Category: Stock Market

Are you looking for some dividend shares to add to your income portfolio? If you are, then the two listed below could be worth considering.

That’s because top brokers have recently named these dividend shares as buys. Here’s why analysts are positive on them:

Coles Group Ltd (ASX: COL)

Coles could be an ASX dividend share to buy right now according to analysts at Citi. The broker currently has a buy rating and $20.10 price target on its shares.

The broker likes Coles due to its strong market position and positive exposure to inflation. It expects that “food inflation will benefit supermarkets significantly while operating costs should remain less than top line inflation, benefiting margins.”

Citi is also forecasting some attractive dividend yields for investors in the coming years. It is expecting fully franked dividends of 74 cents per share in FY 2023 and then 79 cents per share in FY 2024.

Based on the latest Coles share price of $17.60, this will mean yields of 4.2% and 4.5%, respectively, over the next two financial years.

Transurban Group (ASX: TCL)

Another ASX dividend share that brokers rate as a buy is toll road operator Transurban.

Macquarie is positive on Transurban and currently has an outperform rating and $14.66 price target on its shares.

Its analysts believe that the company is one of the best defensive options for income investors on the Australian share market at this time. Especially given its opportunity to raise prices as inflation rises and its burgeoning development pipeline.

As for dividends, Macquarie is forecasting dividends per share of 55 cents in FY 2022 and then 58.5 cents in FY 2023. Based on the current Transurban share price of $13.71, this implies yields of 4% and 4.2%, respectively.

The post Brokers name 2 ASX dividend shares to buy now appeared first on The Motley Fool Australia.

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More reading

• Why did the Coles share price have such a rough trot in August?
• Boost your income with these ASX dividend shares: analysts
• Why is the Coles share price having such a lousy end to the week?
• 5 things to watch on the ASX 200 on Friday
• Here are the top 10 ASX 200 shares 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 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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The S&P/ASX 200 Index (ASX: XJO) slid into the red after a decent start to Tuesday’s trade on news the Reserve Bank of Australia lifted interest rates by 0.5% today. The index closed 0.38% lower at 6,826.50 points.

Today’s decision from the central bank marks the fifth consecutive month in which Australian interest rates have been hiked, bringing the official cash rate to 2.35%. The move is another effort to tame inflation, which sat at 6.1% at last count.

The S&P/ASX 200 Utilities Index (ASX: XUJ) was the market’s worst performing sector today, falling 1.9%.

Meanwhile, the S&P/ASX 200 Information Technology Index (ASX: XIJ) outperformed, lifting 0.7%.

The S&P/ASX 200 Energy Index (ASX: XEJ) also lifted 0.5% amid rising oil prices. The Brent crude oil price rose 2.9% to US$95.74 a barrel overnight while the US Nymex crude oil price gained 2.4% to US$88.92 a barrel.

Finally, iron ore futures saw a 3.3% overnight rise, trading at US$98.47 a tonne. But it wasn’t enough to bolster the S&P/ASX 200 Materials Index (ASX: XMJ). It fell 0.7%.

Four of the ASX 200’s 11 sectors closed in the green today. But which shares outperformed? Let’s take a look.

Top 10 ASX 200 shares countdown

ASX lithium stocks led on Tuesday, and in the lead was Core Lithium Ltd (ASX: CXO).

A bullish outlook for both the battery-making material and fellow producer Pilbara Minerals Ltd (ASX: PLS) may have been behind the gain.

Find out more about Core Lithium and what it’s been up to lately here.

Today’s biggest gains were made by these ASX shares:

ASX-listed company	Share price	Price change
Core Lithium Ltd (ASX: CXO)	$1.495	9.93%
Lake Resources NL (ASX: LKE)	$1.205	9.55%
Paladin Energy Ltd (ASX: PDN)	$0.90	7.78%
Pilbara Minerals Ltd (ASX: PLS)	$3.96	7.03%
New Hope Corporation Limited (ASX: NHC)	$5.72	6.12%
Liontown Resources Limited (ASX: LTR)	$1.765	5.69%
Megaport Ltd (ASX: MP1)	$7.26	5.22%
EML Payments Ltd (ASX: EML)	$0.90	4.65%
De Grey Mining Limited (ASX: DEG)	$0.965	4.32%
Allkem Ltd (ASX: AKE)	$14.06	4.3%

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 Karoon Energy, Pilbara Minerals, PointsBet, and Whitehaven Coal are rising
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• Why is the Core Lithium share price surging 8% on Tuesday?
• Why broker JP Morgan just upgraded the Pilbara Minerals share price
• How are ASX 200 energy stocks performing on Tuesday?

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 EML Payments and MEGAPORT FPO. The Motley Fool Australia has positions in and has recommended EML Payments. The Motley Fool Australia has recommended MEGAPORT FPO. 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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It’s no secret that the best way to make money from investing is to buy and hold high-quality ASX shares for years on end. This allows compounding to take place, which is one of the most powerful forces in finance.

By regularly buying more shares of high-conviction companies, we can remove some of the emotion and tendency to try and time the market. For the average investor, the appeal of picking the highs and lows leads to long-term underperformance compared to the S&P/ASX 200 Index (ASX: XJO).

Today, I want to share with you three ASX shares that I am personally planning to buy more of over time. In my opinion, each of these businesses represents an attractive investment opportunity with a long runway for growth ahead.

I won’t stop buying these 3 ASX shares anytime soon

Each company that I’ll mention today is quite different in terms of market capitalisation, sector, and stage of development. This provides some valuable diversification benefits and reduces the overall risk of the portfolio.

Personally, I’m a big fan of taking a ‘GDV’ (growth, dividend, and value) approach to investing in ASX shares. This doesn’t mean it’s necessarily the right approach, but there are two key benefits to this investing style, in my opinion:

1. It dampens the peaks and troughs in the portfolio compared to if it were completely invested in only growth shares or only dividend shares. At the moment, this has proved comforting when many growth-orientated shares have lost support in the market.
2. It opens the portfolio to many opportunities that may not otherwise be considered purely because they don’t fit into a specific box at a single point in time. For example, Microsoft Corporation (NASDAQ: MSFT) failed to grow its net income for 9 out of 10 quarters between 2014 and 2016 — some might have considered it a deteriorating ‘value’ share — yet, the company, by all accounts, has been a colossus, compounded over the ensuing years.

Having said that, let’s dive into the shares!

Ansarada Group Ltd (ASX: AND)

The first ASX share I’ll be regularly buying more of is Ansarada Group. This fast-growing software-as-a-service (SaaS) company provides cloud-based software solutions that help businesses manage their data during key corporate events, such as mergers & acquisitions (M&A).

At a market capitalisation of around $135 million and currently loss-making, Ansarada quenches the ‘growth’ thirst for me. Based on its latest full-year results, the company delivered 44% revenue growth year on year with a gross margin of 95%.

I think Ansarada is an ASX share with the potential to deliver tremendous shareholder returns as it expands its software offering to more day-to-day operations reliant on orderly data.

Jumbo Interactive Ltd (ASX: JIN)

This company has been a staple of my portfolio for several years now, with my first buy at around $2.70 a share. Jumbo Interactive provides digital lottery services across Australia, Canada, and the United Kingdom.

During my time as a shareholder (going back to 2017), Jumbo has grown its net profits after tax (NPAT) by nearly fourfold. Aiding in this growth has been a successful acquisition strategy, broadening the company’s growth potential.

However, I personally consider Jumbo a cornerstone dividend share in my portfolio. This ASX share is currently trading on a dividend yield of 3.1%.

Sonic Healthcare Ltd (ASX: SHL)

That only leaves us with the ‘value’ component of the portfolio. Sonic Healthcare is a global leader in providing pathology and radiology services. It has a market capitalisation of around $16 billion, making it the largest ASX share on this list.

At present, Sonic is trading on a price-to-earnings (P/E) ratio of around 11 times. This represents a notable discount when compared to the global healthcare industry average of around 18 times earnings.

Personally, I believe Sonic Healthcare has an attractive valuation considering the healthcare sector’s long-term tailwinds. Furthermore, the market appears to be pricing Sonic as though its growth days are behind it. However, I’m quietly confident there could be much more to come, fuelled by acquisitions and advancements in artificial intelligence.

The post 3 ASX shares I’ll be buying and holding for years to come appeared first on The Motley Fool Australia.

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More reading

• Leading brokers name 3 ASX shares to buy today
• How I’d invest $50,000 in ASX dividend shares for retirement, if I had to start from scratch
• 5 ASX 200 shares turning ex-dividend tomorrow
• Analysts name 2 blue chip ASX 200 shares to buy now
• 3 ASX tech shares on the move following earnings results

Motley Fool contributor Mitchell Lawler has positions in Ansarada Group Limited, Jumbo Interactive Limited, and Sonic Healthcare Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Ansarada Group Limited, Jumbo Interactive Limited, and Microsoft. The Motley Fool Australia has positions in and has recommended Ansarada Group Limited. The Motley Fool Australia has recommended Jumbo Interactive Limited and Sonic Healthcare 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 Seven West Media Ltd (ASX: SWM) share price closed higher on Tuesday following the company’s announcement of a new record AFL deal.

At market close, the media company’s shares finished up 3.16% to 49 cents apiece after touching an intraday high of 51 cents a share.

Let’s take a look in more detail at the company’s latest announcement.

Seven West Media shares jump on bonanza AFL deal

Investors rallied up the Seven West Media share price today after the company announced a record AFL television rights deal.

According to The Australian, Seven advised it has signed Australia’s biggest broadcast rights deal with the AFL.

This will see the Seven network, alongside Foxtel, retain television broadcast rights under a seven-year $3.85 billion contract.

In contrast, the AFL secured an extension of two seasons with Seven and Foxtel for $946 million during COVID-19.

However, one key detail that isn’t clear is how much free-to-air televised footy will be shown.

The Seven network provides free access to a number of games over the week, while Foxtel is a pay-to-air service.

Seven West Media managing director and CEO James Warburton said:

We are delighted to extend our partnership with the AFL until 2031. Securing a comprehensive package of digital rights to the AFL for 7plus was our absolute focus. For the first time, fans will be able to access the best AFL games and video content, live and free, in a way that suits them.

More importantly, this new combination of broadcast and digital means SWM will be ideally positioned to drive and capture a significant share of the growing total television market.

Together, the AFL and Seven have made the code the #1 winter sport across the country and we look forward to working with the AFL Commission to extend the sport’s leadership.

Seven West Media share price summary

After tumbling to a 52-week low of 33.5 cents during mid-May, the Seven West Media share price is staging a comeback.

The share fell almost 50% between May and June but has not looked back since. In that time, the company’s shares are up 48%.

Seven West Media presides a market capitalisation of approximately $803 million.

The post Seven West share price lifts on new record AFL deal appeared first on The Motley Fool Australia.

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More reading

• Seven West Media share price tumbles 5% on full-year earnings
• Seven West Media share price in focus following best financial performance in a decade

Motley Fool contributor Aaron Teboneras 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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I think exchange-traded funds (ETFs) are a fantastic way to build long-term wealth. Particularly low-cost, broad-based ETFs listed on the ASX.

These broad-based ETFs sit at the heart of my core portfolio. But I think thematic ETFs can play a part when it comes to satellite or tactical positions, which are riskier and form smaller parts of my portfolio.

While the space is getting crowded and some thematic ETFs seem particularly niche, there is a handful I have my eye on.

Here are two thematic ASX ETFs I’d buy today. In fact, one of them is already sitting in my portfolio.

BetaShares Global Cybersecurity ETF (ASX: HACK)

Starting with the one I own, the BetaShares Global Cybersecurity ETF is a simple way to get exposure to the cybersecurity theme here on the ASX.

The cybersecurity industry has been growing in prominence for years. But it’s now hurtling along a COVID-accelerated trajectory as things like cloud computing and remote working have come to the fore.

According to the Identity Theft Resource Center, the number of new data breaches set a new record in 2021, soaring 68% over the number of incidents seen in 2020.

Consulting firm Gartner forecasts that information security spending will reach US$187 billion in 2023, representing 11% growth.

As security budgets continue to rise and the world only becomes even more connected, cybersecurity will likely be a high-growth industry for years to come.

And like any high-growth industry, there’ll be various winners and losers.

Rather than selecting which individual companies to invest in, this ETF provides investors with a basket of leading companies involved in cybersecurity.

The ETF has 38 holdings, the majority of which are listed in the United States. Right now, the top holdings include Crowdstrike Holdings Inc (NASDAQ: CRWD), Cloudflare Inc (NYSE: NET), and Cisco Systems Inc (NASDAQ: CSCO).

These companies operate across the spectrum of cybersecurity, from virus protection and intrusion detection to computer networking equipment, identity management, content delivery networks, and more.

As a growth-focused ETF, the year hasn’t been particularly kind. Over the past 12 months, the ETF is printing an 11.4% fall (including dividends). But over the last three years, it has delivered an average return of 14.9%.

It’s worth noting that as a thematic ETF, its management fee comes in on the higher side at 0.67%.

VanEck Video Gaming and Esports ETF (ASX: ESPO)

As its name suggests, this VanEck ETF provides investors with exposure to the video gaming and esports thematic.

After once being stereotyped as being isolating and unsociable, gaming has levelled up. And it’s an industry that’s becoming increasingly hard to ignore, especially in the attention economy we live in.

Last year, the number of gamers worldwide surpassed three billion. And the audience for live-streamed gaming content continued to grow, with 747 million people tuning in to watch their favourite gamers on platforms like Twitch and YouTube.

According to research firm Newzoo, the global games market generated revenue of US$181 billion in 2021. It’s tipping this figure to reach US$218.8 billion in 2024.

Meanwhile, esports continues to take on a life of its own. Last year’s League of Legends World Championship racked up more than one billion total hours of viewership. And the finals series garnered a peak audience of 73 million people.

The ETF comprises 25 holdings and aims to track an index that includes the largest and most liquid companies that generate at least 50% of their revenue from video gaming and/or esports.

As it stands, the ETF has key weightings to the US (42%), Japan (22%), and China (16%).

The top holdings include chip company NVIDIA Corporation (NASDAQ: NVDA), Call of Duty publisher Activision Blizzard Inc (NASDAQ: ATVI), and Chinese conglomerate Tencent Holdings Ltd (HKG: 0700).

The ETF has tumbled 27.6% over the last 12 months as many of its top holdings have been smashed, showing the downsides of being a rather concentrated ETF. But zooming out, the index that this ETF tracks has delivered an average annual return of 16.1% across the last three years.

At 0.55%, the ETF attracts lower management fees than the BetaShares Global Cybersecurity ETF.

The post Why I’d buy these 2 ASX ETFs right now appeared first on The Motley Fool Australia.

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More reading

• 3 fantastic ETFs for ASX investors to buy today
• 3 quality ETFs for ASX investors in September
• 2 beaten down ETFs for investors to buy and hold
• 3 high quality ETFs for ASX investors to buy now
• Why I think these 2 ASX shares are bargain buys

Motley Fool contributor Cathryn Goh has positions in BETA CYBER ETF UNITS, Cloudflare, Inc., and CrowdStrike Holdings, Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Activision Blizzard, BETA CYBER ETF UNITS, Cisco Systems, Cloudflare, Inc., CrowdStrike Holdings, Inc., Nvidia, and Tencent Holdings. The Motley Fool Australia has positions in and has recommended BETA CYBER ETF UNITS. The Motley Fool Australia has recommended Activision Blizzard, CrowdStrike Holdings, Inc., Nvidia, and VanEck Vectors ETF Trust – VanEck Vectors Video Gaming and eSports ETF. 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.

I know a lot of people around my age who are still decades away from retirement but can’t wait for that milestone to arrive. But I’ve always worried that retirement is not something I’ll enjoy.

I’m the sort of person who likes being busy. Can I manage the occasional couch potato day? Sure. But does the idea of spending days on end in front of the TV excite me? Not at all.

Now to be clear, I’m not trying to imply that that’s what retirement is all about. But the reality is that I enjoy working not just for the financial benefit, but also, the mental benefit. And I also like having some structure to my days.

As such, I’m taking these concerns into account in the course of my retirement planning. Here’s what I’m doing about them.

1. Saving aggressively

I dread the idea of retiring and winding up bored. And while there are plenty of things I like to do (think hiking, reading, and so forth) that don’t cost money, I also know I’ll probably need a decent-sized nest egg to help ensure that I’m able to keep busy.

That’s why I’m aggressively funding my retirement savings now. As a freelance writer, I’m pushing myself to earn as much as I can now so that I’m able to save as much as possible. When you work on a freelance basis, you can sometimes choose to give up downtime and take on extra projects. That’s something I’ve taken to in recent years, and a big reason is that I have very aggressive savings goals that I want to meet.

2. Planning to continue working in some capacity

These days, I work on a full-time basis, and I wouldn’t have it any other way. As a retiree, I don’t intend to plug away at my desk for 40 hours a week. But I do hope to continue working in some capacity.

Part-time work could give me the structure I need to anchor my days. And, since I get satisfaction from my work, I feel that the mental benefit could be just as important as the financial one, if not more so.

Retirement isn’t for everyone

I know some people who are enjoying their retirement to the fullest. And I know other people who retired, hated it, and went back to work because they couldn’t handle all of that downtime.

You may not know which camp you’ll end up falling into until you get there. But I know myself pretty well, and I can already see myself growing dissatisfied in the absence of some work and a pretty busy schedule. So rather than pretend that retirement will magically work out and be wonderful, I’m taking steps to tackle those concerns. And if you feel similarly about retirement, you should do the same.

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

The post I’m worried I won’t like retirement. Here’s what I’m doing about that appeared first on The Motley Fool Australia.

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More reading

• Why Breville, Incitec Pivot, Magellan, and Super Retail shares are dropping
• Zip share price jumps as broker goes on myth-busting bender
• Should all ASX investors be buying defensive shares right now?
• Why Karoon Energy, Pilbara Minerals, PointsBet, and Whitehaven Coal are rising
• 3 ASX mining shares leaping on mineral discoveries

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.

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

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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to end the day in the red after a late turn. At the time of writing, the benchmark index is down 0.3% to 6,829.9 points.

Four ASX shares that are falling more than most today are listed below. Here’s why they are dropping:

Breville Group Ltd (ASX: BRG)

The Breville share price is down over 4% to $20.97. Investors have been selling this appliance manufacturer’s shares after it was hit by a broker downgrade. According to a note out of Macquarie, it has downgraded Breville’s shares to a neutral rating with a trimmed price target of $23.10. This followed a cautious update from one of its rivals.

Incitec Pivot Ltd (ASX: IPL)

The Incitec Pivot share price is down 3.5% to $3.69. This follows the release of the industrial explosives, chemicals, and fertilisers company’s investor update this morning. Incitec Pivot revealed that its performance has been mixed in FY 2022. For example, its fertiliser business has seen volumes fall due to lower demand. It also warned that its explosives business is experiencing supply chain and inflationary pressures.

Magellan Financial Group Ltd (ASX: MFG)

The Magellan share price is down 2% to $12.19. Investors have been selling this fund manager’s shares following the release of another disappointing funds under management (FUM) update. Magellan revealed that its FUM fell $2.6 billion during August. This comprises $1.3 billion of net outflows and the same amount due to unfavourable market movements.

Super Retail Group Ltd (ASX: SUL)

The Super Retail share price is down 6% to $9.68. This decline has been driven largely by the retail conglomerate’s shares trading ex-dividend this morning. Last month, Super Retail declared a 43 cents per share fully franked final dividend of FY 2022. This will now be paid to eligible shareholders next month on 17 October.

The post Why Breville, Incitec Pivot, Magellan, and Super Retail shares are dropping appeared first on The Motley Fool Australia.

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More reading

• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• Magellan share price nosedives as FUM plunges $1.3 billion
• Own Magellan shares? Here’s some news on your dividends
• 5 ASX 200 shares turning ex-dividend tomorrow
• Broker names 2 excellent ASX growth shares to buy right now

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 Super Retail Group Limited. The Motley Fool Australia has positions in and has recommended Super Retail 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 Zip Co Ltd (ASX: ZIP) share price is up in late afternoon trading amid bullish observations from analysts at Jarden earlier today.

The ASX buy now pay later (BNPL) share currently trades for 84.5 cents, up 1.81%, after hitting an intraday high of 90 cents a share. That’s a gain of more than 8%.

Zip is outperforming the S&P/ASX 200 Index (ASX: XJO) which is down 0.33% at the time of writing.

Let’s cover what the analysts said about Zip shares.

What did the analysts say?

In a note posted to clients, Jarden analysts Elise Kennedy and Tim Halliday provided an alternative view of Zip’s contentious results for FY22, which included a $1 billion loss.

Notably, the analysts said the slowdown in retail sales that Zip is forecast to experience is a “myth” and part of several misconceptions that surround the company.

The analysts said:

Overall, counterintuitively and against consensus, we could see a push towards increasing need from merchants. This could help see a reduction in the marketing dollars that have to be added to the merchant deals in the US and also reduce the pressure on merchant fees.

They continued:

Importantly too, in Australia, the no-surcharge rule change means that merchants can now pass on this cost to the consumer. It may mean less subscribers but a more profitable consumer that continues its usage.

The pair set out to dispel more myths, including Zip’s credit losses and the forecast that it can’t break even on its cash flow.

On the credit front, Kennedy and Halliday observed Zip was “tightening measures across the whole cycle to help contain its credit losses”.

And as for cash burn, the analysts wrote:

Zip had previously guided to being breakeven in FY24, but at the FY22 result, they had enough visibility to narrow that window. It is already cash positive in the ANZ market and expecting to achieve that in the US as it exits FY23. The Rest of World (ROW) strategic review is underway with predictions the second half will see Zip “neutralise” ROW cash burn.

Zip share price snapshot

The Zip share price is down 80% year to date and 87% over the last 12 months.

The company’s current market capitalisation is approximately $584 million.

The post Zip share price jumps as broker goes on myth-busting bender appeared first on The Motley Fool Australia.

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• August’s RBA rate hike saw investors favour Macquarie and BHP shares. Here’s what to expect in September: expert
• These are the 10 most shorted ASX shares
• Why these 3 ASX shares could be in for a massive boost this month

Motley Fool contributor Matthew Farley 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 ZIPCOLTD FPO. 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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Investors might be wondering whether defensive ASX shares are good investments in this environment considering volatility is picking up and the possibility of a recession is rising.

In a typical recession, defensive shares can demonstrate resilient earnings and this could mean a more robust share price.

But, in this period of high inflation and rising interest rates, things may be a bit different.

Profit and the performance of the share price can sometimes vary quite dramatically. In a higher interest rate environment, investors may not value the defensive earnings of some ASX shares as much as they used to. Inflation could also hurt their earnings.

Emma Fisher from Airlie Funds Management discusses which ASX shares could be opportunities in the Australian Financial Review (AFR).

For starters, she said that investors have a better chance of making good money when markets are down. This is because it gives more potential to buy mispriced assets.

She said: “Even though it doesn’t feel as good and it doesn’t feel as comfortable as when markets are making new highs, it’s actually a better environment for stock picking.”

Time to look at defensive ASX shares?

Airlie’s Fisher is not convinced that defensive shares are an easy pick. Companies like Telstra Corporation Ltd (ASX: TLS) and Brambles Limited (ASX: BXB) were two of the names considered.

Fisher said:

If we are in a more inflationary environment than we have been historically, you want to look at the capital intensity of the business model.

So, a lot of those businesses like Telstra or Brambles, they’re spending billions of dollars a year on maintenance capex and that’s going to cost even more each year in an inflationary environment.

They’re sort of running harder to stand still and you’re paying more for them now than you did a year ago. That, to us, doesn’t scream good value.

However, the Airlie fund does have some ASX shares in the portfolio that are seen as defensive. They include Woolworths Group Ltd (ASX: WOW), Wesfarmers Ltd (ASX: WES) and CSL Limited (ASX: CSL).

The tricky thing about this investment environment is that both valuations and earnings outlooks have changed for different areas of the market.

Fisher said:

It can be tempting when you’re worried about where the cycle is going to want to hide in defensives.

The challenge you’ve got is the defensive, safe, boring part of the market has re-rated. So, you’re now facing this choice between, in some instances, eye-wateringly expensive, defensive companies and bombed-out consumer-facing businesses that look tantalisingly cheap, but where you recognise that the earnings are probably too high.

You’ve got to have a playbook for how you navigate both sides of the market.

Why do interest rates matter?

The market may view defensive ASX shares as worth a bit less right now. This is because asset values are pulled lower by higher interest rates.

Warren Buffett once described why this is the case:

The value of every business, the value of a farm, the value of an apartment house, the value of any economic asset, is 100% sensitive to interest rates because all you are doing in investing is transferring some money to somebody now in exchange for what you expect the stream of money to be, to come in over a period of time, and the higher interest rates are the less that present value is going to be. So every business by its nature … its intrinsic valuation is 100% sensitive to interest rates.

The Reserve Bank of Australia (RBA) increased interest rates by another 50 basis points today. The RBA “expects to increase interest rates further over the months ahead“. So it could continue to be a bumpy ride for ASX shares.

The post Should all ASX investors be buying defensive shares right now? appeared first on The Motley Fool Australia.

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• 5 things to watch on the ASX 200 on Tuesday

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 positions in and has recommended CSL Ltd. The Motley Fool Australia has positions in and has recommended Telstra Corporation Limited and 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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In late trade on Tuesday, the S&P/ASX 200 Index (ASX: XJO) has slipped into the red. At the time of writing, the benchmark index is down 0.35% to 6,829.5 points.

Four ASX shares that are not letting that hold them back today are listed below. Here’s why they are rising:

Karoon Energy Ltd (ASX: KAR)

The Karoon Energy share price is up 5.5% to $2.24. This follows the release of a positive update on the Bauna intervention campaign this morning. The company revealed that its second well intervention has been successful and oil production has increased strongly. Work has begun on a third well intervention.

Pilbara Minerals Ltd (ASX: PLS)

The Pilbara Minerals share price has continued its ascent and is up a further 6.5% to $3.94. A number of lithium shares are rising strongly today amid optimism over lithium demand and supply constraints. Pilbara Minerals was given a boost yesterday by a broker note out of JP Morgan. Its analysts upgraded the company’s shares to an overweight rating with an improved price target of $4.10.

Pointsbet Holdings Ltd (ASX: PBH)

The Pointsbet share price is up 2.5% to $2.23. This is despite there being no news out of the sports betting company. However, with the PointsBet share price down 37% in the space of a month, it is possible that some investors believe it has been oversold and created a buying opportunity.

Whitehaven Coal Ltd (ASX: WHC)

The Whitehaven Coal share price is up 3.5% to $8.78. Investors have been buying Whitehaven Coal and other coal miners today after coal prices charged higher. This followed news that Russia has stopped pumping gas via the Nord Stream 1 pipeline to Europe, which is likely to lead to increased demand for coal in Europe.

The post Why Karoon Energy, Pilbara Minerals, PointsBet, and Whitehaven Coal are rising appeared first on The Motley Fool Australia.

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More reading

• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• Why broker JP Morgan just upgraded the Pilbara Minerals share price
• How are ASX 200 energy stocks performing on Tuesday?
• Whitehaven share price surges to yet another all-time high, here’s why
• The Whitehaven share price has surged 36% in a month. Why Morgans predicts more ‘supercharged returns’

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 Pointsbet Holdings Ltd. The Motley Fool Australia has recommended Pointsbet Holdings 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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