‘Use the volatility’: QVE reveals 3 ASX shares it just bought

If you keep asking yourself “What’s next?”, you are not the only one.

The world has been a more turbulent place than usual in 2022, and that has translated into plunging valuations on share markets.

Unfortunately, the experts at QV Equities are expecting more of the same.

“We expect markets to remain volatile in the near future,” they said in a memo to clients.

“The gap between inflation and interest rates remains high and we believe investors will remain uncertain until there are clear signs inflation has started to decline markedly.”

The team noted that Labor treasurer Jim Chalmers’ first budget last month was largely uneventful, but ASX stocks rose during October.

“In the broad rally all ex-20 sectors were up, with real estate (+9.8%) and consumer discretionary (+9.3%) performing best as investors hoped that October’s lower-than-expected RBA rate rise would mean property markets and consumer demand would hold up better than expected.”

Be ready to jump on opportunities

So in such a climate, which ASX shares are the QVE team buying at the moment?

“With the full effect of recent interest rate rises yet to be felt by the Australian economy, we remain focused on investing in companies with strong competitive advantage and recurring earnings.”

Having some cash in hand is important, the memo read, to be able to pounce on opportunities of heavily discounted stocks.

The QVE analysts named several examples of when they did this.

“We used the recent volatility to increase our holdings in high-quality companies at attractive prices including Lottery Corporation Ltd (ASX: TLC) and APA Group (ASX: APA).”

The Lottery Corporation share price has risen about 15% since mid-October, and multiple experts have called it out as a quality defensive stock.

“Revenues have shown resilience through periods of softer economic growth,” read a Firetrail memo last month.

“During the GFC, revenues grew 7% in the year to June 2008, and another 8% in the year to June 2009.”

APA Group shares have risen around 6% year to date, during a period when many of its peers are in the red.

The stock was named as one of the 22 high-yield dividend shares on the Wilsons hit list last month.

The QVE team also bought up shares in one company that’s still in the headlines for all the wrong reasons.

“We also took the opportunity to increase our holding in Medibank Private Ltd (ASX: MPL) after its share price fell heavily after a well-publicised cyber-attack on its client database.”

Medibank shares are going at a 25% discount compared to the end of August.

The post ‘Use the volatility’: QVE reveals 3 ASX shares it just bought appeared first on The Motley Fool Australia.

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More reading

• Do Medibank shares now represent a buying opportunity?
• Here are the 3 most traded ASX 200 shares on Wednesday
• Medibank share price lifts despite hackers leaking data
• Here are the top 10 ASX 200 shares today  
• Why A2 Milk, Cettire, Lottery Corp, and Weebit Nano shares are rising

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 positions in and has recommended APA Group. 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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