The Fortescue Metals Group Limited (ASX: FMG) share price has been on an incredible run since the end of October 2022, rising by around 50%. But, will the iron ore ASX share be able to keep it going?

Last week the company hit a 52-week high. This came after the miner announced a record quarter, delivering its best-ever half-year operating performance.

Iron ore shipments were 49.4 million tonnes in the second quarter of FY23, with 96.9mt of iron ore shipments in the first half of FY23. This was 4% higher than the first half of FY22.

It experienced average revenue of US$87 per dry metric tonne (dmt), compared to C1 costs of US$17.17 per wet metric tonne (wmt).

Can the Fortescue share price keep rising?

Some analysts don’t think so. The Australian reported on a recent broker change on the business, Credit Suisse reduced its rating to underperform with a price target of $17.20. That suggests the Fortescue share price could fall by more than 20% over the next year.

One of the main things that Fortescue is working on is its green energy plans to produce large quantities of green hydrogen, as well as becoming a leader of high-performance batteries through its WAE division.

However, It was reported by the Australian Financial Review that Plug Power is no longer going to be the 50% partner in the Gladstone project where Fortescue Future Industries (FFI) wants to make electrolysers. This means FFI will have to make the factory alone, and use technology FFI has invented.

Electrolysers are used to split water into oxygen and hydrogen.

Management unfazed

But, Fortescue is still very confident about the future.

The AFR reported that the boss of FFI, Mark Hutchinson, said that Plug’s withdrawal would not affect the delivery schedule, with the first electrolysers planned for this year. The newspaper quoted Hutchinson, who said:

The feeling really was that we were advanced on our own technology and the IP [intellectual property] was ours and we can do it at scale.

We want to control our own destiny. Our demand is going to be huge, we think there is enormous value in owning the technology and it is going to develop very, very quickly.

I believe we can get the best economics out of our electrolyser facility, Andy [Marsh] has a different view, that is fine, so bring it on.

We have learnt a lot since the discussions with Plug Power, we love Andy [Marsh], we have a relationship ongoing with Plug Power, they will still supply us with electrolysers on some of our projects.

We are going to need all the OEMs [original equipment manufacturers] to chip in at some stage.

The exciting thing is it’s going to be Australian technology.

Fortescue share price snapshot

After the strength of the share price movement, the Fortescue market capitalisation has reached almost $70 billion.

The post Has the Fortescue share price topped out? appeared first on The Motley Fool Australia.

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More reading

• Fortescue share price hits 52-week high on record half
• 5 things to watch on the ASX 200 on Friday
• How much profit could Fortescue shares make in 2023?
• ASX passive income: My game plan to reach $30,000 per year
• Why a merger between Fortescue and this major-league miner could make sense: expert

Motley Fool contributor Tristan Harrison has positions in Fortescue Metals Group. 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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The good news for investors is that there are a number of quality ASX dividend shares to choose from on the Australian share market to give your passive income a boost.

Two that have been tipped as buys are listed below. Here’s what analysts are saying about them:

Charter Hall Long WALE REIT (ASX: CLW)

The first ASX dividend share that could be a buy for a passive income boost is the Charter Hall Long Wale REIT.

The Charter Hall Long Wale REIT is a property company with a focus on high quality real estate assets that are leased to corporate and government tenants on long term leases.

Analysts at Citi are positive on the company and have a buy rating and $5.00 price target on its shares.

Citi likes the REIT due to its “low risk income stream with c. 12 year WALE and 99.9% occupancy.” The broker also highlights the company’s significant discount to its net tangible assets.

Another positive is that Citi is expecting the Charter Hall Long Wale REIT to provide investors with some very big dividend yields in the near term.

Citi is forecasting dividends per share of 28 cents in FY 2023 and 29 cents in FY 2024. Based on the current Charter Hall Long Wale REIT share price of $4.55, this will mean yields of 6.15% and 6.4%, respectively.

Telstra Corporation Ltd (ASX: TLS)

Another ASX dividend share that could be a top option for income investors is Telstra.

The team at Morgans is positive on the telco giant and believes its shares are trading at an attractive level given its materially improved outlook and potential value-unlocking divestments.

In respect to the latter, the broker believes “TLS’s high quality long life assets like InfraCo are worth substantially more” than the market is currently valuing them.

Its analysts appear to believe that this won’t be the case for long and expect Telstra’s recent restructure to help unlock their value. As a result, the broker has put an add rating and $4.60 price target on its shares.

In respect to dividends, Morgans is expecting Telstra to continue to pay fully franked 16.5 cents per share dividends in FY 2023 and FY 2024. Based on the current Telstra share price of $4.09, this equates to yields of 4%.

The post Generate passive income with these quality ASX 200 dividend shares: brokers appeared first on The Motley Fool Australia.

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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 has positions in and has recommended Telstra Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Woodside Energy Group Ltd (ASX: WDS) share price has been a great performer since the start of 2022. It’s up by more than 60%.

It has gone on a great run, but the question is whether the business will be able to keep it going or if this is as good as it’s going to be.

Energy prices push Woodside share price higher

Woodside has benefited from the demand for energy over the past year. There was stronger demand for resources like LNG. The ability of the world to create enough green energy is still a while away, though Woodside is playing its part in that objective.

The latest update from a business is usually the one that investors give the most meaning to.

In the company’s fourth quarter, the three months to 31 December 2022, it said its production was up 0.7% from the third quarter of 2022 to 51.6 million barrels of oil equivalent (MMboe).

It reported that it achieved a portfolio average realised price of $98 per barrel of oil equivalent.

This update meant that Woodside achieved full-year production of 157.7 MMboe, which beat the production guidance of 153 MMboe to 157 MMboe because of “strong operational performance in the fourth quarter”.

It also said that it continues to make progress with its projects of Scarborough, Pluto train 2 and Sangomar.

Is it still a good buy?

For shareholders that have owned shares for a while, they’ve had a great 13 months.

The company’s 2023 production guidance for 2023 is 180 MMboe to 190 MMboe, partly thanks to the acquisition of the BHP Group Ltd (ASX: BHP) oil and gas division.

According to Commsec, Woodside shares are valued at close to 9 times FY23’s estimated earnings with a potential grossed-up dividend yield of 10.6%.

However, the projections also show Woodside’s earnings per share (EPS) dropping by around 15% in FY24 and then falling another approximately 15% in FY25.

So, the question is – How long will the energy price stay elevated? Long-term good prices should enable the business to keep earning big profits and paying large dividends.

The analyst recommendations that Commsec covers still seem quite positive about the business, with nine buy ratings, seven hold ratings and four sell ratings. One of the recommendations covered by Commsec is Goldman Sachs’ buy rating, with a price target of $38.50.

For me, if I were wanting to try to generate outperformance, I’d want to buy low, sell high with this resource share. The Woodside share price has jumped higher, so I think it’d be worthwhile to be patient and wait for a lower price.

The post Is now the time to load up on Woodside shares? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Monday
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• Consumer spending defies logic as inflation rages higher, locking in yet another interest rate hike in February
• Woodside share price rises on record FY22 production and revenue
• 5 things to watch on the ASX 200 on Wednesday

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. 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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There has been plenty of volatility over the last year, which has opened up a number of opportunities to buy ASX shares at much cheaper prices.

Share prices are meant to go up and down, but there can be the occasional year when there’s a big drop for most businesses on the share market. Prices don’t usually stay low forever, which means this could be an opportunistic time to invest.

Some of the biggest opportunities may be found with the ones that have fallen quite significantly.

Here are two ASX share ideas to consider that could deliver growth over the next few years and beyond.

VanEck Video Gaming and Esports ETF (ASX: ESPO)

I think this is one of the most exciting exchange-traded funds (ETFs) on the ASX. It gives investors access to a portfolio of businesses involved with video gaming and e-sports.

Some of the businesses involved may be known to readers as creators of past and current leading games such as Activision Blizzard, Nintendo, Electronic Arts, Take-Two Interactive, and Bandai Namco. There are also other businesses involved in the gaming world, including ASX shares such as Tencent, Nvidia, and Advanced Micro Devices.

While the US has the biggest weighting at just over 40% of the portfolio, it’s a smaller allocation than other global ETFs may have. Other countries that have a sizeable weighting include Japan (21.4%), China (19%), Australia (4.2%), and Singapore (4.1%).

VanEck research shows there are more than 2.7 billion active gamers worldwide. The top e-sport tournaments are seeing crowds that reportedly rival the World Cup and the Olympic Games. Video gaming has achieved 12% average annual revenue growth since 2015. This is a good driver for earnings. Meanwhile, e-sports has created new potential revenue streams from game publisher fees, media rights, merchandise, ticket sales, and advertising.

After a 32% drop for the ETF since November 2021, I think this industry is now very attractively priced.

Bubs Australia Ltd (ASX: BUB)

Bubs is an ASX share that is seeing its revenue rapidly grow. The latest example of this was in the FY23 first quarter where its gross revenue increased 28% and infant formula revenue went up 109% year over year.

Impressively, the company is growing its market share in Australia, the USA, and China. In its Australian retail channel, it achieved a market share of 56% of the total goat formula category while in the USA, its market share was 0.4%, but 9% of the organic and health formula category in its first 13 weeks in the country.

With its Chinese revenue, the company saw daigou (private trader) infant formula gross revenue rise 20% in the first quarter.

I think the ASX share is taking the right steps to become a much bigger business in the coming years if it can keep gaining market share in its most profitable segment – infant formula. If it can achieve even half the success of A2 Milk Company Ltd (ASX: A2M), then it would do very well.

With the Bubs share price down 45% since mid-August 2022, I think it looks better value.

The post I think these 2 ASX shares are steals appeared first on The Motley Fool Australia.

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• Time to return to tech? Here are 2 ASX tech ETFs to buy
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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. has positions in and has recommended Activision Blizzard, Advanced Micro Devices, Nvidia, Take-Two Interactive Software, and Tencent. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Electronic Arts and Nintendo and has recommended the following options: long January 2023 $115 calls on Take-Two Interactive Software. The Motley Fool Australia has recommended VanEck Vectors Video Gaming And eSports ETF, A2 Milk, Activision Blizzard, Bubs Australia, and Nvidia. 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 last five years have been good to the BHP Group Ltd (ASX: BHP) share price. In the meantime, the iron ore giant has been handing investors some pretty generous dividends.

Shares in the S&P/ASX 200 Index (ASX: XJO) icon were trading for just $30.81 in late January 2018.

Today, they’re swapping hands for $49.54 – approximately 61% higher than this time five years ago.

That means a $5,000 investment back then would be worth $8,025.48 today.

But what about the dividends? Let’s take a look at the total return – including dividends – a long-term investor has likely received from BHP shares.

All dividends offered by BHP shares since 2018

Here’re all the dividends BHP shareholders probably received over the last five years:

BHP dividends’ pay date	Type	Dividend amount
September 2022	Final	$2.55
March 2022	Interim	$2.08
September 2021	Final	$2.71
March 2021	Interim	$1.31
September 2020	Final	75.4 cents
March 2020	Interim	99.4 cents
September 2019	Final	$1.13
March 2019	Interim	78.1 cents
January 2019	Special	$1.41
September 2018	Final	88.5 cents
March 2018	Interim	70.6 cents
Total:		$15.31

As the chart above shows, each BHP share has been the bearer of $15.31 in dividends since January 2018. That means a $5,000 investment in the stock back then has likely yielded $2,480.22 of passive income.

That also means our figurative investor has probably realised a return on investment (ROI) of around 110% in time, factoring in both share price gains and dividends.

And that could have been boosted if they had of compounded their dividends, perhaps using the ASX 200 company’s dividend reinvestment plan (DRP). Not to mention, the fully franked payouts might have provided extra benefits come tax time.

BHP shares currently boast a whopping 9.35% dividend yield.

The post Invested $5,000 in BHP shares 5 years ago? Here’s how much passive income you’ve earned 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 BHP share price in the green today?
• How to generate $50,000 of passive income from BHP shares
• The BHP share price has had a stellar start to 2023. Is it too late to buy?
• Investing in ASX 200 copper shares? Here’s the outlook for the red metal in 2023

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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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I think there are some ASX growth shares that are destined for considerable growth in the coming years.

With the two ideas I’m going to write about in this article, the shares are exposed to useful tailwinds that could be a boost for revenue and earnings. This can then lead to share price growth and dividend growth.

We don’t know what share prices are going to do. But if operating profitability continues to grow then I think investors can do well with these two ASX growth shares.

Australian Ethical Investment Ltd (ASX: AEF)

Australian Ethical seems like one of the most promising fund managers on the ASX in my opinion.

It aims to provide investors with investment options that are highly ethical and align with investor ethics.

I think the best part of the business is the amount of superannuation funds under management (FUM) that it is responsible for. The tax-beneficial nature of superannuation, as well as the mandatory superannuation guarantee contributions, lead me to believe that this segment of its FUM will keep rising.

At 31 December 2022, it had $8.37 billion of FUM, with $6.5 billion of that being superannuation and the rest being managed funds.

Despite share market volatility, the ASX growth share saw positive net flows and positive market movements in the three months to December 2022.

BetaShares Global Cybersecurity ETF (ASX: HACK)

I think this is one of the best exchange-traded funds (ETFs) on the ASX. It’s all about global cybersecurity businesses that are leading the fight against cybercriminals.

Sadly, cybercrime seems to be worsening every year. Just look at what happened to Optus and Medibank Private Limited (ASX: MPL) last year.

The FY22 Australian Cyber Security Centre report said:

In Australia, we also saw an increase in the number and sophistication of cyber threats, making crimes like extortion, espionage, and fraud easier to replicate at a greater scale. The ACSC received over 76,000 cybercrime reports, an increase of nearly 13 per cent from the previous financial year. This equates to one report every 7 minutes, compared to every 8 minutes last financial year.

The ACSC report also revealed a 14% increase in the average cost per cybercrime report. This could be a useful tailwind for the businesses involved.

There is a total of 37 positions in the ASX growth share’s portfolio, with each business involved in different way to try to protect organisations. Some of the businesses involved include Broadcom, Fortinet, Cisco Systems, Infosys, Palo Alto Networks, and Okta.

According to BetaShares research, the global cybersecurity market is going to reach around US$480 billion by 2030, up from US$203 billion in 2021.

The post Looking for ASX growth shares? I rate these 2 as buys appeared first on The Motley Fool Australia.

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• Time to return to tech? Here are 2 ASX tech ETFs to buy
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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. has positions in and has recommended Australian Ethical Investment, BetaShares Global Cybersecurity ETF, Cisco Systems, Fortinet, Okta, and Palo Alto Networks. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Broadcom. The Motley Fool Australia has positions in and has recommended BetaShares Global Cybersecurity ETF. The Motley Fool Australia has recommended Australian Ethical Investment and Okta. 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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With so many dividend shares to choose from, it can be hard to decide which ones to buy over others.

The good news is that experts have been busy picking out some of the best dividend shares to buy right now.

Two that have been singled out as buys are listed below. Here’s what you need to know about them:

National Australia Bank Ltd (ASX: NAB)

The first dividend share for investors to look at is NAB.

Goldman Sachs is a fan of this big four bank and currently has a buy rating and $34.81 price target on its shares.

Its analysts like NAB due to its exposure to commercial lending, which they expect to perform better than home lending in the current environment. Goldman also highlights the work NAB has done on productivity and cost management and believes it leaves the bank well positioned for an environment of elevated inflationary pressure.

In respect to dividends, Goldman Sachs is expecting NAB to pay fully franked dividends of $1.66 per share in FY 2023 and $1.73 per share in FY 2024. Based on the current NAB share price of $31.79, this means yields of 5.2% and 5.4%, respectively.

Rural Funds Group (ASX: RFF)

Rural Funds could be another top dividend share for income investors to buy. It is an agriculture-focused real estate property trust that owns a diverse portfolio of properties across different geographies and sectors.

Its portfolio includes almond and macadamia orchards, premium vineyards, water entitlements, cropping and cattle farms. These are leased on long term agreements to major players in the industry such as Australia’s largest meat processor, JBS Australia, wine giant Treasury Wine Estates Ltd (ASX: TWE), and leading almond producer Select Harvests Limited (ASX: SHV).

Bell Potter is positive on the company and has a buy rating and $2.75 price target on its shares.

As for dividends, Bell Potter is forecasting an 11.7 cents per share dividend in FY 2023 and then a 12.7 cents per share dividend in FY 2024. Based on the current Rural Funds share price of $2.46, this represents yields of 4.75% and 5.15%, respectively.

The post Buy NAB and this high yield ASX dividend share: experts appeared first on The Motley Fool Australia.

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• Investing in ASX 200 bank shares? Here’s the dividend outlook for 2023
• Goldman Sachs names 2 ASX dividend shares to buy now
• Add these ASX shares to your retirement portfolio for growing income: analysts
• ASX passive income: My game plan to reach $30,000 per year
• Can income investors bank on a 6% dividend yield from NAB shares?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Rural Funds Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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New Hope Corporation Limited (ASX: NHC) shares could pay an incredibly high dividend yield this year. But is it the best value S&P/ASX 200 Index (ASX: XJO) stock out there?

It’s not often that we’d think that a stock that has risen by more than 150% in the last year could be a contender for best value. But it has a good shot.

As one of the largest ASX coal shares, it’s not going to be a popular option for some investors.

However, it’s worth pointing out that ASX 200 coal shares are currently making a bucketload of cash amid much higher energy prices.

Latest quarterly update

In the three months to October 2022, the business reported that thermal coal prices reached another record of US$412.72 per tonne, which was a 215% increase against the comparative quarter the previous year.

Within that quarter, its underlying earnings before interest, tax, depreciation and amortisation (EBITDA) was up 167% year over year.

This meant the business finished with a cash balance of A$1.8 billion, as well as trade receivables of A$139 million.

The company is swimming in cash at the moment. That’s why it decided to announce a $300 million share buyback – the company said this “represents an opportunity to enhance the value of the remaining shares”.

New Hope noted that it “still maintains a significant balance in its franking account”. This implies there is scope for more big dividends.

Dividend estimate for FY23

On Commsec, the current projection is that the business could pay an annual dividend per share of $1.73.

At the current New Hope share price, that suggests the business could pay a dividend yield of around 30%, or 42% grossed-up when franking credits are included in the calculation.

That is an enormous yield. The Commsec projected numbers only suggest a dividend payout ratio of 75%. So why is it so big?

It’s down to the exceptionally low price/earnings (P/E) ratio.

New Hope is expected to generate $2.30 of earnings per share (EPS) in FY23. That means the New Hope share price is valued at just 2.5 times FY23’s estimated earnings.

The FY23 numbers make it seem like an exceptional idea.

But coal prices aren’t expected to stay this strong forever.

EPS is expected to drop by 20% in FY24 and then by another 33% in FY25.

Using the far-off projections, the New Hope share price is valued at 4.7 times FY25’s estimated earnings and a grossed-up dividend yield of 15%.

So, the EPS is expected to almost halve, while the dividend could drop by around two-thirds.

Foolish takeaway

The tricky thing is knowing where the coal price is going to go. If the coal price drops off quickly, then share price pain may not be worth the dividends. But, if the coal price is stronger than some expect, it could mean this ASX 200 share’s valuation is incredibly cheap.

No one could have predicted that the coal price would soar in 2022. So, it’s just a guess on what happens next.

For investors who don’t mind that it produces coal, this business may still do well on the total return measure because of the big dividends. Of the analyst opinions collated by Commsec, five rate it as a buy and only one rates it as a sell.

The post With a 30% forecast yield, is this dividend stock the biggest bargain on the ASX 200? appeared first on The Motley Fool Australia.

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• Two ASX sectors to buy right now (and two to avoid like the plague): fundie
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• Want to invest successfully? You need to do this with your dividends
• Experts betting against a bear market for ASX shares
• Why did ASX 200 coal share New Hope Corporation sink 9% today?

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 Scott Phillips.

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Ask A Fund Manager

The Motley Fool chats with the best in the industry so that you can get an insight into how the professionals think. In this edition, Schroders portfolio manager Ray David looks into his crystal ball to reveal the ASX sectors that will be hot this year.

Investment style

The Motley Fool: How would you describe your fund to a potential client?

Ray David: Schroders Long Short Fund, as the name says, it is a long-short fund. So we do take short positions and we do take long positions but, in general, we are about 100% invested in the market. And typically the short positions make up about 20% to 30% of the portfolio. And the funds taken from the short positions are then reinvested back into the market, which then gives us a long position about 120%, 130%. 

It’s important to say that we are not betting on the direction of the market. So if the market goes up, we’re fully invested, we’ll go up too. If the market goes down, our fund will generally decline with the market too. But the short positions look to add additional returns because the benefits of shorting is that we can take advantage of the analysis we do on companies.

If we identify them as poor investments, we’ll typically short them to try and enhance the return to our clients. Whereas a long-only investor, they’ll just simply avoid those poor-quality companies and move on. So we’re playing both sides of the market. 

We’re trying to make money by buying undervalued stocks that go up. At the same time, we are trying to short poor quality or overvalued companies that we think the market’s overly priced. 

MF: With the long side, I know Schroders is very famous as a value investor. Is that how you would describe it?

RD: Correct. We do spend a lot of time on understanding company valuations. And generally, we are trying to buy stocks that we think are undervalued. 

Typically, when people think of value managers, they might think of investors that are contrarian or buying things that are bombed out. We do try to focus on good quality companies and companies that have, what we say is, durable earnings. So just because a stock is down on its knees doesn’t necessarily mean we’re going to own it in the fund. We do the work and if we think it ticks a number of boxes, which is, number one, it’s undervalued, number two, it’s a business that’s got a competitive advantage or it’s a good quality business, it’s got earnings duration. The third point, “Is the management and governance of good nature?” 

MF: 2022 was an unpleasant year for a lot of investors. How did your team go?

RD: The fund did really well. Our total fund return beat the market by about 6% pre-fees. So the market was flat and our fund was net up. 

If we look at our total performance since inception over two-and-a-half years, we’ve outperformed the benchmark or the S&P/ASX 200 Index (ASX: XJO) by 4.6%. 

When we look at that composition or that performance, 70% of it has come from the long positions and 30% has come from shorts, which is what we would expect with a 130-30 structure. 

So we’ve been able to deliver performance in volatile markets, which really plays to our skill as a manager that’s focused on valuations and sort of good quality companies.

MF: You’ve picked the most action-packed 2.5 years ever to run a fund.

RD: Sure. We’ve had COVID in the middle of that. We’ve had the COVID recovery. We’ve gone from quantitative easing to quantitative tightening to inflation that’s at 40-year highs. 

Even though it’s two and a half years, it feels like we’ve gone through three or four cycles already within that period.

A case in point is some of these retail stocks. Everyone was really bearish on retail names [but] actually were coming out with very strong results. 

MF: That leads to the question of where you think the market is heading this year?

RD: The market, we think, is going to be volatile going forward. 

On an aggregate view, the market is looking fairly priced. It’s made up of some really cheap sectors where we see pretty good value, and at the same time, it’s made up of expensive sectors. The market’s trading on about 14.5 times PE, and its long-run average is about 15. So it’s not strikingly cheap; it’s not overly expensive. 

But there are sectors which look very expensive historically and sectors which look cheap. The sector that looks cheap in our view, which we do have positions in our portfolio, is general insurance. The energy sector is quite cheap. We’re overweight energy.

MF: Energy? Even after the bull year it’s just had? 

RD: Yeah, that’s right. If you think about the energy sector, they’ve gone from really unloved to now the market is starting to like them, but the multiples that they’re trading on are still quite low. They’re trading on about six or seven times earnings, especially something like a Santos Ltd (ASX: STO). 

A lot of these companies have benefited from high energy prices. And energy prices have rolled off, but they never really re-rated to the silly levels that we saw with, for example, the tech companies or the iron ore stocks that we saw in 2015. So energy just looks really good. 

And we think the outlook for energy stocks is attractive because there’s just not a lot of supply coming in. No one really wants to invest in fossil fuels or LNG or gas without the high prices to justify the returns, because everyone’s quite worried about renewables and the ESG factors.

Then within the overvalued sectors, we still think ASX technology stocks are quite overpriced. If you look at stocks like WiseTech Global Ltd (ASX: WTC), Pro Medicus Limited (ASX: PME), they’re actually not far from record highs so they’re never really derated in that tech sell-off. 

The other sectors which we think look pretty expensive are real estate investment trusts (REIT) and healthcare. We’re quite cautious on real estate investment trusts because they face the triple headwind of declining asset prices because interest rates have gone up, softening rental income, particularly if you’re in office and retail, and thirdly, their costs are going up — interest repayments and cost to manage the facilities. 

In summary, the market is fairly priced, but there’s still pockets of value and there’s pockets of overvaluation. We’re looking to exploit our views around valuation versus what’s priced by the market.

The post Two ASX sectors to buy right now (and two to avoid like the plague): fundie appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Monday
• Want to invest successfully? You need to do this with your dividends
• Experts betting against a bear market for ASX shares
• These ASX 200 tech shares are leading the market today
• Invested $1,000 in Mineral Resources shares 10 years ago? Here’s how much passive income you’ve made

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Pro Medicus and WiseTech Global. The Motley Fool Australia has positions in and has recommended Pro Medicus and WiseTech Global. 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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On Friday, the S&P/ASX 200 Index (ASX: XJO) finished the week on a positive note. The benchmark index rose 0.35% to 7,493.8 points.

Will the market be able to build on this on Monday? Here are five things to watch:

ASX 200 expected to edge higher

The Australian share market looks set to rise slightly on Monday following a positive finish to the week on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 12 points or 0.15% higher this morning. On Wall Street, the Dow Jones was up 0.1%, the S&P 500 rose 0.25 %, and the NASDAQ stormed 0.95% higher.

Oil prices fall

It could be a difficult start to the week for ASX 200 energy shares such as Santos Ltd (ASX: STO) and Woodside Energy Group Ltd (ASX: WDS) after oil prices pulled back on Friday. According to Bloomberg, the WTI crude oil price was down 2% to US$79.38 a barrel and the Brent crude oil price fell 1% to US$86.66 a barrel. Oil prices fell in response to a stronger supply outlook.

ResMed rated as a buy

The ResMed Inc (ASX: RMD) share price could be good value according to analysts at Goldman Sachs. In response to the sleep disorder treatment company’s quarterly update, the broker has retained its buy rating with an improved price target of $38.00. Goldman commented: “Steady improvements in diagnosis rates and supply chain could widen opportunity for share gains.”

Quarterly updates

It is likely to be another day filled with quarterly updates. Among those scheduled to release updates this morning are rare earths producer Lynas Rare Earths Ltd (ASX: LYC) and copper miner and BHP Group Ltd (ASX: BHP) takeover target, OZ Minerals Ltd (ASX: OZL).

Gold price softens

Gold miners Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) could have a soft start to the week after the gold price edged lower on Friday. According to CNBC, the spot gold price fell 0.1% to $1,927.6 per ounce. Despite this, the precious metal secured its sixth successive weekly gain.

The post 5 things to watch on the ASX 200 on Monday appeared first on The Motley Fool Australia.

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More reading

• $20,000 invested in these ASX shares 10 years ago is worth how much now?
• Want to invest successfully? You need to do this with your dividends
• Experts betting against a bear market for ASX shares
• Why is the BHP share price in the green today?
• Why Accent, Mineral Resources, Newcrest, and Whitehaven Coal 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 positions in and has recommended ResMed. The Motley Fool Australia has positions in and has recommended ResMed. 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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