inflation, as many readers would know, has been the hot topic for pretty much all of this year.

But currently, according to goldprice.org, the price for the commodity is actually lower than where it started 2022. It’s also lower than where it was 12 months ago.

Very odd.

However, Shaw and Partners portfolio manager James Gerrish reckons last week the situation started to turn around.

“Gold stocks finally found some love, hence we’ve updated our view on three of the major names,” he said in his Market Matters newsletter.

“Although, not surprisingly, there’s a degree of similarity across the sector.”

Here are the three ASX gold shares that are looking good at the moment:

‘We like the risk/reward’ for this gold miner

It’s been a brutal few months for shareholders of gold miner Newcrest Mining Ltd (ASX: NCM).

“Heavyweight gold stock Newcrest Mining has endured an awful 2022 falling over 45% from its April high under the combined weight of rising bond yields and an extremely strong US dollar,” said Gerrish.

“However, as bond yields threaten to soften following the Bank of England’s intervention we can see gold and its related stocks regain some of its lost lustre.”

Newcrest shares closed Wednesday at $17.89 each.

Gerrish’s team favours the stock as a buy now for a rally heading into the festive season.

“Market Matters is bullish [on] Newcrest into Christmas, initially targeting the $20 area,” said Gerrish.

“We like the risk/reward to Newcrest around $16.50 looking for ~20% upside into 2023.”

‘Rally could be hard and fast’

Northern Star Resources Ltd (ASX: NST) investors have also had a frustrating year, seeing the stock price lose almost 40% from mid-April to last week.

“Northern Star has held up better than most of its peers over recent weeks but it’s still been a tough year for the gold miner.”

However, Gerrish believes the current pessimism on gold is “quite extreme”.

“We believe this stock offers good value at current levels and when the sentiment turns for the sector the rally could be hard and fast.”

Northern Star has already rallied almost 22% since Monday last week to close Wednesday at $8.48 a share.

‘40% upside into 2023 feeling very achievable’

Evolution Mining Ltd (ASX: EVN) is a similar story to Newcrest, according to Gerrish.

“Evolution looks like an exaggerated form of Newcrest having fallen over 60% from its April high,” he said.

“However, we also now like the risk/reward towards Evolution, with 40% upside into 2023 feeling very achievable.”

The Evolution share price finished Wednesday at $2.10.

“Market Matters is bullish on Evolution targeting the $2.75 area,” said Gerrish.

“We like EVN as a contrarian/countertrend play into Christmas.”

The post 40% upside: Expert picks 3 ASX gold shares attractive to buy right now appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Thursday
• Are ASX 200 gold shares worth buying as an inflation hedge?
• Macquarie reveals ASX 200 shares ‘more likely to outperform in a bear market rally’
• 5 things to watch on the ASX 200 on Wednesday
• Why Allkem, Evolution, Paradigm, and Sayona Mining shares are zooming higher

Motley Fool contributor Tony Yoo 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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Most readers of The Motley Fool don’t have to be told twice how much technology shares have suffered this year.

They just need to look at the sea of red in their portfolios as evidence of how much these stocks have re-rated over the past 12 months.

The S&P/ASX All Technology Index (ASX: XTX) has now dropped more than 31% year to date, while the Nasdaq Composite (NASDAQ: .IXIC) has plunged 29.4%.

But as the world approaches the point at which interest rates will stop increasing, it’s time to assess where the bargains can be picked up.

Cloud computing is a dominant area of tech that pretty much covers every relevant growth business in the sector. The term simply refers to tech products and services delivered over the internet.

Every quarter, New Zealand’s Clare Capital examines the valuations of listed cloud companies in the US and Australia/New Zealand markets.

The latest report provides an insight as to where an investor could secure a better entry point when buying tech shares.

US vs ANZ tech valuations

The home of public technology businesses is the United States, which has a plethora of innovative companies listed on both the NYSE and NASDAQ exchanges, all serving a massive population.

Tech is a relatively minor part of the ASX, which is dominated by mining and finance businesses.

Perhaps this explains why investors in the US seem to appreciate cloud companies more.

As of the end of September, Clare Capital’s US cloud index shows a median ‘enterprise value to next 12 months revenue’ ratio of 5.2. 

The ANZ cloud index is positively a bargain compared to that, sitting at a median multiple of 2.8.

So one could conclude that ASX tech companies are now significantly cheaper than their US counterparts.

Clare Capital’s methodology involves 93 companies in the US and 50 from Australia and New Zealand.

“It is worth noting that there is a significant company size difference between the two indices, with the median EV of US companies at NZ$8.3 billion versus NZ$0.3 billion for ANZ companies,” read the report.

Tech carnage could now have ‘plateaued’

The brutality of 2022 is seen in how Clare Capital’s US cloud index has dropped 64% over the past 12 months. The ANZ index has plummeted 48%.

However, the freefall of US cloud companies seems to have “plateaued after a rough year”, with the 30 September multiple just 4% lower than the previous quarter.

Meanwhile, the Australia and New Zealand valuations actually increased 9% over the same three months.

While local tech shares are cheaper than the US equivalents, investors will need to carefully examine each company on their potential.

Historically, US tech shares have shown more upside due to a larger addressable market and an investor base more enthusiastic about the sector.

The post Are ASX tech shares cheaper than US tech stocks? appeared first on The Motley Fool Australia.

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More reading

• ‘High quality’: Analyst names 2 ASX tech shares to buy right now
• 5 things to watch on the ASX 200 on Thursday
• How did the Westpac share price manage to beat the ASX 200 in September?
• Expert reveals why ‘a premium is warranted’ for Qantas shares in October
• Are ASX 200 tech shares staging a comeback?

Motley Fool contributor Tony Yoo 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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ASX shares have enjoyed a nice revival since the Reserve Bank’s latest interest rate increase on Tuesday afternoon.

The 25 basis point hike was smaller than many experts expected, so growth and technology stocks have made hay the last couple of days.

But it’s still a volatile world. It’s important to buy growth shares with suitable attributes.

To assist, one Wilson Asset Management expert recently named a pair of tech stocks he would pounce on right now:

‘A much higher quality business’ than we thought

Wilson equities dealer Will Thompson was “surprised” by ELMO Software Ltd (ASX: ELO) over reporting season.

“They’re proving that they’re able to increase that ARR [annual recurring revenue] over the past year,” he said in a Wilson video.

“Costs [are] now at a level where they don’t need to… raise money anymore. It’s starting to look like a much higher quality business than we previously thought.”

Elmo is a buy for Thompson.

According to CMC Markets, five out of seven analysts currently agree with him that it’s a buy.

Despite a strong rally since Tuesday, the Elmo share price has nevertheless halved since the start of 2022.

Ready to pick up some bargains

Thompson is a fan of the people who run billing software maker Hansen Technologies Limited (ASX: HSN).

“It’s got one of the best management teams — high quality. They’ve been there for 30 years,” he said.

“Balance sheet’s really strong. They’ve reported good earnings.”

Despite this, the Hansen share price has plunged more than 23% since 5 August.

“It’s been a frustrating period,” said Thompson.

“They’re looking to do a bit of M and A [mergers and acquisitions] but just the vendors [are keeping] valuations still probably at the end of 2020 and 2021 levels where they were eye-wateringly high.”

But this stalemate seems to be resolving.

“Hopefully they’ll be able to make… a few transactions in the second half of the year and into 2023.”

Elvest Co portfolio manager Adrian Ezquerro told The Motley Fool last month that Hansen’s a buy for an investor willing to be patient.

“We remain pretty optimistic on Hansen’s prospects,” he said.

“We think in this market maybe vendor expectations might be becoming a little more realistic and the business is on a circa 7% free cash flow.”

The post ‘High quality’: Analyst names 2 ASX tech shares to buy right now appeared first on The Motley Fool Australia.

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More reading

• 2 ASX shares now at a buying opportunity after a shocking 2022: fundie
• 3 beaten down ASX All Ords tech shares that are printing cash

Motley Fool contributor Tony Yoo has positions in Elmo Software. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Elmo Software and Hansen Technologies. The Motley Fool Australia has positions in and has recommended Elmo Software. 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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On Wednesday, the S&P/ASX 200 Index (ASX: XJO) had another strong day and charged notably higher again. The benchmark index rose 1.7% to 6,815.7 points.

Will the market be able to build on this on Thursday? Here are five things to watch:

ASX 200 expected to open flat

The Australian share market looks to have run out of steam after two very big sessions. According to the latest SPI futures, the ASX 200 is expected to open the day flat this morning. On a volatile night on Wall Street, in late trade the Dow Jones is up 0.3%, the S&P 500 is up 0.2% and the NASDAQ has pushed 0.1% higher.

Bank of Queensland rated neutral

The Bank of Queensland Ltd (ASX: BOQ) share price will be one to watch today. Ahead of the regional bank’s full year results release next week, Goldman Sachs has reiterated its neutral rating and $8.16 price target on its shares. While only a neutral rating, this price target implies potential upside of approximately 17% for investors.

Oil prices rise after OPEC cut

Energy shares including Santos Ltd (ASX: STO) and Woodside Energy Group Ltd (ASX: WDS) could have a good day after oil prices pushed higher on Wednesday night. According to Bloomberg, the WTI crude oil price is up 1.5% to US$87.82 a barrel and the Brent crude oil price is up 1.8% to US$93.50 a barrel. This follows news that OPEC is cutting production by 2 million barrels a day to boost prices.

Dividends being paid

A large group of ASX 200 shares will be paying their shareholders their latest dividends today. This includes appliance manufacturer Breville Group Ltd (ASX: BRG), funerals company InvoCare Limited (ASX: IVC), conglomerate Wesfarmers Ltd (ASX: WDS), and energy giant Woodside. The latter is paying its shareholders a 160 cents per share fully franked dividend today.

Gold price falls

Gold miners Evolution Mining Ltd (ASX: EVN) and Regis Resources Limited (ASX: RRL) could have a subdued day after the gold price edged lower overnight. According to CNBC, the spot gold price is down 0.25% to US$1,726.40 an ounce. A stronger US dollar weighed on the gold price.

The post 5 things to watch on the ASX 200 on Thursday appeared first on The Motley Fool Australia.

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More reading

• Where is the Woodside share price headed in October?
• Are ASX 200 gold shares worth buying as an inflation hedge?
• Macquarie reveals ASX 200 shares ‘more likely to outperform in a bear market rally’
• Why did the Wesfarmers share price get hammered so hard in September?
• 5 things to watch on the ASX 200 on Wednesday

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 Wesfarmers Limited. 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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The Westpac Banking Corp (ASX: WBC) share price ended up falling less in September than the S&P/ASX 200 Index (ASX: XJO). The ASX 200 fell 7.3% while the Westpac share price declined by 4.5%.

That’s an interesting result considering a sizeable part of the ASX 200 is made up of the big banks: Westpac, Commonwealth Bank of Australia (ASX: CBA), Australia and New Zealand Banking Group Ltd (ASX: ANZ), and National Australia Bank Ltd (ASX: NAB).

The ASX 200 consists of many varied companies and can be influenced by different industries or even individual shares. For example, BHP Group Ltd (ASX: BHP) makes up around 10% of the ASX 200. Other resource shares also have sizeable weightings in the index such as Fortescue Metals Group Limited (ASX: FMG) and Rio Tinto Limited (ASX: RIO).

Other large businesses in the ASX 200 include CSL Limited (ASX: CSL), Wesfarmers Ltd (ASX: WES), Woodside Energy Group Ltd (ASX: WDS), and Woolworths Group Ltd (ASX: WOW).

I won’t run through how every single business performed last month. But the BHP share price fell by around 5% and many others also saw painful falls.

What happened that could have limited the damage for the Westpac share price?

One of the biggest problems facing investors, and the market as a whole, is that interest rates are rising.

In theory, that’s meant to hurt the valuations of assets like shares. It essentially means that investors are wanting to pay a lower multiple of earnings for a business.

But things are a little different for banks because a large part of the activity of lending is about interest rates.

Banks had been suffering from lower net interest margins (NIMs) when interest rates were close to 0%. A NIM tells investors how much profit a bank is making by lending. This is done by comparing the lending rate to the cost of financing that lending (such as through savings accounts).

While it’s difficult for borrowers to see the cost of their loan go up, it’s seen as a good thing for the NIM of banks because they can quickly pass on the rate hike imposed by central banks. But savers generally aren’t seeing the same level of increase.

There are also questions about what higher rates may do to the level of loan arrears and bad debts in the long term. However, higher interest rates are expected to increase bank profitability in the short term.

In summary, it’s not surprising that many ASX shares fell in September when the Reserve Bank of Australia (RBA) increased interest rates by another 50 basis points. That certainly impacts valuations. However, Westpac’s short-term earnings should benefit from a higher interest rate.

Broker ratings

In September, the broker Citi decided to increase its Westpac share price target to $30, which implies a possible rise of more than 30%. It thinks the bank will benefit from the level of liquidity that it has.

Macquarie is less optimistic about the Westpac share price, with a neutral rating and a price target of just $22.25. It thinks Westpac will do well with a rising NIM but, in the longer term, there could be pressure on its loan book because of the higher interest rates.

The post How did the Westpac share price manage to beat the ASX 200 in September? appeared first on The Motley Fool Australia.

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More reading

• Here’s how ASX 200 bank shares fared in the shocker month of September
• These ASX dividend shares have been tipped as buys by experts
• Will the Westpac share price rebound in October?
• Will the RBA raise rates again next week? Here’s what Westpac thinks
• The ANZ share price outperformed its ASX 200 bank share peers in September

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Tristan Harrison has positions in Fortescue Metals Group Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL Ltd. The Motley Fool Australia has positions in and has recommended Wesfarmers Limited. The Motley Fool Australia has recommended Macquarie Group Limited and Westpac Banking Corporation. 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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Qantas Airways Limited (ASX: QAN) shares finished 2.51% higher on Wednesday at $5.30 apiece.

This outperformed the overall market, which rallied for a second day due to the Reserve Bank’s lower-than-expected rate hike yesterday.

The S&P/ASX 200 Index (ASX: XJO) finished up 1.74% to 6,815.7 points.

Expert says Qantas shares worth a premium

Tony Paterno of Ord Minnett says Qantas is a buy.

On The Bull this week, Paterno said Qantas has a “superior domestic market structure and share”.

He said:

Given its superior domestic market structure and share, a restructured and more variable cost base, a strong balance sheet and potential upside from the loyalty program, we believe a premium for Qantas is warranted.

Qantas fell in September

The Qantas share price hit some turbulence in September, as my colleague Tristan reported.

There was no price-sensitive news from the company last month. However, the market continued to worry about the impact of rising inflation, interest rates, and fuel costs on the airline.

As Tristan reported, Qantas is working on several cost and revenue initiatives to offset the impact of higher inflation and fuel costs.

One of them is reducing its domestic capacity by another 10%. The company said some capacity may be restored once “operational resilience” improves.

In the first half of FY23, capacity will be 95% of pre-COVID levels and in the second half, it will be 106% of pre-COVID levels.

Qantas share price snapshot

Over the past year, the most investors have been willing to pay for Qantas shares is $5.97.

That’s where the ASX travel share was trading in November last year.

In December 2019, before the pandemic, Qantas was trading at a historical five-year high of $7.46 a share.

The post Expert reveals why ‘a premium is warranted’ for Qantas shares in October appeared first on The Motley Fool Australia.

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More reading

• Did ASX travel shares do well in September?
• The Qantas share price hit some turbulence in September
• Why did the Qantas share price have a lousy end to the week?
• Qantas share price follows ASX 200 lower despite Jetstar CEO news
• Why is the Qantas share price flying higher than the ASX 200 this month?

Motley Fool contributor Bronwyn Allen has positions in Qantas Airways Limited. 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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S&P/ASX 200 Index (ASX: XJO) tech shares are enjoying a welcome lift these past two trading days.

The ASX 200 is up 5.3% since Monday’s closing bell. But the S&P/ASX All Technology Index (ASX: XTX) – which also contains some smaller tech shares outside of the ASX 200 – leapt much further, gaining 9% over the same period.

Year to date, however, the All Tech Index remains down a painful 31.3%.

How have these ASX 200 tech shares stacked up?

Turning to some of the biggest and best-known names, the Block Inc (ASX: SQ2) share price has gained a whopping 11.2% since Monday’s close.

Like most tech companies, the global payments company, which acquired Afterpay in January, has struggled amid fast-rising inflation and interest rates. Since commencing trading on the ASX on 20 January, Block shares are down 46.3%.

Another ASX 200 tech share leaping higher this week is accounting software provider Xero Ltd (ASX: XRO). Xero shares are up 10.2% over the past two days. But like Block, the Xero share price is still down a sharp 46% in 2022.

Up next, shares in WiseTech Global Ltd (ASX: WTC) have surged 12.7% since the end of trading on Monday. The company, which provides cloud-based software solutions for the logistics sector, is now only down 2.9% for the calendar year.

The final ASX 200 tech share on our radar today is administration services company Link Administration Holdings Ltd (ASX: LNK). Link shares are up 11% over the past two days. The stock received an extra boost today on news that Dye & Durham has come back with a fresh takeover offer for parts of the company’s business. However, Link shares remain down 43.9% in 2022.

What’s driving the outperformance?

ASX 200 tech shares have been outperforming in line with their peers on the NASDAQ. The tech-heavy US index closed 3.3% higher yesterday, bringing its two-day gains to 5.7%.

Many tech companies are priced with growth in mind. Meaning investors pay more for shares today in hopes the tech companies will be earning significantly more revenue a few years down the road.

But as interest rates ratcheted sharply higher this year, so too did the present cost of those future earnings.

The past two days of reprieve have come as signs emerge that a series of rate increases in the US, the world’s biggest economy, are having some impact on slowing the pace of inflation. That could mean the US Fed won’t need to hike rates as aggressively as the market has priced in.

Here in Australia, ASX 200 tech shares received an extra boost from the Reserve Bank of Australia (RBA) yesterday. That came after the central bank lifted rates by 0.25% rather than the 0.50% investors had widely expected.

Getting back to our question then, are ASX 200 tech shares staging a comeback?

Well, in the short-term they obviously are.

Whether that’s sustainable or more of a bear market bounce will largely depend on those pesky inflation figures over the coming months.

If the RBA and global central banks can ease off their aggressive tightening path, well-positioned, beaten-down tech companies will be among the big beneficiaries.

The post Are ASX 200 tech shares staging a comeback? appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Why CBA, Flight Centre, Life360, and Link shares are storming higher
• Macquarie reveals ASX 200 shares ‘more likely to outperform in a bear market rally’
• Link share price jumps 7% on new buyout offer
• Here’s why the Block share price is jumping 9% today

Motley Fool contributor Bernd Struben 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 Link Administration Holdings Ltd, WiseTech Global, and Xero. The Motley Fool Australia has positions in and has recommended WiseTech Global and Xero. 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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The S&P/ASX 200 Index (ASX: XJO) recovered further from its September rout today. The index closed 1.74% higher at 6,815.70 points on Wednesday.

It followed a strong session on Wall Street overnight that saw the Dow Jones Industrial Average Index (DJX: .DJI) gain 2.8%. Meanwhile, the S&P 500 Index (SP: .INX) lifted 3% and the tech-heavy Nasdaq Composite Index (NASDAQ: .IXIC) rose 3.3%.

It likely comes as no surprise, then, that the S&P/ASX 200 Information Technology Index (ASX: XIJ) led the way today. It closed 3.8% higher.

The S&P/ASX 200 Consumer Discretionary Index (ASX: XDJ) and the S&P/ASX 200 Consumer Staples Index (ASX: XSJ), meanwhile, traded in different directions. The former posted a 2.7% gain while the latter slumped 0.04% – making it today’s worst performing sector.

Many ASX 200 miners also posted gains, driving the S&P/ASX 200 Materials Index (ASX: XMJ) to rise 1.4%.

Finally, the S&P/ASX 200 Energy Index (ASX: XEJ) lifted 1.2% following a good night for oil prices.

The Brent crude oil price lifted 3.3% to US$91.80 a barrel and the US Nymex crude oil price gained 3.5% to US$86.52 a barrel.

But which ASX 200 share outperformed all others on Wednesday? Keep reading to find out.

Top 10 ASX 200 shares countdown

The Telix Pharmaceuticals Ltd (ASX: TLX) share price topped the index today, gaining close to 12% despite the company’s silence.

Today’s biggest gains were made by these shares:

ASX-listed company	Share price	Price change
Telix Pharmaceuticals Ltd (ASX: TLX)	$5.56	11.65%
HUB24 Ltd (ASX: HUB)	$23.50	9.71%
Block Inc (ASX: SQ2)	$94.90	7.47%
REA Group Limited (ASX: REA)	$129.60	7.45%
James Hardie Industries plc (ASX: JHX)	$34.29	6.89%
Link Administration Holdings Ltd (ASX: LNK)	$3.11	6.69%
Nanosonics Ltd (ASX: NAN)	$3.74	6.55%
Boral Limited (ASX: BLD)	$2.94	6.52%
Reece Ltd (ASX: REH)	$15.36	6.37%
Domain Holdings Australia Ltd (ASX: DHG)	$3.57	6.25%

Our top 10 ASX 200 shares countdown is a recurring end-of-day summary to let you know which companies were making big moves on the day. Check in at Fool.com.au after the weekday market closes to see which stocks make the countdown.

The post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.

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More reading

• Why CBA, Flight Centre, Life360, and Link shares are storming higher
• Macquarie reveals ASX 200 shares ‘more likely to outperform in a bear market rally’
• Link share price jumps 7% on new buyout offer
• Here’s why the Block share price is jumping 9% today
• ‘Strong buy’: Wilson analyst picks 2 ASX shares to grab right now

Motley Fool contributor Brooke Cooper 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 Hub24 Ltd, Link Administration Holdings Ltd, and Nanosonics Limited. The Motley Fool Australia has positions in and has recommended Hub24 Ltd and Nanosonics Limited. The Motley Fool Australia has recommended REA Group Limited. 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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The Woodside Energy Group Ltd (ASX: WDS) share price has started October off with a bang.

At Wednesday’s market close, Woodside shares have risen by around 7% since the start of the month.

Although the performance over the last five days isn’t necessarily going to be repeated over the next five days, or even over the rest of the month.

But, share markets have rebounded strongly after September. The S&P/ASX 200 Index (ASX: XJO) has jumped by 5.3% in October to date — it has seen a lot of the ground lost in September already recovered in less than a week of the new month. This is likely due to investors thinking that interest rates may not go as high as previously feared.

As readers may have noticed, the Woodside share price has outperformed the ASX 200 in October so far.

What could happen next?

Of course, anything could happen next. Without a crystal ball, it’s impossible to know.

June saw a number of ASX shares hit a low point for 2022. But then they started climbing.

We’ve seen ASX shares (and global shares) go up considerably in the last few days. But some piece of news could send them down again. Or even higher. Or valuations could stay at this level for a while. Who knows?

The combination of inflation and rising interest rates is causing considerable volatility. For quite a lot of the year, it has meant declines for the market, but volatility includes periods of upswings as well. We may already have seen the bottom.

As with all energy companies, one of the key factors that can influence the Woodside share price, profit, cash flow and dividend is what happens with resource prices.

The business benefited after energy prices increased following the Russian invasion of Ukraine. But, in recent weeks and months, the oil price has been drifting lower.

When the resource price goes up, it’s good for a commodity business. It costs roughly the same to produce a barrel of oil (equivalent), so higher revenue for the same amount of resource largely adds to profit.

But the same is true in reverse. When the resource price drops, it can largely reduce profit and cash flow.

Which way will the oil price go next? The Russian invasion of Ukraine continues. However, investors may be worrying that there is a greater risk of global recession, which could reduce demand for oil and therefore impact the oil price.

Broker ratings on the Woodside share price

It’s hard to say what a share price will do this week or even this month.

However, brokers like to release price targets. This is where the experts believe that the share price will be in 12 months from now.

For example, the broker Morgan Stanley has an overweight (buy) rating on Woodside with a price target of $37. That implies a possible rise of around 10%.

The broker Citi also rates Woodside as a buy, with a price target of $36.50. That implies a possible rise of close to 10%. It likes Woodside for its exposure to LNG and that it may benefit amid the European energy crisis.

Woodside share price snapshot

Over the past six months, the Woodside share price virtually hasn’t moved.

The post Where is the Woodside share price headed in October? appeared first on The Motley Fool Australia.

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More reading

• Macquarie reveals ASX 200 shares ‘more likely to outperform in a bear market rally’
• 5 things to watch on the ASX 200 on Wednesday
• Why is the Woodside share price beating the ASX 200 today? 
• Was the Woodside share price a safe haven in September?
• If I’d invested $1,000 in Woodside shares at the start of 2022, here’s what I’d have now

Citigroup is an advertising partner of The Ascent, a Motley Fool company. 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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The Sayona Mining Ltd (ASX: SYA) share price was out of form on Wednesday.

The lithium developer’s shares ended the day almost 8% lower to 23.5 cents.

This was despite the ASX 200 index rising a sizeable 1.75% to 6,815.7 points.

Why did the Sayona Mining share price underperform the market?

There appears to have been a couple of reasons for the softness in the Sayona Mining share price on Wednesday.

The first is relative weakness in the lithium industry, which saw the majority of lithium shares underperform today. For example, the Allkem Ltd (ASX: AKE) share price dropped 3% and the Core Lithium Ltd (ASX: CXO) share price fell almost 3.5%.

The other reason is potential profit taking from investors following some very strong gains recently.

After all, even after today’s large decline, the Sayona Mining share price is up around 100% since 23 June.

What else happened?

The above weighed so heavily on its shares that not even an update on the company’s Moblan Lithium Project in Quebec, Canada could keep them in positive territory.

According to the release, Sayona has launched the pre-feasibility study for the project and is expecting it to be complete by May next year. If all goes to plan, this is expected to be followed by a definitive feasibility study, with a target completion date of September 2023.

The release explains that the studies will examine the development of a mine and concentrator north of Chibougamau, near Mistissini, with the Moblan project serving as the centre of Sayona’s northern lithium hub, including the emerging Lac Albert Project.

Sayona’s managing director, Brett Lynch, commented:

Since acquiring the Moblan project in October 2021, Sayona has worked to rapidly develop this project with an extensive drilling program, targeting a major expansion of our lithium resource in an area already hosting world‐scale mines. This study should further enhance our confidence in the quality of the Moblan project and its potential for development as a new northern base of production, adding to our North American Lithium (NAL) operation and the Abitibi hub in the south.

The post Why did the Sayona Mining share price skip the ASX 200 party today? appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro owns Allkem shares. 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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