Category: Stock Market

I’m a big fan of buy and hold investing and believe it is the best way for investors to grow their wealth.

To demonstrate how successful it can be, I like to pick out a number of popular ASX shares to see how much a single $20,000 investment 10 years ago would be worth today.

This time around I have picked out the two ASX shares that are listed below:

Altium Limited (ASX: ALU)

After struggling in its early years, it has been onwards and upwards for this electronic design software company over the last 10 years. This has been driven by increasing demand for platforms that help design the printed circuit boards (PCBs) found inside almost all electronic devices. And with the Internet of Things and AI markets underpinning an explosion in electronic devices globally, demand is only expected to increase over the next decade. This bodes very well for Altium, given how its platforms are widely regarded as head and shoulders above the competition.

Altium’s strong growth over the last decade has led to its shares thoroughly outperforming the market average. During this time, the Altium share price has generated an average total return of 83.2% per annum. This would have turned a $20,000 investment into a staggering $8.5 million.

Pro Medicus Limited (ASX: PME)

Pro Medicus is a leading provider of radiology information systems (RIS), Picture Archiving and Communication Systems (PACS), and advanced visualisation solutions across the globe. Over the last 30 years, the company has been helping its clients deliver first-rate patient care by enhancing and streamlining medical practice management. Pleasingly, demand for Pro Medicus’ technology continues to increase as healthcare institutions shift away from legacy systems. This has led to many of the largest health institutions in the world signing long-term contracts in recent years.

And it isn’t hard to see why. Pro Medicus’ products and services combine speed, scalability, stability and smarts to help eliminate administrative tasks and workarounds, optimise the efficiency of clinical and administrative staff, and maximise profits.

This has resulted in strong sales and profit growth, underpinning stellar returns for its lucky shareholders. Over the last 10 years, the Pro Medicus share price has generated an average total return of 76.1% per annum. This means $20,000 invested into its shares in 2011 would be worth a massive $5.7 million today.

The post Investing $20k into these ASX shares 10 years ago would have made you very rich appeared first on The Motley Fool Australia.

More reading

• 3 stellar ASX growth shares named as buys
• Pro Medicus (ASX:PME) share price jumps 7% following broker notes
• Top brokers name 3 ASX shares to sell today
• Why Afterpay, Core Lithium, De Grey Mining, & Pro Medicus are storming higher
• ASX 200 Weekly Wrap: ASX makes it 5 out of 5

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. owns shares of and has recommended Altium and Pro Medicus Ltd. The Motley Fool Australia owns shares of and has recommended Altium and Pro Medicus Ltd. 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) was out of form last week and tumbled lower. The benchmark index recorded a 0.8% decline over the five days, closing the period at 7,308 points.

Not all ASX 200 shares dropped lower with the market. Here’s why these were the best performers on the index last week:

Afterpay Ltd (ASX: APT)

The Afterpay share price was the best performer on the ASX 200 last week with a gain of 12.8%. Investors were buying the payments company’s shares after it announced the expansion of its one-time card footprint. Afterpay will now let users shop with 12 of the most popular and largest merchants in the United States. This includes Amazon, Nike, Nordstrom, Target, and Walgreens. Combined, the new additions represent almost half of all U.S. ecommerce volume.

Kogan.com Ltd (ASX: KGN)

The Kogan share price was on form at long last, recording an 11.1% gain over the five days. A good portion of this gain came at the end of the week following the outbreak of COVID-19 in Sydney. Investors appear to believe that Kogan could benefit from consumers having to shop online during lockdown.

Boral Limited (ASX: BLD)

The Boral share price was a very positive performer last week, rising 8.3% over the period. It certainly was an eventful week. At the start of the week, the building products company announced an agreement to sell its North American Building Products business to Westlake Chemical Corporation. According to the release, the two parties have agreed a fee of US$2.15 billion (~A$2.9 billion). This is expected to lead to a significant surplus in capital, which could be returned to shareholders via a distribution. Late on in the week, Seven Group Holdings Ltd (ASX: SVW) revealed that it would increase its takeover offer to $7.40 under certain circumstances.

Adbri Ltd (ASX: ABC)

The Adbri share price wasn’t far behind with a gain of 6.8% over the five days. This was despite there being no news out of the building materials company. However, with Seven Group lifting its takeover proposal for Boral, investors may also believe it deserves to trade on higher multiples and were bidding it higher.

The post These were the best-performing ASX 200 shares last week appeared first on The Motley Fool Australia.

More reading

• These were the worst-performing ASX 200 shares last week
• ASX 200 rises, Charter Hall up, Boral jumps
• Crude to $100 per barrel? 3 ASX 200 oil shares trading well below pre-COVID levels
• The Stockland (ASX:SGP) share price hit a new 52-week high today
• Here are some of the most actively traded 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. owns shares of and has recommended AFTERPAY T FPO and Kogan.com ltd. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO and Kogan.com ltd. 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) ran out of steam last week and took a bit of a tumble. The benchmark index fell 0.8% over the five days to 7,308 points.

While a good number of shares dropped lower with the market, some fell more than most. Here’s why these were the worst performers on the index last week:

Woolworths Group Ltd (ASX: WOW)

The Woolworths share price was the worst performer on the ASX 200 last week with a decline of 13.8%. However, this is not ordinary decline. This decline was caused by the spin-off of its drinks business. This saw Endeavour Group Limited (ASX: EDV) join the ASX 200 index on Thursday, with Woolworths’ shareholders receiving one Endeavour Group share for every Woolworths share they hold.

Codan Limited (ASX: CDA)

The Codan share price was the next worst performer with a decline of 8.8% over the five days. Investors may have been selling the metal detector-focused technology company for a couple of reasons. One is the weakening gold price outlook, which investors may fear could soften demand for its metal detectors. Also potentially weighing on its shares was some recent and significant insider selling by its CEO.

Nuix Ltd (ASX: NXL)

The Nuix share price wasn’t far behind with an 8.6% decline last week. This means the embattled investigative analytics and intelligence software provider’s shares are now down 70.2% since the start of the year. This latest decline appears to have been driven by news that a search warrant was executed at Nuix’s Sydney office seeking documents. Though, it is worth noting that it advised that this is in relation to an investigation into the affairs of an individual and does not relate to any allegation of wrongdoing by Nuix.

Mesoblast limited (ASX: MSB)

The Mesoblast share price was out of form and dropped 6.9% over the period. This was despite there being no news out of the biotechnology company last week. Though, with its shares still up over 14% since this time last month, this decline could have been caused by profit taking from some investors.

The post These were the worst-performing ASX 200 shares last week appeared first on The Motley Fool Australia.

More reading

• ASX 200 rises, Charter Hall up, Boral jumps
• Crude to $100 per barrel? 3 ASX 200 oil shares trading well below pre-COVID levels
• The Stockland (ASX:SGP) share price hit a new 52-week high today
• Here are some of the most actively traded ASX 200 shares today
• Why New Hope, Nuix, Pilbara Minerals, & Woolworths shares are dropping

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 Nuix Pty Ltd. The Motley Fool Australia has recommended Nuix Pty Ltd. 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) rose by 0.5% to 7,308 points.

Here are some of the highlights from the ASX:

Charter Hall Group (ASX: CHC)

The Charter Hall share price went up more than 2% after an update.

The ASX 200 real estate management outfit said that its funds under management (FUM) has increased after property revaluations.

It said that the FUM will see gross valuation increases of $3.3 billion, including $0.6 billion of development capital expenditure, which is expected to see group FUM rise to approximately $52 billion as at 30 June 2021.

Group FUM has increased $12 billion over the course of FY21, resulting in 28% growth of FUM.

Charter Hall’s CEO and managing director David Harrison said:

Today’s valuation outcomes demonstrate the success of our investment selection process. We’ve seen impressive valuation gains across most sectors, delivering strong returns for our investors. Our focus on securing long-leased assets to high quality tenants, often secured through off-market sale-and-leaseback transactions, or through our develop-to-core development pipeline, continues to deliver attractive enhanced returns. The net valuation growth for FY21 of $3.7 billion in addition to the $1.8 billion of capex during FY21 has complemented the $7.8 billion of acquisitions and $1.8 billion of divestments, resulting in $6 billion of net acquisitions for FY21 to date.

Boral Limited (ASX: BLD)

The Boral share price went up around 6% after receiving a higher takeover offer from Seven Group Holdings Ltd (ASX: SVW).

Seven Group announced an extension to its takeover offer to 2 July 2021.

Seven Group said that if it receives acceptances under its offer is sufficient to increase its aggregate interest in Boral shares to 29.5% or more before 5pm on 2 July 2021, it will increase its offer to $7.30 cash per Boral share.

It will increase the offer to $7.40 per share if the acceptances increases Seven’s interest of Boral shares to 34.5% or more.

Star Entertainment Group Ltd (ASX: SGR)

The Star share price went up 0.3% today.

After the market closed, Star Entertainment gave an update about The Star Sydney’s operating restrictions.

The ASX 200 casino operator noted the NSW Government’s announcement of a seven day stay-at-home order that applies to four local government areas (LGAs) including The Star Sydney and takes effect from 11:59pm on 25 June 2021.

The orders also detail that people should only enter the four LGAs for essential purposes.

It will cease operations, apart from limited hotel facilities. This will remain in place until at least 11:59pm on 2 July 2021.

The Star will continue to pay staff during the seven day stay-at-home period.

The post ASX 200 rises, Charter Hall up, Boral jumps appeared first on The Motley Fool Australia.

More reading

• Crude to $100 per barrel? 3 ASX 200 oil shares trading well below pre-COVID levels
• The Stockland (ASX:SGP) share price hit a new 52-week high today
• Here are some of the most actively traded ASX 200 shares today
• Boral (ASX:BLD) share price surges 6% on changes to Seven takeover bid
• ASX 200 up 0.3%: CSL downgraded, Zip drops, Charter Hall impresses

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Are you looking to add a small cap share or two to your portfolio? If you are, then you might want to look closely at the shares listed below.

Here’s why analysts are positive on these small cap shares:

Audinate Group Limited (ASX: AD8)

The first small cap share to look at is Audinate. It is the leading provider of professional digital audio networking technologies globally.

Audinate’s Dante platform distributes digital audio signals over computer networks. It has been designed to bring the benefits of IT networking to the professional AV industry. The company notes that using Dante-enabled products ensures interoperability between audio devices and allows end users to enjoy high quality, flexible solutions.

The quality of Dante is ahead of the competition by such a distance that there are now more than 3,000 different products incorporating Dante for audio-over-IP connectivity. This makes it the protocol of choice in more than 91% of the networked audio products currently available.

Analysts at UBS are positive on the company and currently have a buy rating and $10.40 price target on its shares. This compares to the latest Audinate share price of $8.28.

Volpara Health Technologies Ltd (ASX: VHT)

Another small cap ASX share to watch is Volpara Health Technologies. It is a healthcare technology company that uses artificial intelligence imaging algorithms to assist with the early detection of breast and lung cancer.

Volpara has been growing its annualised recurring revenue (ARR) at a quick rate for a number of years and this continued in FY 2021 despite the pandemic.

Looking ahead, thanks to acquisitions and its growing product suite, the company appears well-positioned to continue its strong growth in the years to come. Especially considering its ever-improving average revenue per user metric.

Management certainly appears to believe this is the case. It estimates that it has a US$750 million ARR opportunity in breast cancer screening alone. This gives it a significant runway for growth over the next decade.

Morgans is a fan of Volpara and has an add rating and $1.87 price target on the company’s shares. This compares to the current Volpara share price of $1.17.

The post 2 buy-rated small cap ASX shares tipped for strong growth appeared first on The Motley Fool Australia.

More reading

• 3 small cap ASX shares worth watching closely
• 2 excellent ASX healthcare shares named as buys
• 3 exciting small cap ASX shares to watch this month
• 2 small cap ASX shares that are growing quickly
• 2 excellent small cap ASX shares to watch very closely

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. owns shares of and has recommended AUDINATEGL FPO and VOLPARA FPO NZ. The Motley Fool Australia owns shares of and has recommended AUDINATEGL FPO and VOLPARA FPO NZ. 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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Investors looking to bolster their portfolio with some blue chip ASX 200 shares might want to take a look at the three listed below.

Here’s why these blue chips are highly rated:

CSL Limited (ASX: CSL)

The first blue chip ASX share to consider is CSL. It is one of the world’s leading biotechnology companies, comprising two businesses – CSL Behring and Seqirus. CSL Behring is the number one player in a global plasma therapies industry worth a massive US$30 billion per year. Whereas Seqirus is the number two player in the US$6 billion global influenza vaccines industry. CSL has been tipped for solid long term growth thanks to increasing demand for its therapies and its lucrative R&D pipeline.

UBS is positive on CSL. It currently has a buy rating and $330.00 price target on its shares.

NEXTDC Ltd (ASX: NXT)

Another blue chip share to look at is NEXTDC. It is a leading data centre operator with world class operations across key Australian location. It has also recently opened offices in Singapore and Tokyo, with a view to expanding into these markets. If this expansion is a success, it could give it a very long runway for growth over the next decade. Particularly given the increasing demand for data centre services due to the structural shift to the cloud.

Goldman Sachs is a big fan. This morning it reiterated its conviction buy rating and $14.80 price target on its shares.

SEEK Limited (ASX: SEK)

A final blue chip ASX share to consider is this job listings giant. It could be a great long term investment option thanks to its investments in growth opportunities and its domination of the ANZ market. The latter is a big positive given Australia’s strong economic recovery from the pandemic. With unemployment levels tipped to reduce materially over the next few years, job ad volumes are tipped to rise strongly.

Macquarie recently upgraded the company’s shares to an outperform rating with a $40.00 price target.

The post 3 blue chip ASX 200 shares that brokers rate as buys appeared first on The Motley Fool Australia.

More reading

• The CSL (ASX:CSL) share price has fallen 7% this week
• ASX 200 up 0.3%: CSL downgraded, Zip drops, Charter Hall impresses
• Leading broker tips NEXTDC (ASX:NXT) share price to race higher
• 5 things to watch on the ASX 200 on Friday
• CSL (ASX:CSL) share price falls on broker downgrade

Motley Fool contributor James Mickleboro owns shares of NEXTDC Limited and SEEK Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended CSL Ltd. The Motley Fool Australia has recommended SEEK 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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I like to keep an eye on substantial shareholder notices. This is because these notices give you an idea of which shares large investors, asset managers, and investment funds are buying or selling.

Two notices that have caught my eye are summarised below. Here’s what this fund manager has been buying:

Bapcor Ltd (ASX: BAP)

A change of interests of substantial holder notice reveals that AustralianSuper has been increasing its stake in this auto parts retailer.

According to the notice, the super fund has added approximately 3.5 million shares to its holding over the last three months. This means that AustralianSuper now owns a total of 24,130,659 Bapcor shares, which is the equivalent of a 7.11% interest.

AustralianSuper was purchasing shares as recently as 22 June when it picked up 277,207 shares at an average of $8.31 per share. This is broadly in line with the latest Bapcor share price of $8.34.

Analysts at Citi would be supportive of these purchases. The broker currently has a buy rating and $9.50 price target on its shares.

Reject Shop Ltd (ASX: TRS)

Another change of interests of substantial holder notice reveals that WAM Capital Limited (ASX: WAM) has taken advantage of recent weakness in the Reject Shop share price to top up its position.

The notice shows that WAM picked up ~450,000 Reject Shop shares since February, lifting its holding to 3,456,359 shares. This represents a 9.03% stake, up from 7.87% previously. WAM was buying shares as recently as Monday when the Reject Shop share price dropped to a 52-week low. Judging by its purchases, WAM’s analysts appear to believe its shares have been oversold.

Morgan Stanley certainly believes this is the case. Last week the broker put an overweight rating and lofty $10.00 price target on its shares. This compares to the latest Reject Shop share price of $5.37.

The post Fund managers are buying these ASX shares appeared first on The Motley Fool Australia.

More reading

• These ASX shares are growing their dividends at a solid rate
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• ASX 200 rises, Appen drops, Reject Shop discounted
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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 owns shares of and has recommended Bapcor. 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 Bitcoin (CRYPTO: BTC) price has rebounded over the past 24 hours, up 5% to US$34,533 (AU$45,438).

Today’s gains will come as welcome news to Bitcoin holders, who watched the price of the world’s biggest digital token drop below US$29,460 on Tuesday.

While Bitcoin has now gained 17% since Tuesday’s lows, it remains down 47% from mid-April’s US$64,829 all-time high.

Of course in the volatile world of cryptocurrencies, not all of the top-100 tokens gained today. While some gained far more than Bitcoin’s 5%.

This crypto blew away Bitcoin’s 5% gains today

Today’s best performing crypto is…drum roll please…Celo (CRYPTO: CELO).

One Celo is currently worth US$2.83. That’s up 25% in the past 24 hours, or 5 times more than what Bitcoin has gained.

While Celo is small in comparison to its big siblings like Bitcoin and Ethereum (CRYPTO: ETH), its market cap of US$695 million is nothing to sneeze at. And it ranks as the 85th largest crypto in virtual circulation.

So what exactly is Celo?

For that we turn to CoinMarketCap, which tells us:

Celo is a blockchain ecosystem focused on increasing cryptocurrency adoption among smartphone users.

By using phone numbers as public keys, Celo hopes to introduce the world’s billions of smartphone owners, including those without banking access, to transacting in cryptocurrency.

Celo is a relative newcomer to the crypto space, launched in May 2020.

While today’s 25% price gains are impressive, as a handy reminder of the inherent volatility in crypto prices, Celo was worth US$6.18 on 18 May this year. Meaning the price is down 55% in just 5 weeks.

So if you’re going to be an investor in Celo, Bitcoin or other cryptos, make sure you do it with money you can afford to lose.

The post This crypto blew away Bitcoin’s 5% gains today appeared first on The Motley Fool Australia.

More reading

• Bitcoin’s misfortunes spreading pain across the globe
• Six things investors need to know before investing in cryptocurrencies
• Following another wild night, the Ethereum price is gaining…for now
• Here’s Why Bitcoin, Ethereum, and Dogecoin Crashed Tuesday
• Ignore the ‘death cross’…here’s why the Bitcoin price is crashing

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Bitcoin. 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 Xero Limited (ASX: XRO) share price has been a strong performer over the last 12 months.

Since this time last year, the cloud-based business and accounting platform provider’s shares are up 53%.

Why has the Xero share price been on fire over the last 12 months?

The strong gain by the Xero share price over the last 12 months has been driven largely by the company’s impressive performance during FY 2021.

For the 12 months ended 31 March, Xero reported an 18% increase in revenue to NZ$848.8 million. This was driven largely by its Australian, UK, and Rest of the World operations, which all reported strong revenue growth year on year.

This strong top line growth was underpinned by a 20% increase in subscribers to 2.74 million. This reflects a 20% increase in ANZ subscribers to 1.56 million and a 21% increase in International subscribers to 1.18 million.

And thanks to the achievement of further operating leverage, Xero reported a 39% jump in earnings before interest, tax, depreciation and amortisation (EBITDA) of NZ$191.2 million.

Can its shares go higher?

One broker that believes the Xero share price may now have peaked for the time being is Citi.

According to a recent note, its analysts have retained their neutral rating and $135.70 price target on its shares. This compares unfavourably to the current Xero share price of $136.94.

While the broker is a fan of Xero and believes demand for its platform is increasing, it appears to believe its valuation is getting stretched.

Citi commented: “We see the demand backdrop for Xero as positive driven by improving SMB trends as economies open up, strength in business formation boosting new customer acquisition and low insolvencies/bankruptcies keeping churn in check. Further, FY22e revenue growth should benefit from the PlanDay acquisition (3% impact). However, with the stock trading on 19x FY22e revenue, we do not see the risk-reward as compelling and maintain our Neutral rating.”

The post Up 53% in 12 months: Can the Xero (ASX:XRO) share price go even higher? appeared first on The Motley Fool Australia.

More reading

• 2 excellent ASX 200 blue chip shares to consider
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• ASX 200 Weekly Wrap: ASX makes it 5 out of 5

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. owns shares of and has recommended Xero. The Motley Fool Australia owns shares of and has recommended 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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S&P/ASX 200 Index (ASX: XJO) oil shares took some of the biggest hits on the ASX during the initial fallout from the COVID-19 pandemic.

Oil prices fell through the floor. Demand dried up almost overnight as global lockdowns and border closures grounded aircraft and left cars sitting in their garages for weeks at a time. 

On 3 January 2020, a barrel of Brent crude was selling for US$68.60 (AU$90.26 at today’s exchange rate). By 24 February, that same barrel was selling for US$21.44, a fall of 59%.

Little wonder that ASX 200 oil shares took a bath in the early months of 2020.

How these 3 ASX 200 oil shares moved in the wake of the pandemic

For the purposes of this article, I’ve put the microscope on the 3 biggest ASX 200 oil shares. Namely:

• Woodside Petroleum Ltd (ASX: WPL), with a market cap of $21.8 billion
• Santos Ltd (ASX: STO), with a market cap of $15.0 billion
• Oil Search Ltd (ASX: OSH), with a market cap of $7.9 billion

So, how did these powerhouse ASX 200 oil shares perform early on in 2020?

Not well!

The Woodside share price crashed 54% from 3 January through to its 20 March 2020 low. The Santos share price crumbled 64% over that same time frame. The Oil Search share price fell a gut-wrenching 69%.

Now all 3 of these ASX 200 oil shares have delivered sizeable gains to investors who bravely picked up their shares at these lows.

Woodside has gained 41% since 20 March 2020; Santos has gained 132%; and Oil Search shares are up 66%. By comparison, the ASX 200 has gained 52% over this period.

But here’s the thing.

All 3 oil majors are still trading well below their pre-COVID levels, even as the oil price has surpassed its early 2020 level.

Oil price rockets back but ASX 200 oil shares lag

Today, a barrel of Brent crude is fetching US$75.76.

I’ll save you scrolling back up to the top and tell you that’s more than 10% higher than the US$68.60 per barrel Brent was trading for at the start of 2020. 

Yet, while they’ve posted large gains since the lows, these 3 ASX 200 oil shares have yet to recoup much of their pandemic-driven losses.

The Woodside share price is still down 35% from 3 January 2020. Santos shares remain down 15%. The Oil Search share price is down 48% since the beginning of 2020.

With the Brent crude price up 10% in that same time, many analysts are forecasting even higher oil prices ahead.

Why crude oil could hit US$100 per barrel

Forecasting longer term energy prices is right up there with forecasting longer term foreign exchange fluctuations. In other words, there are a heck of a lot of variables at play.

But in the medium term, analysts can get a decent handle on likely potential price moves by gauging basic supply and demand dynamics.

On the demand side, the world is beginning to reopen amid vaccine rollouts. Should that reopening continue without major glitches from COVID variants, pent up demand for domestic and international travel should continue to put upward pressure on crude oil prices.

On the supply side, US shale production remains well below pre-pandemic levels. In addition, OPEC+ is, at the moment, still restricting output from its members. While the cartel might opt to increase supply when it meets next week, expectations are that any increase will be modest.

Petrol stockpiles in the United States, the world’s biggest economy, are also down.

As Bloomberg reports:

[A] U.S. government report earlier showed crude supplies, gasoline inventories and stockpiles at the nation’s largest storage hub at Cushing, Oklahoma, all tumbled last week, reinforcing the expectation of limited supply during the summer driving season.

Tuesday’s Qatar Economic Forum also reinforced the notion that crude oil prices could go higher, all the way to US$100 a barrel. During the forum, leaders of major oil firms cited a lack of investment in oil and gas projects as putting upward pressure on prices.

There’s “quite a chance” crude will reach $100 a barrel, TotalEnergies SE Chief Executive Officer Patrick Pouyanne said at the Forum.

The International Energy Agency has also forecast a crude supply crunch in the second half of 2021, if new supply doesn’t come online.

India, the world’s second most populous nation, is already struggling with high energy costs. The country is amongst those urging OPEC+ to open the taps wider.

From Bloomberg:

India has once again urged OPEC and its allies to revive halted oil production as the world’s third-biggest consumer expressed “deep concern” over spiraling energy prices.

“High crude prices are adding significant inflationary pressure on India,” Oil Minister Dharmendra Pradhan told OPEC’s top official.

Foolish takeaway

There are many different factors that determine the price of individual ASX 200 oil shares.

The price of the black gold they pump from the ground is undoubtedly a major influence on oil share prices.

If TotalEnergies’ Patrick Pouyanne has it right and crude heads back to US$100 per barrel — some 32% above today’s price – it should provide some healthy tailwinds for ASX 200 oil shares.

The post Crude to $100 per barrel? 3 ASX 200 oil shares trading well below pre-COVID levels appeared first on The Motley Fool Australia.

More reading

• The Stockland (ASX:SGP) share price hit a new 52-week high today
• Here are some of the most actively traded ASX 200 shares today
• Woodside among ASX energy shares claiming financiers are pulling the pin
• ASX 200 up 0.3%: CSL downgraded, Zip drops, Charter Hall impresses
• 5 things to watch on the ASX 200 on Friday

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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