Category: Stock Market

The All Ordinaries Index (ASX: XAO) is enjoying a welcome reprieve from the recent wave of selling, up nearly 1% in afternoon trade.

And two ASX gold shares are doing some of the heavy lifting.

The Gold Road Resources Ltd (ASX: GOR) share price is up 8.04%. That’s up there with the best intraday performance, at the time of writing, of any S&P/ASX 200 Index (ASX: XJO) shares today.

Gold Road closed yesterday at $1.68 per share and is currently trading for $1.81 per share.

Rival ASX gold share, Resolute Mining Limited (ASX: RSG), is also shining brightly. Resolute closed yesterday at 31 cents and is currently trading for 32 cents, up 4.1%.

On a broader level, ASX gold shares are slightly outperforming the benchmark this morning, with the S&P/ASX All Ordinaries Gold Index (ASX: XGD) up 1.58%.

Why are ASX gold shares outperforming today?

The big tailwind driving ASX gold shares higher is, as you’d expect, the soaring gold price.

While gold retraced slightly overnight, an ounce of bullion is still trading for US$2,040 (AU$2,793).

That’s right about near the all-time highs reached on 7 August 2020. And it’s up from US$1,826 per ounce just one month ago, a gain of 12%.

Gold is classically viewed as a haven asset. And indeed, the yellow metal first saw demand surge as investors sought an inflation hedge. Gold’s bull run was then spurred onwards by Russia’s invasion of Ukraine.

While that’s put a lot of pressure on share markets, it’s gone the other way for gold, and most ASX gold shares.

“The stock market is in a messy situation right now. You are going to continue to see selling pressure and that is also bullish for the metal,” said Jim Wyckoff, senior analyst at Kitco Metals (courtesy of Reuters).

And should Russia’s war in Ukraine escalate, it could see gold march higher still.

Shortly before gold topped US$2,000, Carsten Menke, analyst at Julius Baer, said:

The severity of the war in Ukraine and the uncertainty around its future trajectory have fuelled broad-based gold buying from safe-haven seekers, pushing prices towards $2,000 per ounce.

A further escalation would likely lift prices further. The latter would likely have a more lasting impact, as it could push the world economy towards a stagflation scenario, which we see as very bullish for gold.

But as mentioned up top, it’s not just the Russian invasion of Ukraine supporting higher gold prices and ASX gold shares. Investors are well aware that long-dormant inflation looks to be awakening. Quickly.

According to David Meger, director of metals trading at High Ridge Futures (quoted by Reuters):

The combination of roaring energy prices, grain prices, base metal prices is culminated in dramatic inflationary pressures that continue to be the major underlying support behind gold moves higher.

How have these 2 gold producers been performing?

With gold prices within a whisker of breaking into new highs, many ASX gold shares have been making hay.

Resolute Mining, however, has not been among those. Despite today’s lift and the rocketing gold price, the Resolute share price is down 1.6% over the past month. That’s in a month that saw the ASX Gold Index shoot up 20.95%.

Gold Road Resources, on the other hand, outperformed even this lofty benchmark.

The ASX 200 gold share is up 28.93% since the closing bell on 9 February.

The post Why these 2 ASX gold shares are charging higher today appeared first on The Motley Fool Australia.

More reading

• Top broker says this ASX share will surge another 17% amid soaring gold prices
• 3 ASX gold shares rocking new 52-week highs today
• Leading brokers name 3 ASX shares to buy today

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 Bruce Jackson.

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The Air New Zealand Ltd (ASX: AIZ) share price has been under pressure in the past month.

The company’s shares have shed almost 16% in a month and are currently trading at $1.30 each, up 0.39% on the day so far. In comparison, the S&P/ASX 200 Index (ASX: XJO) has lost around 1.7% in the past month.

Let’s take a look at what is happening at this ASX airline.

What’s happening at Air New Zealand?

Airline shares have been under pressure lately amid rising fuel prices. The Qantas Airways Limited (ASX: QAN) share has also dropped 16% in the past month.

In today’s news, Air New Zealand is holding talks with striking cabin crew amid an ongoing wage dispute, New Zealand news website Stuff reported.

Employees who were made redundant during the COVID-19 pandemic are upset about being re-hired on lower wages. The company has rehired more than a thousand former staff for New Zealand’s international border opening, Newshub reported.

In recent share market news, Air New Zealand has recently been removed from the All Ordinaries Index (ASX: XAO). This was announced after market close on Friday as part of a quarterly rebalance of S&P/ASX indices. It will take effect from 21 March. Air New Zealand shares fell more than 3% between market close on Friday and Monday 7 March.

Finally, Air New Zealand’s half-yearly report also may have had a negative impact on its share price. The company’s shares dropped almost 4% on the day the report was released.

In its report, Air New Zealand said its fuel costs increased 14% to $174 million for the half-year. And the company noted it expects fuel costs to impact second-half results.

The airline reported a statutory loss before tax of $376 million, with dividends remaining suspended.

The company aims to be carbon neutral by 2050.

Air New Zealand share price

The Air New Zealand share price has fallen 12.7% in the past year, while it is down almost 8% this year to date.

For perspective, the benchmark ASX 200 has returned about 4% over the past year.

In the past week, Air New Zealand shares have slumped almost 10%.

Air New Zealand has a market capitalisation of about $1.46 billion based on the current share price.

The post Air New Zealand (ASX: AIZ) share price plummets 16% in a month appeared first on The Motley Fool Australia.

More reading

• Why this broker says the Transurban (ASX:TCL) share price can drive 14% higher
• Up 48% in 2022, why this ASX 200 energy giant is gaining again today
• 3 more of Morgans’ best ASX share ideas for March
• ‘Widespread flooding’ update: IAG (ASX:IAG) share price backtracks
• Fundie tips ASX battery metal shares that are NOT lithium

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 Bruce Jackson.

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The Transurban Group (ASX: TCL) share price could be driving higher from here.

That’s the view of the team at Morgans, which has just named it among its best ideas for March.

Where is the Transurban share price heading?

According to the note, the broker has an add rating and $14.29 price target on the toll road operator’s shares.

Based on the current Transurban share price of $12.51, this implies potential upside of 14% for investors over the next 12 months.

In addition, Morgans expects a 35 cents per share distribution in FY 2022 and then an increase to 53.7 cents per share in FY 2023.

If you add FY 2022’s dividend yield of 2.8% into the equation, this brings the total potential return on offer with its shares to almost 17%.

Why is Morgans bullish?

Morgans is bullish on the Transurban share price due to the company’s exposure to urbanisation and the growth in regional population and employment. It expects this and its growth projects to underpin a rapid recovery in its dividend as COVID headwinds ease.

Its analysts explained: “TCL owns a pure play portfolio of toll road concession assets located in Melbourne, Sydney, Brisbane, and North America. This provides exposure to regional population and employment growth and urbanisation. Given very high EBITDA margins, earnings are driven by traffic growth (with recovery from Covid) and toll escalation (roughly half at CPI and the remainder fixed c.4% pa).”

“We think TCL will continue to be attractive to investors given its market cap weighting (important for passive index tracking flows), the high quality of its assets, management team, balance sheet, and growth prospects. Watch for rapid recovery in DPS alongside traffic recovery and WestConnex acquisition prospects. A negative overhang is the contaminated soil disposal issues related to its West Gate Tunnel Project,” it added.

The post Why this broker says the Transurban (ASX:TCL) share price can drive 14% higher appeared first on The Motley Fool Australia.

More reading

• Top brokers name 3 ASX shares to buy next week
• Why brokers rate these ASX 200 dividend shares as buys
• Which new investments are predicted to help the AFIC (ASX:AFI) share price and dividends?
• Just banked the Transurban (ASX:TCL) dividend? Here’s what you need to know
• Morgans names 2 ASX 200 dividend 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 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 Bruce Jackson.

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The S&P/ASX 200 Index (ASX: XJO) has shaken off its recent malaise today and is currently up 1.1%.

ASX 200 energy giant Woodside Petroleum Limited (ASX: WPL) is edging ahead of the benchmark, up 1.4% at time of writing.

That marks a lengthy run of outperformance for the Woodside share price, which has now gained a whopping 48% since the opening bell on 4 January. This has seen its market cap grow to some $32 billion.

While the Woodside share price performance stands out amongst its peers, the S&P/ASX 200 Energy Index (ASX: XEJ) has also left the benchmark in the dust.

Despite today’s lift, the ASX 200 is down 7% year-to-date, compared to a 20.7% gain posted by the Energy Index.

Why are ASX 200 energy shares like Woodside outperforming?

You need look no further than the eye watering petrol prices posted at your local servo to grasp the biggest tailwind propelling ASX 200 energy shares higher.

Fossil fuel prices, already trending upwards at the end of 2021, have rocketed to record or near-record highs following Russia’s invasion of neighbouring Ukraine.

Brent crude is up another 1.4% over the past 24 hours. It’s currently trading for US$130 per barrel, after briefly touching US$132 per barrel earlier in the day, according to data from Bloomberg. That’s the highest level since 2008, and clearly helping lift ASX 200 energy shares.

The latest surge in crude prices comes after United States President Joe Biden and United Kingdom Prime Minister Boris Johnson said their nations would ban imports on Russian oil.

“The United States is targeting the main artery of Russia’s economy. We will not be part of subsidizing Putin’s war,” Biden said.

While the US is also targeting Russian coal and gas exports, the UK won’t yet follow suit. To date, continental European nations have yet to sign onto the oil ban.

Woodside share price snapshot

As Brent crude oil has soared 42% over the past month, the Woodside share price has gone along for the ride, up 25% since the closing bell on 9 February.

By comparison, the ASX 200 is down 2.8% while the ASX 200 Energy Index is up 10.4%.

The post Up 48% in 2022, why this ASX 200 energy giant is gaining again today appeared first on The Motley Fool Australia.

More reading

• Why Bapcor, GQG, Smartgroup, and Woodside shares are dropping
• Woodside (ASX:WPL) share price slips for first time in 7 days
• 5 things to watch on the ASX 200 on Tuesday
• Here are the top 10 ASX shares today
• WAM boss urges cashed-up ASX 200 companies to buy, invest or pay dividends

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 Bruce Jackson.

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If you’re looking for a few new additions to your portfolio in March, then look no further.

Analysts at Morgans have picked out a number of ASX shares that they class as their best ideas for the month.

The first three I looked at can be found here. Whereas below are three more that the broker rates highly:

QBE Insurance Group Ltd (ASX: QBE)

This insurance giant’s shares could be in the buy zone according to Morgans. Especially given premium increases and its positive cost cutting outlook. The broker currently has an add rating and $13.50 price target on its shares.

It said: “With strong rate increases still flowing through QBE’s insurance book, and further cost-out benefits to come, we expect QBE’s earnings profile to improve strongly over the next few years. The stock also has a robust balance sheet and remains relatively inexpensive overall trading on ~12x FY22F PE.”

ResMed Inc (ASX: RMD)

Another ASX share that the broker rates highly is ResMed. It believes the medical device company has a very bright future thanks to its digital platform. Morgans has an add rating and $40.46 price target on the company’s shares.

Its analysts commented: “While we believe the next few quarters will likely be volatile, as Covid-related demand for ventilators continues to slow and core sleep apnoea volumes gradually lift, nothing changes our medium/longer term view that the company remains well-placed as it builds a unique, patient-centric, connected-care digital platform that addresses the main pinch points across the healthcare value chain.”

Santos Ltd (ASX: STO)

If you’re looking for options in the resources sector, then Morgans has got your back. Its analysts like Santos due to its growth profile and its diversified earnings base. Furthermore, it believes this energy producer’s shares are still great value after recent gains. The broker has an add rating and $9.00 price target on its shares.

Morgans explained: “We expect the resilience of STO’s growth profile and diversified earnings base see it best placed to outperform against a backdrop of a broader sector recovery. While pre-FEED, we see Dorado as likely to provide attractive growth for STO, while its recent acquisition increasing its stake in Darwin LNG has increased our confidence in Barossa’s development.”

The post 3 more of Morgans’ best ASX share ideas for March appeared first on The Motley Fool Australia.

More reading

• You can’t pick the bottom, but these 4 ASX shares are already bargains: expert
• 5 things to watch on the ASX 200 on Wednesday
• Here’s why the QBE (ASX:QBE) share price is sliding 5% today
• Up 14% in a week. Here’s why this expert says Santos (ASX:STO) shares are undervalued
• The oil price just hit a 13-year high, and these ASX 200 shares are surging

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 recommended ResMed. The Motley Fool Australia has recommended ResMed Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Insurance Australia Group Ltd (ASX: IAG) share price is edging lower today, striking pain again for shareholders.

In the past week, the insurance giant’s shares travelled around 7% lower.

At the time of writing, the company shares are down a further 0.12% to $4.255.

What’s the latest with IAG?

Investors are sending the IAG share price lower following the company’s update regarding the recent severe weather impacting Australia’s east coast.

According to the announcement, IAG advised it has received more than 24,000 claims across south-east Queensland and New South Wales as of 9 March. This includes around 3,500 claims from the widespread flooding which has occurred throughout Sydney over the last three days.

IAG stated that while the wet weather continues to hit the eastern seaboard, the number of claims is expected to rise.

Management noted that it has extensive reinsurance protection in place.

The company said current estimates to the net claims cost from the storm and flooding event is approximately $74 million. This is lower than the forecast $95 million the company disclosed in early March. IAG said this was due to development on previous claims that further eroded its FY22 aggregate and reduced net claims costs.

As it stands, IAG has utilised roughly $95 million of the $236 million of aggregate cover following the weather-related event.

From February 2022, the company increased its expectation for FY22 net natural perils claims costs to approximately $1.1 billion. Previously that number stood at an estimate of $1,045 million.

Nonetheless, IAG reaffirmed its reported margin guidance range of 10% to 12% for FY22. However, given the increase in estimated net natural perils claims costs, the lower half of the guidance range is more likely.

IAG managing director and CEO Nick Hawkins commented:

We have all hands on deck for our NRMA Insurance, CGU and WFI customers with extra people on the phones and on the ground in devastated areas in Queensland and NSW. Our assessors and repairers have started assessments and emergency make safe repairs in impacted areas and we are securing temporary accommodation for customers who can’t return to their homes.

IAG share price summary

Over the last 12 months, the IAG share price has lost almost 8%, with year-to-date flat. The company’s shares have fallen 50% since July 2019, with heavy losses attributed to the COVID-19 pandemic.

Based on today’s price, IAG presides a market capitalisation of roughly $10.5 billion, with approximately 2.47 billion shares on issue.

The post ‘Widespread flooding’ update: IAG (ASX:IAG) share price backtracks appeared first on The Motley Fool Australia.

More reading

• ASX 200 (ASX:XJO) midday update: Origin’s $250m buyback, Nickel Mines smashed
• The IAG (ASX:IAG) share price managed to gain 8% in February. Here’s how
• Top brokers name 3 ASX shares to sell next week
• ‘$2 billion cost’: How are the floods impacting ASX 200 insurance shares this week?
• IAG (ASX:IAG) share price slumps amid $300m Greensill hit

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 owns and has recommended Insurance Australia Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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A fund manager has put the spotlight on ASX shares exploring battery metals other than lithium.

These companies include Syrah Resources Ltd (ASX: SYR), Alpha HPA Ltd (ASX: A4N) and American Pacific Borates (ASX: 5EA).

Let’s take a look at why this investment company highlighted these shares.

Battery industry power

Fund manager Tribeca Investment Partners has outlined why it favours certain battery metal shares — outside the popular copper and lithium producers — that contribute other elements critical to the production of lithium-ion batteries.

In a livewire report, Tribeca included Syrah Resources, a company that produces the crucial battery element, graphite.

The fund manager also favoured Alpha, which produces high purity aluminum used in battery resources and LED lighting.

Tribeca’s natural resources team predicted the company could “generate greater than $250 million of free cash flow from its products”.

In the report, Tribeca also included boron producer American Pacific Borates on its list of battery metal shares, although the company has since stopped trading on the ASX under this name. In a bid to list on the US NASDAQ exchange in mid-March, all ordinary shares of the company were transferred today to 5E Advanced Materials (ASX: 5EA).

5E Advanced Materials is now the sole shareholder and parent company of American Pacific Borates. The company’s shares are up 1% today.

Speaking to livewire, Tribeca head of research Todd Warren said boron was a key ingredient for solar glass, used in electric vehicle drivetrains and wind turbines. He predicted boron would see “10 times demand growth” over the next few decades.

Share price recap

In the past year, Syrah shares surged 16% and Alpha climbed 1%. Meanwhile, American Borates surged 37.3% in the 12 months preceding yesterday’s market close.

In the year to date, Syrah has dropped 30%, while Alpha has fallen 18%.

For perspective, the  S&P/ASX 200 Index (ASX: XJO) has returned nearly 4% in the past year.

The post Fundie tips ASX battery metal shares that are NOT lithium appeared first on The Motley Fool Australia.

More reading

• Nickel Mines (ASX:NIC) share price plummets 22% as nickel prices go crazy
• ANZ has the largest ASX big four bank dividend yield right now. What?
• 3 beaten-up ASX tech shares that ‘tick all the boxes’: fundies
• ASX 200 (ASX:XJO) midday update: Origin’s $250m buyback, Nickel Mines smashed
• One word for trying times like these

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 Bruce Jackson.

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The Nickel Mines Ltd (ASX: NIC) share price is riding an elevator to the downside on Wednesday during an unprecedented time for the commodity.

At the time of writing, the market has set fire to the nickel miner’s shares, burning away 22.7% of its valuation in the process. In turn, the Nickel Mines share price is now sitting at $1.14 after hitting a new 52-week high of $1.79 only yesterday.

The most confusing part of this disappointing move is that it’s occurring while nickel prices are at record highs. So, what gives?

What is going on with the Nickel Mines share price?

Shareholders of the $3 billion nickel company are probably scratching their heads on Wednesday as shares get pushed into an abyss. The shocking downward move in the Nickel Mines share price doesn’t appear to be a consequence of an announcement.

Adding to the perplexing situation, the price of nickel hit a new all-time high overnight — breaking above US$100,000 per tonne. Most onlookers would take this as a major positive for the ASX-listed nickel company, though, it appears not to be the case.

The chart below paints the dichotomy of the situation vividly.

Instead, it seems the market is more wary than it is excited about the rocketing nickel price. Possibly due to the unprecedented nature of the situation.

The London Metal Exchange decided to cancel nickel trading altogether last night as the runaway commodity price prompts a short squeeze. This follows a curbing in western countries dealing with Russia, which is responsible for ~9% of the world’s nickel production.

Analysts have conveyed expectations of further wildness in the nickel prices to come. For example, BMO analyst Colin Hamilton had this to say:

It is unlikely this is the last of extreme volatility we see in commodity markets

Meanwhile, a Bloomberg journalist shared his disbelief in the crazy scenario on Twitter yesterday, stating:

The three-month price has DOUBLED in less than 48 hours. I’ve been watching this market for 20 years, seen nothing remotely like this.

Now what?

Shares in Nickel Mines have been placed in a trading halt awaiting a further announcement. At this point in time, there is no indication on whether the announcement might be related to this morning’s fall.

The Nickel Mines share price is now down 22% since the beginning of 2022.

The post Nickel Mines (ASX:NIC) share price plummets 22% as nickel prices go crazy appeared first on The Motley Fool Australia.

More reading

• ASX 200 (ASX:XJO) midday update: Origin’s $250m buyback, Nickel Mines smashed
• These 3 ASX 200 shares are topping the volume charts on Tuesday
• 5 ASX mining shares smashing 52-week highs today
• Here’s why the Nickel Mines (ASX:NIC) share price just hit an all-time high
• The price of nickel is soaring and these ASX mining shares are cashing in

Motley Fool contributor Mitchell Lawler 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 Bruce Jackson.

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The big four ASX bank shares have long been held up as the dividend heavyweights of the Australian share market. And perhaps fair enough too. Amongst a list of ASX 200 blue chips over the past decade or two, the big four have consistently ranked as amongst the highest-yielding shares. That’s with a brief hiatus during COVID-ravaged 2020.

But it’s fairly safe to say that bank yields are more or less back to where they used to be. However, it still might come as a surprise to learn that the highest-yielding ASX bank share right now is none other than Australia and New Zealand Banking Group Ltd (ASX: ANZ).

Yes, ANZ currently has a dividend yield of 5.68%. Since ANZ’s last few dividends have come with full franking credits too, this dividend grosses-up to an impressive 8.11%.

In contrast, Westpac Banking Corp (ASX: WBC) shares currently have a dividend yield of 5.38% on the table.

The National Australia Bank Ltd (ASX: NAB) share price offers a dividend yield of 4.41% at today’s levels.

And Commonwealth Bank of Australia (ASX: CBA), the ASX’s largest and most popular bank share, currently offers a dividend yield of 3.88%.

The difference between 5.38% and 3.88% is rather stark, especially by ASX bank standards. So why is ANZ such a good yielder right now?

Why is ANZ the highest yielding big four ASX bank share right now?

Well, it more or less comes down to how investors are pricing bank shares right now. When analysing different companies that all operate in the same sector and industry (such as ASX banks), the price-to-earnings (P/E) ratio is a very useful metric. It allows us to analyse how the market is pricing each bank relative to their respective earnings. A dollar of earnings has the same value, no matter if it is earned by ANZ or CBA.

So right now, CBA has a P/E ratio of 17.79. That means investors are paying $17.79 for every $1 of earnings the bank makes.

Westpac currently has a P/E ratio of 15.8. NAB is sitting at 15.11.

But ANZ is languishing at the bottom of the table with a P/E ratio of just 12.17. That means that investors are prepared to pay $17.79 for every dollar of CBA’s earnings, but only $12.17 for every $1 of ANZ’s.

We looked at some of the reasons why investors aren’t too fond of ANZ shares right now earlier this month. But because of this fact, ANZ shares are right now cheaper on a P/E basis than any of the other big four banks. But cheaper share prices equate to higher dividend yields. That’s because a dividend yield is calculated by dividing a share price by a company’s dividends per share.

This is probably why the ANZ share price is currently offering the highest yield of the ASX 20 big four banks today.

The post ANZ has the largest ASX big four bank dividend yield right now. What? appeared first on The Motley Fool Australia.

More reading

• ASX 200 (ASX:XJO) midday update: Origin’s $250m buyback, Nickel Mines smashed
• The Coles (ASX:COL) dividend beats Woolworths. Does that make it a better income share?
• Why the ASX 200 could outperform the US market for the next 10 years: expert
• 5 things to watch on the ASX 200 on Wednesday
• Here are the top 10 ASX shares today

Motley Fool contributor Sebastian Bowen owns National Australia Bank 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 Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Plenty of the biggest ASX tech shares have had a terrible start to the year. However, some investors are now seeing this selloff as an opportunity to buy beaten-up businesses.

James Delaney, a portfolio manager at Sage Capital, has outlined two technology stocks that look like ones that investors may want to add to their portfolios. QVG Capital’s Chris Prunty outlined another opportunity.

Mr Delaney and Mr Prunty were talking to Livewire about some of these opportunities. Mr Delaney called his ideas “undeniably industry leaders, ticking all the boxes in terms of asset growth and having massive additional earnings growth headroom”:

WiseTech Global Ltd (ASX: WTC)

WiseTech listed several years ago at a price that was thought expensive at 6.5x sales whilst the US 10-year bond rate was “trading on a multiple of 1.8 times”.

The WiseTech share price has grown significantly since listing and has expanded globally. However, the valuation is now 20x sales – its valuation compared to sales has increased three and a half times. The US 10-year is now at 1.86%. Mr Delaney said the reason for the change was how investors look at and value technology stocks.

So, why is the ASX tech share an opportunity?

The fund manager noted that the WiseTech share price has fallen quite a bit recently – it’s down over 20% since the start of 2022 – and the company is expected to keep growing so a fall in the share price makes it more attractive at a lower valuation multiple.

WiseTech is benefiting from the COVID-19 supply chain problems that need to be “untangled”. This shows how useful its software offering is.

Xero Limited (ASX: XRO)

Cloud accounting tech business Xero is another pick by Mr Delaney because of the network effects it has developed.

The fund manager believes that it has managed to create ongoing dominance in the industry in Australia and New Zealand, but it has also been growing in other regions around the world.

In the ASX tech share’s most recent result, the FY22 half-year result, it said that total subscribers had increased by 23% to 3 million.

Xero reported that Australia had 124,000 net subscriber additions to reach 1.24 million subscribers. New Zealand saw an extra 34,000 net subscriber additions to reach a total of 480,000 subscribers. The UK had 65,000 net subscriber additions, taking the total to 785,000. In the rest of the world, Xero saw net subscribers additions of 26,000 to 201,000 with strong progress in South Africa and Singapore.

Yet, the Xero share price has fallen 33% since the start of the year.

Hansen Technologies Limited (ASX: HSN)

Hansen Technologies is an ASX tech share that provides billing software and telecommunication and utility businesses.

It’s reportedly the biggest tech position in the QVG Capital portfolio.

Mr Prunty made a humorous point that Hansen is “super unsexy and boring” but the telcos and utilities would rather “chop off their own arms than get rid of something as integral to their workflows and customer experience as their billing and meter-reading software.

For that reason, Hansen has a very sticky client base. Other positives include that it generates a lot of cash flow, it has done well with acquisitions and it has a forward price/earnings ratio (p/e ratio) of just 7x.

Since the start of 2022, the Hansen share price has fallen by 8%.

In the recent reporting season, the ASX tech share reported that revenue grew by 5% to $148.9 million and underlying net profit after tax (NPAT) increased 13% to $23.6 million.

Over the long-term, it’s aiming to reach $500 million of revenue by 2025 with a long-term earnings before interest, tax, depreciation and amortisation (EBITDA) margin of more than 30% driven by an ongoing focus on profitability and operational leverage as it continues to grow the business.

The post 3 beaten-up ASX tech shares that ‘tick all the boxes’: fundies appeared first on The Motley Fool Australia.

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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. owns and has recommended Hansen Technologies, WiseTech Global, and Xero. The Motley Fool Australia owns 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 Bruce Jackson.

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