Category: Stock Market

The Allkem Ltd (ASX: AKE) share price is enjoying a rally on Tuesday amid some positive broker sentiment.

Shares in the lithium developer are currently going for $14.025 each, up 4.04%, after hitting an intraday high of $14.14 this morning. That’s almost 5% higher on the day.

For context, the S&P/ASX 200 Materials Index (ASX: XMJ) is 0.11% lower at the time of writing while the S&P/ASX 200 Index (ASX: XJO) is up just 0.05%.

The Allkem price surge comes after Macquarie gave the company a very bullish price target of $21 per share, a further 55% upside. Let’s investigate what the broker said.

Why did Macquarie give Allkem a 55% upside?

Macquarie used a couple of valuation techniques to arrive at the projected fair value of Allkem shares. These included calculating its net present value and forward enterprise value to earnings before interest, taxes, depreciation, and amortisation (EBITDA) ratio, as the Australian Financial Review reported.

The broker said:

AKE continues to highlight the tripling of production by 2026 to 120ktpa and has highlighted that numerous studies are underway to target the next leg of growth beyond 2026. Buoyant lithium prices continue to drive material upside, with [free cash flow] yields above 30 per cent from FY26 at spot prices.

As part of the analysis, the broker also projected free cash flow and sales forecasts for FY23. Macquarie expects Allkem to have a free cash flow of $595 million and sales of $1.57 billion.

This outlook for Allkem comes amid broader positive developments for ASX lithium shares over the last week.

These include an increased price target for lithium itself and the US state of California mandating that all new vehicles sold in the state are to be EV or hydrogen-powered by 2035.

Allkem share price snapshot

The Allkem share price has had a buoyant year so far, trading 34% higher year to date. Meanwhile, the broader Materials Index has recorded an 8% loss over the same period.

The company’s current market capitalisation is around $8.93 billion.

The post Why Macquarie is tipping 55% upside for ASX lithium share Allkem appeared first on The Motley Fool Australia.

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More reading

• Why Allkem, Capricorn Metals, Lovisa, and Pilbara Minerals shares are rising today
• An Allkem director offloaded $20 million in shares this week. What gives?
• Piedmont Lithium share price falls 5% after plans to build the largest US lithium plant unveiled
• The Pilbara Minerals share price surged 30% in August. What now?
• Could this new piece of legislation be a boost for ASX lithium shares?

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 no position in any of the stocks mentioned. The Motley Fool Australia has recommended Macquarie 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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It’s been a bouncy, yet overall negative day for the S&P/ASX 200 Index (ASX: XJO) so far this Tuesday. At present, the ASX 200 has fallen by a tentative 0.058% and is trading at just above 6,850 points.

But let’s talk about the Nickel Industries Ltd (ASX: NIC) share price.

Nickel Industries shares closed at 92.5 cents each yesterday. The nickel producer opened at 92 cents this morning and is currently trading down a chunky 3.03% at 89.5 cents per share.

But shareholders shouldn’t get too disappointed by this seemingly nasty fall. For Nickel Industries shares are dropping today for one of the best reasons to have an ASX share fall in value. Nickel Industries is now trading ex-dividend for its upcoming interim dividend payment.

As we covered last month, 31 August saw Nickel Industries report its half-yearly earnings. The company reported a pleasing 43% rise in profit after tax to US$118.4 million, as well as a 37% increase in earnings before interest, tax, depreciation, and amortisation (EBITDA) to $126.9 million.

Nickel Industries share price falls as ex-dividend date arrives

The earnings enabled Nickel Industries to declare an interim dividend of two cents per share, unfranked. This was consistent with the company’s last final dividend payment, as well as the previous interim dividend from last year.

This dividend will hit investors’ bank accounts later this month on 14 September.

When a company trades ex-dividend, it effectively cuts off any new investors from receiving the dividend payment. That is what has happened to the company today. As such, investors needed to hold Nickel Industries shares as of yesterday in order to be eligible for the payment.

Since, for all intents and purposes, Nickel Industries shares are less valuable today than they were yesterday for new investors, the company’s shares have taken a hit in value. That is probably why we are seeing weakness in the Nickel Industries share price this Tuesday.

At the current Nickel Industries share price, this ASX 200 materials share has a dividend yield of 3.11%.

The post Why is the Nickel Industries share price getting hammered on Tuesday? appeared first on The Motley Fool Australia.

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More reading

• Why BHP, Deep Yellow, Nickel Industries, and PointsBet shares are dropping
• Nickel Industries share price dips despite 40% profit surge

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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A2 Milk Co Ltd (ASX: A2M) delivered some bullish news to investors in its earnings card for FY22 posted on Monday last week.

Not only did net profit after tax (NPAT) surge 42.3% to NZ$114.7 million (A$103 million) but it also announced it will repurchase NZ$150 million (AU$ 135 million) worth of shares from the market.

Share buybacks can sometimes be seen as a signal that the company believes its shares are undervalued. It also means shareholders effectively own a larger piece of the company since the number of shares on the market goes down.

Considering these details, let’s consider why A2 Milk is buying up its shares.

Why is A2 Milk buying its own shares?

Several factors combined over FY22 to allow the company to announce a large share repurchasing plan. One is A2 Milk stepping up its presence in China. The company said this led to record market share for its Chinese-labelled infant formula in mother and baby stores and the domestic online market in China.

This carries over to a positive outlook for FY23. The company expects high single-digit growth in revenue, as well as a boost in its earnings before interest, tax, depreciation, and amortisation (EBITDA), and EBITDA margin.

These factors strengthened A2 Milk’s balance sheet, with its net cash line item ending at $816.5 million for the period.

It’s reported the company’s board of directors discussed alternative options but decided that a share buyback was the best use of its capital.

A2 Milk will buy back 37.18 million shares from the market, or around 4.9% of its total outstanding shares of 743.66 million.

The buyback will commence on 28 September and is expected to be completed on 28 August next year.

The A2 Milk share price snapshot

The A2 Milk share price is down 0.87% at the time of writing.

Shares of the infant formula company currently trade at $5.68 a share.

That puts them up around 4% year to date. Meanwhile, the S&P/ASX 200 Index (ASX: XJO) is down 9.4% over the same period.

The company has a current market capitalisation of around $4.2 billion.

The post Why is A2 Milk buying back shares? appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Why did the A2 Milk share price smash the market with a 22% gain in August?
• How do A2 Milk shares stack up against Bubs post-earnings season?
• Here are the top 10 ASX 200 shares today
• These were the best performers on the ASX 200 in August

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 no position in any of the stocks mentioned. The Motley Fool Australia has recommended A2 Milk. 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 Northern Star Resources Ltd (ASX: NST) share price is heading south during early afternoon trade.

This comes despite the price of gold elevating 0.62% today and the company not releasing any market-sensitive news.

At the time of writing, Northern Star shares are down 1.87% to $7.33.

Why are Northern Star shares falling on Tuesday?

Investors are offloading Northern Star shares as they trade ex-dividend today.

This means if you purchased the company’s shares yesterday or before, you will be eligible for the latest dividend.

However, when a company’s shares trade ex-dividend, the share price tends to fall in proportion to the dividend paid out. This can also vary on how the market is tracking for the day as well as investor sentiment.

For those eligible for Northern Star’s final dividend, shareholders will receive a payment of 11.5 cents per share on 29 September.

The dividend is fully franked.

Are Northern Star shares a buy now?

Following the financial scorecard for the full year, a number of brokers weighed in on the Northern Star share price.

As reported by ANZ Share Investing, analysts at Macquarie raised their price target by 5% to $10.50 for Northern Star shares. Based on the current share price, this implies an upside of roughly 43%.

In addition, the team at Citi had a more bullish price, raising its target by 0.9% to $10.90 apiece.

On the other hand, UBS had a slightly bearish outlook, cutting its price target by 2% to $9.60. Nonetheless, this still indicates an upside of 31% from where Northern Star shares trade today.

Northern Star share price summary

Since April 2022, the Northern Star share price has come under selling pressure due to macroenvironmental headwinds.

This includes strong inflationary movements which have prompted central banks to lift interest rates.

Year-to-date, the gold miner’s shares are down 22%.

Based on today’s price, Northern Star commands a market capitalisation of roughly $8.70 billion. It has a dividend yield of 2.64%.

The post Why is the Northern Star share price losing its shine on Tuesday? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Monday
• Why is the ASX 200 diving 2% on Tuesday?
• 5 things to watch on the ASX 200 on Wednesday
• Here are the top 10 ASX 200 shares today
• Everything you need to know about the latest Northern Star dividend

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Aaron Teboneras has positions in Northern Star Resources 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 recommended Macquarie 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 share price of diversified mining giant Rio Tinto Limited (ASX: RIO) is down 1.25% to $90.62 today.

Investors have pushed the ASX mining share lower on Tuesday on no news.

Noteworthy, however, is that the company recently held a meeting with senior executives of the state-owned China Mineral Resources Group.

In the broader market, the S&P/ASX 300 Metals and Mining Index (ASX: XMM) is flat today.

Rio Tinto a ‘trusted partner’ to China

Following recent changes to import/export legislation from policymakers in China, the newly-formed China Mineral Resources Group is now overseeing the supply of mineral resources into the country.

Naturally, this involves purchasing too, especially given the country’s previous vocal frustration at volatility and surging prices in iron ore markets.

Now as the new administration is put into place, Rio’s CEO, Jakob Stausholm, has met with the group, The Australian reports.

Stausholm was joined by Rio Tinto chief commercial officer, Alf Barrios, in a video meeting with the management of the China Mineral Resources Group.

For Barrios, the opportunity extends a lengthy relationship selling into China and the development is a “win-win” for those involved.

Rio’s website in China says:

… given the importance of the supply chain in supporting China’s economic growth, Rio Tinto will continue to strive to be a trusted partner in China.

What else is happening for Rio Tinto?

Meanwhile, further positive news for Rio Tinto came earlier this week after it came to an agreement to acquire the remaining 49% interest in Canadian-listed Turquoise Hill Resources for $4.8 billion.

The decision comes after a drawn-out process where several offers were previously rejected.

Rio Tinto share price review

In the past 12 months, the Rio Tinto share price has extended its slide into the red. It’s down more than 18% in that time.

The post Own Rio Tinto shares? Here’s why the CEO just met with China Mineral Resources appeared first on The Motley Fool Australia.

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More reading

• Why are ASX 200 mining shares getting hammered on Friday?
• What’s the outlook for ASX 200 copper shares in September?
• Is the Rio Tinto share price a buy post-earnings season?
• 5 things to watch on the ASX 200 on Friday
• Rio Tinto share price dips despite $4.9b Turquoise Hill deal

Motley Fool contributor Zach Bristow 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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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.

There’s an old chestnut that most investors could stand to hear: If you want to succeed in investing (or hockey), skate to where the puck is going, not to where it’s been.

Buying shares of yesterday’s winning businesses might be a decent way to preserve your wealth by banking on their continued success, but if you want to nab big gains, you’ll need to invest in companies that are working on solving tomorrow’s problems today. Clocking important trends in the economy and the world is critical for guiding your search.

So let’s take a look at two trends that’ll likely be huge in the near future. You’ll gain a few actionable ideas about investments that could pay off down the line.

1. Psychedelic therapies for mental illnesses

Psychedelic drugs like psilocybin, LSD, ketamine, and MDMA aren’t legal to use recreationally in most places, but that doesn’t mean they can’t be powerful medicines when used appropriately.

The current standards of care for some common yet difficult-to-treat conditions like major depressive disorder are interventions like antidepressant drugs and cognitive behavioral therapy that leave many patients experiencing relapses despite treatment. But psychedelic therapies delivered by experienced therapists might not have that problem — which could be an opportunity the businesses that make them.

Compass Pathways (NASDAQ: CMPS) and Atai Life Sciences (NASDAQ: ATAI) are two biotech stocks with pipelines chock-full of psychedelic therapies in clinical development. Per Compass’ data from one of its phase 2b studies, its COMP360 psilocybin-with-talk-therapy combination leads to rapid reduction in depression symptoms that lasts for at least 12 weeks and causes few serious side effects. For some subsets of patients, the improvements appear to be long-lasting or perhaps even permanent. And Atai’s equity interest in Compass means that it stands to benefit from the therapy’s sales if it’s eventually commercialized.

But Compass’ impressive results are far from the only success story in recent clinical trials of psychedelics. Numerous third-party researchers and academic groups have shown compelling results that suggest psychedelics have the chance to reshape psychiatry as we know it, and for the better. If you want to get exposure to upside from drug development in the psychedelics space, either Atai or Compass is a suitable place to consider investing.

2. Treating or curing long COVID

As you may have heard, long COVID is an illness that features a sometimes-debilitating constellation of symptoms like fatigue, shortness of breath, and cognitive issues, all of which can occur after someone is infected with the coronavirus.

According to the Centers for Disease Control (CDC), 7.5% of adults in the U.S. are afflicted with long COVID. And an estimated 80% of people who have been infected with the coronavirus have at least one long-term symptom associated with their illness. Right now, it appears that even fully vaccinated and boosted people can experience long COVID, and even mild coronavirus infections can cause it.

To make matters worse, there are no specific treatments for it yet, and the ranks of the afflicted are, unfortunately, growing.

A few different companies are either considering or have already initiated investigations into long COVID therapies. Pfizer‘s (NYSE: PFE) antiviral medicine, Paxlovid, might soon be tested for that purpose, though no trials are currently ongoing. GlaxoSmithKline and other major drug manufacturers are also considering initiating new therapy programs, and a few biotechs have already tested candidates in clinical trials and struck out.

With so many millions of people suffering with long COVID, any medicines that successfully treat it will likely be big moneymakers. For now, there aren’t too many places to park $2,000, but if a player like Pfizer announces that it’s initiating a project, it’ll be a green light for investors. Just keep in mind that there’s a significant risk of failure in the clinical trial process, so it might make sense to pick a few different long COVID stocks to buy rather than just one.

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

The post 2 top trends to invest $2,000 in ahead of the crowd appeared first on The Motley Fool Australia.

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More reading

• Ready for a storm: 3 ASX 200 shares with ironclad balance sheets
• Why is the CSL share price on the slide today?
• Why is the BlueScope share price dipping on Tuesday?
• ‘Better chance of making good money when markets are down’: fundie
• What’s the outlook for the BHP share price in September?

Alex Carchidi 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 COMPASS Pathways plc. 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 2022, inflation is up, interest rates are following, and the S&P/ASX 200 Index (ASX: XJO) has fallen 10% year to date. But there’s a silver lining to this year’s volatility for those on the hunt for ASX 200 shares.

Some fundies believe it has brought opportunities to buy some of the index’s favourite stocks for decent prices.

Airlie Funds Management portfolio managers Emma Fisher and Matt Williams are on the hunt for stocks trading at reasonable prices following the market’s poor performance, the Australian Financial Review (AFR) reports. Particularly, those boasting strong balance sheets.

And they’ve flagged three ASX 200 shares that meet the brief. Keep reading to find out which stocks have caught the fundies’ attention.

3 ASX 200 shares boasting strong balance sheets

Premier Investments Limited (ASX: PMV)

Premier Investments, the company behind brands such as Just Jeans, Peter Alexander, and Jay Jays, is one such share.

It ended the first half of financial year 2022 with $400 million of net cash, having paid off all its operating debt.  

The company’s share price has dumped 30% year to date to trade at $21.29 at the time of writing.

ARB Corporation Limited (ASX: ARB)

The ARB share price has also struggled this year, falling 43% year to date to swap hands at $29.70.

That’s despite the ASX 200 share boasting a net cash position of $52.7 million and no debt at the end of financial year 2022.

Fisher reportedly believes the four-wheel drive accessories retailer is a quality business trading at reasonable levels right now.

Medibank Private Ltd (ASX: MPL)

Medibank boasted a “strong” balance sheet and no debt at the end of financial year 2022.

The company is also well positioned to tackle inflationary impacts. Fisher commented on the business, courtesy of the AFR:

[W]e’re happy to own [Medibank] still, even though it has performed well, because it’s got the kicker from high interest rates in terms of its investment income, and it’s a capital-lite business model. So, it shouldn’t be hugely hurt by inflation.

Williams also reportedly said Medibank’s latest results were among the highest quality results posted in the August earnings season.

The ASX 200 share has gained 9% year to date to trade at $3.66.

The post Ready for a storm: 3 ASX 200 shares with ironclad balance sheets appeared first on The Motley Fool Australia.

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• ‘Better chance of making good money when markets are down’: fundie
• Hoping to bag the latest Medibank dividend? Read this
• These 9 ASX 200 shares are going ex-dividend tomorrow
• Can the Medibank share price deliver healthy growth and dividends?
• Analysts name 2 ASX 200 dividend shares to buy 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 no position in any of the stocks mentioned. The Motley Fool Australia has recommended ARB Corporation Limited and Premier Investments 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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It’s been a wavering start to the trading day for the S&P/ASX 200 Index (ASX: XJO) so far this Tuesday. At the time of writing, the ASX 200 has gained just 0.09% and is back below 6,860 points. But it’s still ahead of the CSL Limited (ASX: CSL) share price.

CSL shares are down 0.1% at the time of writing. The ASX 200 healthcare giant closed at $294.80 a share yesterday. It opened at $294.42 this morning and is now trading at $294.50 at the time of writing.

This doesn’t exactly appear to be a strong session for CSL shares, given the ASX 200 is slightly outperforming these gains so far. But it is if we factor in what has just happened to the CSL share price. The company has just traded ex-dividend today for the upcoming final dividend payment for FY22.

When CSL revealed its full-year earnings report for FY22 last month, it declared a final dividend of US$1.18 per share. That translates to $1.68 per share, partially franked at 10%.

As we discussed yesterday, this was flat in US dollar terms on last year’s final dividend. But thanks to favourable currency exchange rates, ASX investors will enjoy a 5.6% boost from what they received last year.

The dividend is scheduled to be paid out next month on 5 October, so investors will have to wait until then to see the cash.

CSL share price rises, despite ex-dividend date

But CSL shares traded ex-dividend for this upcoming final payment today. That means that any new investors in CSL from today are not eligible to receive this dividend.

Normally, when a company trades ex-dividend, we see a corresponding drop in the company’s share price. This reflects the reality that CSL shares are less valuable, thanks to the fact that the dividend is no longer available for new investors.

Today, we have seen no such obvious drop. That means that CSL is having a fairly strong day – if it weren’t for the ex-dividend date, the company would probably be enjoying gains.

So arguably, this is a very happy day for CSL investors.

At the current CSL share price, this ASX 200 healthcare share has a dividend yield of 1.02%.

The post Why is the CSL share price on the slide today? appeared first on The Motley Fool Australia.

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More reading

• Want to snare the next CSL dividend? Read this
• 5 ASX 200 shares turning ex-dividend tomorrow
• Why is the CSL share price outperforming the ASX 200 on Friday?
• ASX 200 shares declared $42b of dividends in August. Here’s how you can get a slice
• How do CSL shares stack up against Cochlear following earnings season?

Motley Fool contributor Sebastian Bowen has positions in CSL Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL Ltd. 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 BlueScope Steel Ltd (ASX: BSL) share price is backtracking today while the S&P/ASX 200 Index (ASX: XJO) is travelling higher.

During midday trade, the steel producer’s shares are down 1.82% to $16.15.

For context, the benchmark ASX 200 index is up 0.14% to just under 6,860 points.

Let’s take a look at what’s dragging BlueScope shares lower on Tuesday.

Why is the BlueScope share price losing ground today?

With earnings season all wrapped up, the BlueScope share price is now trading ex-dividend.

This comes after the company delivered a robust full-year result, reporting a record performance which led to $2.81 billion in net profit after tax (NPAT).

On the back of the outstanding achievement, the board declared an unfranked final dividend of 25 cents per share.

If you bought the company’s shares before market close yesterday and held onto them until this morning, you’ll be eligible for the dividend.

Be sure to check your bank accounts on 12 October as that’s when BlueScope will make its dividend payment to shareholders.

In case you were wondering, there’s no dividend reinvestment plan (DRP) currently being offered.

BlueScope noted that it has made nearly $1 billion in shareholder returns across FY 2022. This includes $344 million in dividends and $638 million in on-market buybacks.

Further, the board approved an increase to the share buyback program to allow up to a further $500 million to be bought over the next 12 months.

It’s likely that with such a significant buyback program, BlueScope shares could continue to rise.

BlueScope share price summary

In 2022, BlueScope shares have fallen 23% on the back of China’s property crisis and iron ore price setback.

On the other hand, the S&P/ASX 200 Materials Index (ASX: XMJ) is down 8% over the same time frame.

BlueScope shares reached a 52-week low of $14.75 in July before making a slight recovery.

Based on today’s price, BlueScope commands a market capitalisation of approximately $7.58 billion and has a dividend yield of 3.11%.

The post Why is the BlueScope share price dipping on Tuesday? appeared first on The Motley Fool Australia.

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More reading

• Looking to bank the next BlueScope dividend? Here’s what to do
• 5 ASX 200 shares turning ex-dividend tomorrow
• ASX 200 shares declared $42b of dividends in August. Here’s how you can get a slice
• 3 ASX 200 shares having a super start to the week
• Why BlueScope, Carsales, Core Lithium, and Nearmap shares are racing higher

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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It’s a scary time on the market for many invested in ASX shares. The S&P/ASX 200 Index (ASX: XJO) has dumped 10% year to date and two of Wall Street’s three major indexes have fallen into bear markets.

But Airlie Funds Management’s Emma Fisher isn’t worried. The portfolio manager reportedly welcomes volatility and the stock picking prospects it brings.

Here’s how the fundie is taking advantage of recent turbulence in the market.

Market downturns or buying opportunities?

“It sounds counterintuitive, but you’ve got a better chance of making good money when markets are down,” Fisher said, as quoted by the Australian Financial Review (AFR).

Fisher continued:

We welcome volatility, we welcome short-termism because it increases the chance that you’re going to be able to buy mispriced assets.

While concerns of stalling growth and even a potential recession have swirled in some circles recently, Fisher has been eyeing a new set of opportunities.

The publication quoted Fisher as saying:

The thing about the dominant narrative is we love it … because if it’s driving the headlines, then it’s probably creating opportunities.

It’s not saying that the dominant narrative of, say, economic turmoil is wrong, and that it’s not going to happen. It’s saying it’s been more than priced into some stocks, in some sectors.

And the best place to be during such volatility? ASX shares.

The fundie said Australia’s housing market, filled to the brim with variable mortgages, will likely mean rate hikes will impact the economy faster here. Therefore, the Reserve Bank of Australia could get away with fewer hikes than other central banks.

Meanwhile, Aussie companies’ balance sheets are stronger than they have been in previous downturns.

Should ASX investors get defensive?

Investors may be tempted to turn to defensive stocks but Fisher warned this could set them back.

She said some defensive stocks are currently trading at “eye-wateringly expensive” levels. Meanwhile, other consumer-facing businesses have been “bombed out”, but their earnings remain “too high”.

Fisher said, courtesy of the AFR:

Our playbook there is to really focus on the balance sheets of these companies. Because the market’s probably right that earnings are too high, but valuations have now priced that in.

If you’re looking at consumer discretionary-facing businesses, you want to own businesses that are pretty much net cash or that they own a lot of property.

3 ASX retail shares that might be worth looking at

Fisher and fellow portfolio manager Matt Williams have reportedly flagged three ASX retail shares that meet the criteria.

These include Nick Scali Limited (ASX: NCK) and Premier Investments Limited (ASX: PMV).

The former closed financial year 2022 with $74.6 million in cash and $97.4 million worth of property. It also boasted an outstanding order bank of $185 million.

The latter is behind such brands as Peter Alexander, Jay Jays, and Just Jeans. It ended the first half with a net cash position of $400 million.

Finally, Fisher reportedly dubbed four-wheel drive accessories retailer ARB Corporation Limited (ASX: ARB) a quality business trading at a reasonable price.

The three ASX retail shares have fallen 32%, 31%, and 46% respectively year to date.

The post ‘Better chance of making good money when markets are down’: fundie appeared first on The Motley Fool Australia.

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More reading

• ASX dividend windfall continues but it’s not just Woodside and ASX 200 energy stocks splashing the big cash
• Top brokers name 3 ASX shares to buy today
• ARB share price plunges amid ‘uncertain’ outlook
• Earnings preview: Here’s which ASX shares are reporting today
• Why EML, Nearmap, NIB, and Nick Scali shares are charging higher

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 no position in any of the stocks mentioned. The Motley Fool Australia has recommended ARB Corporation Limited and Premier Investments 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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