I’ve written before about how much I love Budget day.

Regardless of the party in power, it’s a small but important (and nerdy) example of transparent democracy in action.

And it really is the document that, more than any other, tells us about the country we’re going to become (because, well, ‘follow the money’).

Now, the Budget papers have gone to the printers. And the speeches are being given their final polish.

So it’s too late to influence what’s in either.

But, if I had Jim Chalmers’ ear (you are reading this, right, Treasurer?), here’s what I’d have liked to see in tonight’s speech and the financial papers that go with it.

(I’ll drift a little into social and other policy, below, but I’ll keep my comments largely to financial matters. I’m sure there are other things that the country needs and should do!)

First, a commitment to, and policies that take us meaningfully towards, bringing the Federal Budget into structural balance.

No, not immediately.

And not balanced every single year.

The government should run a deficit to support demand when the economy is weak. And run a surplus to take heat out of the economy when it’s strong.

It’s smart economic policy.

But recently?

Well, our pollies are addicted to the spending that entices us to vote for them. And allergic to taxes that we might not like.

And so?

And so, we have a Budget that is in ‘structural deficit’ – where the spending in the bad times isn’t even close to offset by surpluses in the good times.

Boffins and pedants hate the credit card analogy… but it’s useful here:

It’s the equivalent of running up a big credit card debt when work is scarce, then paying it down a little when you get a bonus, only to spend up even more next time.

It’s unsustainable – and it’s unsustainable for the government, too.

The hole is too deep to fill in during one year, or even one term of government. But Treasurer Chalmers should announce and chart a course to returning the Budget to sustainability.

Next, he should announce the formation of an expanded Future Fund, to become a fully-fledged Sovereign Wealth Fund.

A what?

Countries like Norway, Saudi Arabia and others have used natural resources windfalls to turn those one-time resource sales into ongoing national wealth.

They are monuments to long-term thinking in the national interest.

See, the oil, gas, iron and gold we’re lucky enough to have around the country has been there for millions (billions?) of years.

And then, in an instant, some time in 2022, we let companies drill or dig it up, and flog it off. We collect a little in resource levies and company taxes, and use that for… today’s political promises.

Billions of years in the making, and then sold for peanuts to pay for new swimming pools, tax cuts and carparks.

Don’t you reckon that those natural assets we inherited should be converted into financial assets that will sustain us, our kids and their kids, instead?

Yep. Me too.

The Treasurer should announce it.

Next, we need some honest policy on housing. Yes, reports in this morning’s media about ‘one million new homes’ sounds impressive. But, at the time of writing, I haven’t seen a timeframe. And more high density housing or urban sprawl doesn’t exactly fill me with joy.

Because housing construction is only part of the story. Where are the rest of the policies? You know, like how many homes our natural and built environments can support? How much green space will we lose? How will our energy grid, water supply and waste facilities cope? How many people can Australia support, and where?

I’m a fan of more affordable housing, and more housing, if people can’t find a roof for over their heads. But I’m far from convinced ‘ever more houses’ is the answer, particularly if we haven’t had the national conversation about the rest of those considerations.

(And the continual adding of first home owner’s grants, boosts and shared equity programs do absolutely nothing for affordability. They’re barely disguised fig leaves for governments to avoid actually having an honest, mature conversation about prices.)

Speaking of which, the next thing I’d like to see is the end of negative gearing (but have the existing program grandfathered) for the purchase of existing housing. For the reasons I annunciate, above. Residential housing should be shelter, first and foremost. Not a tax lurk that probably pushes prices up.

And we should reintroduce the indexing of capital gains, rather than an arbitrary 50% long term capital gains tax discount.

Why? Because it costs the budget a small fortune, and you can’t convince me the tax treatment should be one rate after 364 days, but half of that rate two days later… just because we completed one trip around the sun. And indexing could actually be much better for truly long-term investors – doubly so in high(er) inflation environments. It’s just better policy.

Next, I’d make early childhood education free and universally available. And spare me the class war rubbish. It’s not about the parents… it’s about the kids.

Every child has access to free and universal primary and secondary school education in Australia. We should recognise that early childhood education is just as – perhaps more – important, and we should remove every barrier to giving kids the best possible start in life.

(Former SA Premier Jay Wetherill is doing some wonderful work in an Andrew Forrest-funded program called Thrive by Five, if you’re interested.)

Yes, that’s primarily a social program, not a financial one. But if we want a smart, educated society that can make the most of the opportunity our country provides – financially and otherwise – this is a no-brainer (and will likely save the country money over the long term).

Back on finances, though, any business would make investments today, that would sufficiently reduce outgoings tomorrow. (So should households, by the way: if you haven’t already, you really should see if solar panels are right for your place… they might be the smartest investment some people can make!)

Investing now, for savings later, comes under many headings: effectiveness, efficiency, and more. I’d love to see the government announce funding for a government department (or subset of another) to investigate the opportunity for big investments that make us more efficient, effective and competitive in the future, as a nation.

Put some business people in charge. Give them a minimum return-on-investment hurdle, then give them a large pot of money. Reduced administration? Check. Reduced recurring operating costs? Check. Faster, easier operations? Check.

Speaking of which, here’s the last thing on my wishlist (Oh, there’s more, but I’m trying to just focus on a few, for now): announce that every dollar of R&D or other support funding for business must come with an equity stake in that business.

Right now, governments make research grants and get nothing for it, in many cases. Or we give millions of dollars in support funding (hello Qantas Airways Limited (ASX: QAN)!), with nothing in return, when a company survives and then thrives. (Qantas shareholders are getting a buyback. The government, after tipping in a fortune? Nothing.)

Taxpayers should get a return for our money. If the organisation truly wants the capital, there should be a quid pro quo. And if that requirement means they decline the investment, then great – we keep the cash.

So, that’s it.

Programs, policies and initiatives that probably won’t be in tonight’s budget.

But they should be.

Because they’re responsible, sensible and in the national interest.

And Treasurer, if you’re reading this, feel free to get in touch, if you want some help framing the next one.

Fool on!

The post What should be in tonight’s Budget (but probably won’t) appeared first on The Motley Fool Australia.

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• Which ASX 200 shares could benefit from the federal budget?
• This famous investor is buying Tesla shares again. 3 reasons you should too
• Why is the Sayona Mining share price booming 10% on Tuesday?
• Why are Core Lithium shares lifting another 5% on Tuesday?

Motley Fool contributor Scott Phillips 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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The Cettire Ltd (ASX: CTT) share price is on fire again on Tuesday and smashing the All Ords index.

In afternoon trade, the online luxury fashion retailer’s shares are up 15% to $1.78.

This means the Cettire share price has now risen a whopping 137% this month.

This has reduced its year to date decline to approximately 52%.

Why is the Cettire share price rocketing higher?

Investors have been scrambling to buy the company’s shares this month after it released a strong quarterly update.

During the three months ended 30 September, despite rising living costs and global recession fears, Cettire reported a 62% increase in quarterly gross revenue over the prior corresponding period to $84.4 million.

Management notes that this was driven by the doubling of its active customers to 287,626 and improvements in repeat customer spending.

Another positive was that the Farfetch rival achieved this top line growth in a profitable manner. The company revealed that it delivered adjusted EBITDA of $5.5 million thanks partly to a reduction in its marketing investment as a percentage of sales revenue to low double-digits.

What about its outlook?

While the economic environment remains highly uncertain, the company’s CEO Dean Mintz appears confident that Cettire is well-placed for the all-important second quarter.

He stated that “demand environment remains health” and that he has “confidence in our Q2 outlook.”

Can Cettire’s shares keep rising?

Based on the current Cettire share price, the company has a market capitalisation of approximately $700 million. This means that its shares are trading at 2.1x annualised sales.

As a comparison, its much larger and well-known rival Farfetch is trading at just 1.4x sales at present.

This could be an indication that the Cettire share price has now jumped into overvalued territory. But time will tell if that is the case.

The post Back in fashion? This ASX All Ords share is up over 130% so far in October 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 recommended Cettire Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Believe it or not, tonight is federal budget night. If you’re a little confused, I wouldn’t blame you. Yes, we’ve already had a budget this year, the one delivered back in March.

But that was a different government, with a different Treasurer. Normally, the economics enthusiasts among us get one budget a year to salivate over. But due to the change of government and the new Treasurer’s wishes, this year we are getting two for the price of one.

New Treasurer Jim Chalmers is now scheduled to deliver this new budget (some are calling it a mini-budget) at 7.30 pm tonight.

Now, of course, we won’t know everything that’s in this new budget until it gets released, as is the norm with these things. But we can speculate as to what it might mean for the economy, and of course, ASX shares.

An analysis of the upcoming budget from Bloomberg predicts the key areas to watch are infrastructure, resources, housing, childcare and telecommunications.

Which ASX 200 shares are ones to watch after the budget?

The report points out that the government could be set to pledge $96 billion for road and rail investment. No doubt this will go towards some road and rail upgrades and perhaps even new links altogether. But it also warns that some of this cash may come from scrapping other previous government promises, such as commuter car parks.

Some ASX shares to watch in this space are construction and building companies. Those include Adbri Ltd (ASX: ABC), Boral Limited (ASX: BLD), and Lendlease Group (ASX: LLC). Another one to watch might be toll road operator Transurban Group (ASX: TCL).

The report also predicts that the recent government interest in funding critical mineral supply chains will continue. This could see more grants to ASX 200 shares in the lithium, rare earths and battery metals space. So keep your eye on shares like Pilbara Minerals Ltd (ASX: PLS) and Lynas Rare Earths Ltd (ASX: LYC).

Housing, childcare and telecommunications

Housing continues to be a potent political issue as well. So Bloomberg argues that we could see some further developments addressing these issues in tonight’s budget. We already know the government has a new ‘first home guarantee’ scheme that it took to the election.

The government has also indicated that it wants to see super funds invest in affordable housing. So it will be interesting to see how property-linked ASX 200 shares like REA Group Limited (ASX: REA) and Domain Holdings Australia Ltd (ASX: DHG) fare following this budget.

The government has also already announced an increase in paid parental leave from 18 weeks to 26 weeks from 2024. We could see more announcements in this arena tonight. So more ASX 200 shares to keep an eye on include those in childcare. Think G8 Education Ltd (ASX: GEM) and the like.

Finally, Bloomberg reports that the government is looking at investing another $2.4 billion into the national broadband network (nbn) to expand full-fibre access to another 1.5 million premises by 2025. That could have direct implications for the ASX 200’s telco shares. Those include Telstra Corporation Ltd (ASX: TLS), Aussie Broadband Ltd (ASX: ABB), and TPG Telecom Ltd (ASX: TPG).

The post Which ASX 200 shares could benefit from the federal budget? appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has positions in Telstra Corporation Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Aussie Broadband Limited. The Motley Fool Australia has positions in and has recommended Telstra Corporation Limited. The Motley Fool Australia has recommended Aussie Broadband Limited, REA Group Limited, and TPG Telecom Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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

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

Cathie Wood has been one of the biggest Tesla (NASDAQ: TSLA) bulls on Wall Street. The stock has been at or near the top holding in several exchange-traded funds (ETFs) run by Wood. But Wood was still a seller of Tesla shares beginning last fall when the stock was near its highs and again in the spring of this year. 

Wood’s trading has certainly been timely, buying back shares when the stock dipped and selling some off after it rose higher. That’s why investors should note that Wood has been buying again in October, including another 66,190 shares for the ARK Innovation ETF the day after Tesla reported third-quarter earnings. Here are three good reasons why Wood is in bull mode with Tesla stock again — and why you should be too. 

Cathie Wood likes growth

Wood’s latest buy came after the stock sank following Tesla’s Q3 report. Some analysts were focusing on the admission by management on the earnings call that it expects to come up short of the 50% growth goal for 2022 vehicle deliveries versus last year. Importantly, however, Tesla still projects it will meet that goal for vehicle production. The difference will be due to shipping bottlenecks the company has been experiencing.

In Q3, Tesla produced 22,000 more vehicles than it delivered due to those logistics issues. But those cars have buyers and aren’t just going to inventory. Whether customers take ownership in one quarterly period versus another shouldn’t matter to long-term investors. And it’s not just production that is growing at a fast rate. Total revenue grew 56% year over year in Q3 and net income more than doubled.

Profitability remains strong

Another concern for some investors is how Tesla’s profit margins will hold up as competitors start to enter the market en masse. Automotive gross margin did, in fact, drop 258 basis points year over year. That’s not overly surprising as supply chain constraints and rising material and labor costs increase expenses for companies in the automotive sector.

But Tesla’s automotive gross margin held steady at 27.9% versus the prior quarter. That implies that the company is making up for added expenses. Ford recently warned investors that it expects an extra $1 billion in “inflation-related supplier costs” in Q3 alone. Tesla has raised prices on its products, and investors should take it as a good sign that those price hikes are helping and are also not sapping demand.

Contributions from other products

Some Tesla critics point to the fact that the company has a limited product lineup that hasn’t been updated for years. But the electric Semi Truck will begin deliveries on Dec. 1 to its first customer, PepsiCo. The Cybertruck is also on the “final lap,” according to CEO Elon Musk, and should begin deliveries next year. Down the road, Tesla is expected to introduce a lower-priced electric vehicle (EV) that will expand its product line of passenger vehicles, too.

Musk also told investors the company is working as quickly as possible to increase battery-production capacity. Its energy division also includes battery storage and solar rooftops, and has more demand than it can supply. Sales from that division represented 5% of total revenue in Q3 as its energy-storage deployments jumped 62% year over year.

All of that should result in many years of growth to come from different places for Tesla. Some investors may be concerned about the current state of the economy. This week, Musk commented on that, calling Tesla’s business “recession resilient” due to the global momentum transitioning to electric vehicles.

Cathie Wood may do a lot of buying and selling in her funds, but individual investors should be looking at where the company will be years from now. Tesla looks to be well positioned. Its valuation remains high with a trailing-12-month price-to-earnings (P/E) ratio around 60. But if Tesla continues to grow production and net income at these levels, those long-term investors who follow Cathie Wood’s lead and buy at current price levels would seem to be making a good investment. 

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

The post This famous investor is buying Tesla shares again. 3 reasons you should too appeared first on The Motley Fool Australia.

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

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

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The Sayona Mining Ltd (ASX: SYA) share price is pushing higher today on no news. At the time of writing, the share is trading 11% in the green at 25.5 cents.

Also pushing higher today and continuing its lengthy rally is the price of lithium, with lithium carbonate now priced at A$120,047.45 per tonne – a record high.

It hasn’t been smooth sailing for Sayona on the chart these past 6 months, however. As seen in the chart below, shares are reclaiming ground after dipping from highs of 35.5 cents on 13 September.

What’s up with the Sayona Mining share price?

Chief to the upside in recent weeks for Sayona has been the extended gains in lithium pricing that have seen the battery metal shoot to another record high.

Driving the upside is the continued demand for batteries used in electric vehicles such as cars, scooters and buses.

Exploration and offtake activity has exploded in the space over the past 2–3 years and this has seen numerous new entrants into the space.

Updates in the space are therefore rewarded very generously if positive, which has been the case for Sayona lately.

On October 4 it announced it has launched a pre-feasibility study to produce lithium carbonate at its North American Lithium (NAL) project.

This was immediately followed by an update advising another pre-feasibility study at the Moblan Lithium Project, in Canada.

Finally, on 18 October, the company advised it had found a contractor to deliver its NAL spodumene concentrate from its facility to the port.

As such, investors positioning themselves within the lithium trade will have found the company’s latest two updates appealing, evidenced in the price action afterwards.

Shares are now up 18% this week, and today’s trading volume is already 82% of the 4-week average at 69.2 million shares.

Meanwhile, Sayona is up 96% this year to date.

The post Why is the Sayona Mining share price booming 10% on Tuesday? appeared first on The Motley Fool Australia.

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• If you’d bought $5,000 of Sayona Mining shares at the start of 2022, congratulations! Here’s what you’d have today
• Why are these ASX 200 lithium shares smashing it on Monday?
• The Sayona Mining share price has dumped 24% since joining the ASX 200. What’s happening?
• Can ASX 200 lithium shares bank on the price of lithium to keep soaring?

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

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Shares of Core Lithium Ltd (ASX: CXO) are pushing 5% into the green on Tuesday and now trade at $1.465 apiece.

Today’s jump extends gains for the lithium player and brings this year’s return to almost 150%, amid a continued rally in the price of lithium.

Lithium carbonate now trades at A$120,047 per tonne, another all-time high. The battery material has now gained 95% year to date.

The chart below shows Core Lithium’s performance (in black) against the broader S&P/ASX 300 Metals and Mining Index (ASX: XMM) which has slipped 5% in 2022 so far.

What’s up with Core Lithium shares?

Core Lithium’s upcoming offtake agreement with electric vehicle manufacturer Tesla has been in focus following the electric vehicle giant’s recent quarterly earnings.

Core Lithium is one of three ASX-listed companies chosen by Tesla to help fulfil its enormous lithium supply requirements.

Whilst Tesla delivered a record 343,000 cars during the period, revenue was behind analyst expectations, and this has triggered questions on the demand situation looking ahead.

Core’s deal with Tesla would see it produce spodumene concentrate for four years starting in 2023. As such, it represents a large opportunity for the company.

News of the agreement has been a major catalyst for the share’s performance this year to date, alongside the price of lithium.

With prices of the battery metal still punching above record highs, momentum remains in Core’s favour, particularly given the enthusiasm for renewables and battery technology.

It’s also worth noting it was Tesla’s revenue expectation that fell short, not the number of cars it delivered. In Tesla’s case, it suggests demand is still robust.

Certainly, investors remain bullish on Core Lithium shares on Tuesday.

Trading volume has already hit 48% of the four-week trading average with 17.8 million shares exchanging hands in early trade.

Meanwhile, Core Lithium shares are up 157% in the past 12 months.

The post Why are Core Lithium shares lifting another 5% on Tuesday? appeared first on The Motley Fool Australia.

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• Here are the 3 most heavily traded ASX 200 shares on Monday
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Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (ASX: XJO) may be trading sharply lower this year, but that hasn’t stopped some ASX shares from reaching new highs.

Three ASX mining shares that have just climbed to all-time highs are listed below. Here’s why they are flying high right now:

Mineral Resources Limited (ASX: MIN)

The Mineral Resources share price hit a new all-time high of $78.14 this morning. While there was no news out of the mining and mining services company, investors have been fighting to buy its shares all year due to its lithium operations. These are expected to generate bumper profits this year thanks to sky high lithium prices.

Interestingly, despite hitting an all-time high, the team at Macquarie still sees significant value in the Mineral Resources share price. Its analysts have an outperform rating and $98.00 price target on its shares.

Pilbara Minerals Ltd (ASX: PLS)

The Pilbara Minerals share price reached a record high of $5.66 this morning. This followed the release of the lithium miner’s first quarter update this morning, which revealed further solid production and sales growth.

Macquarie is also positive on the Pilbara Minerals share price. Though, it doesn’t see anywhere near as much upside potential as it does with Mineral Resources shares. Its analysts have an outperform rating and $5.70 price target. However, it is worth noting that this could change once the broker has reviewed the company’s quarterly update.

Tietto Minerals Ltd (ASX: TIE)

The Tietto Minerals share price climbed to an all-time high of 73 cents on Tuesday despite there being no news out of the gold developer. Though, it is worth noting that last week the company provided a positive update on its Abujar Gold Project in the Ivory Coast.

That update revealed that the construction of the project is on track and Tietto expects to deliver its first gold during the current quarter. If everything goes to plan, management expects to produce 260,000oz of gold from Abujar in 2023.

The post 3 ASX mining shares hitting all-time highs today 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 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’s a mountain of advice for market watchers seeking out their next big winner. On top of that, every ASX investor will likely search for ASX shares to buy in their own unique way.

For instance, if I were to create an ASX wish list, I’d be looking to fill it with quality businesses trading at cheap valuations.

That way, I believe, I would have a better chance of picking winning ASX shares with plenty of future prospects.

I would also pay special attention to creating a list of diverse ASX stocks, searching a wide range of sectors to find potential champions.  

How I’d build a ‘best ASX shares to buy now’ list

Find high quality ASX shares

There are plenty of factors that one can consider when assessing the quality of an ASX share. Personally, I would consider a company’s competitive advantages and balance sheet.

A business able to corner a market that is reliant on its offerings is the gold standard. However, a loyal customer base and room for growth can also prove a strong advantage over competing businesses.

Additionally, a company with room for growth, the means to do, and extra cash in case of tough times could also be a quality ASX share.

Whichever way a market watcher determines if an ASX share represents good quality, the best place to start is often recent earnings and updates.

Additionally, it’s important to keep an open mind when considering not only a stock’s strengths but its weaknesses too. In many cases, current weaknesses can represent future risks.

It’s also generally a good idea to compare an ASX-listed company to its peers.

Identify undervalued stocks

Another measure I would consider when building a ‘best ASX shares to buy now’ list is a stock’s valuation. There are plenty of ways to assess if a stock is trading cheaply.

Two common and useful measures are price-to-book (P/B) ratios and price-to-earnings (P/E) ratios.

While no measure is perfect – and none can predict the future – these two ratios are simple to understand and can be easily calculated using a company’s financial statements.  

Once again, I would compare a company’s valuation to that of its peers before adding it to my list.

Diversification

Finally, I would make a point to not focus on any single sector while building my ‘best ASX shares to buy now’ list.

A strategically diverse portfolio is less likely to be largely impacted by a downturn in a single sector.

Diversification can also allow a shareholder to take advantage of a diverse range of opportunities spread across the ASX.

Though, spreading a portfolio across numerous sectors neither guarantees returns nor downside protection.

The post How I’d build a ‘best ASX shares to buy now’ list appeared first on The Motley Fool Australia.

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More reading

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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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It’s turning out to be another positive day for the S&P/ASX 200 Index (ASX: XJO) so far this Tuesday. But the Woodside Energy Group Ltd (ASX: WDS) share price is looking a lot more volatile.

At the time of writing, the ASX 200 has gained a healthy 0.56%, putting the index back over 6,800 points.

Woodside shares initially opened strongly this morning, rising just after open to $35.93 a share. But things quickly took a turn for the worse, with the company dropping to $35.38 soon after.

As it presently stands, Woodside Energy is still in the red, nursing a 0.22% loss at $35.53 a share.

So what could be going on here? Let’s check out what’s new with Woodside.

Woodside share price rises amid new carbon capture partnership

Well, there haven’t been any new ASX announcements from this ASX oil share today. However, the company did put out a media release yesterday that could be influencing sentiment.

This announcement gazetted a new strategic collaboration. Woodside declared that it has signed an agreement with the US-based carbon capture and storage company LanzaTech NZ Inc. Here’s what the company had to say:

Under the Strategic Framework Agreement Woodside will, in collaboration with LanzaTech and subject to a positive final investment decision, design, construct, own, maintain and operate pilot facilities relating to LanzaTech’s technologies.

The Strategic Framework Agreement also allows Woodside and LanzaTech to explore opportunities for the potential commercial scale–up of LanzaTech’s technology, which seeks to convert greenhouse gas emissions into new products.

Additionally, Woodside also announced that it would be investing US$50 million into the publicly listed AMCI Acquisition Corp. AMCI is expected to merge with LanzaTech, facilitating LanzaTech’s entrance onto the public markets.

Although these moves were announced yesterday, they could well be influencing the Woodside share price today.

But, as always, we can’t rule out that the moves of the oil price itself are also at play here. As an ASX energy share, the Woodside share price is easily influenced by how oil is being priced by the markets.

As my Fool colleague James covered this morning, oil had a weak session overnight on the US markets. Both WTI and Brent crude fell. WTI was down 0.3% to US$84.76 a barrel, while Brent dropped 0.1% to US$93.47. This could be why we are seeing some weakness in the Woodside share price this Tuesday.

But investors can’t be too upset. Woodside shares remain up a very pleasing 57% in 2022 thus far, and up 47% over the past 12 months.

At the current Woodside share price, this ASX 200 oil share has a market capitalisation of $67.5 billion, with a dividend yield of 8.61%.

The post Why is the Woodside share price bouncing around today? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Monday
• Expert reveals why these ASX All Ords shares are drumming up a ‘growing international appetite’ right now
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• Here are the top 10 ASX 200 shares today

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

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Shares of Fortescue Metals Group Limited (ASX: FMG) are tracking lower from the open today and trade less than 2% in the red at $16.54.

In what’s been a profitable year for commodity baskets, the second half of CY2022 hasn’t been so rosy. Most raw materials have consolidated gains.

Iron ore, the key ingredient in steel making, has been perhaps the key exemplar of this trend. It has pushed south of record highs and now trades back at pre-pandemic highs.

With the price of iron ore approaching 52-week lows early in the week, this has put pressure on Fortescue shares. It currently rests at US$92.50 per tonne.

What does this mean for Fortescue shares?

Since the company is one of the largest iron ore producers in the world, it is therefore a price taker on the material, meaning that its share price fluctuates with volatility in the commodity markets.

It comes as no surprise therefore to see that investors have sold off Fortescue in unison with the descent in the iron ore price, as seen on the chart below.

With the sell-off, shares have retreated towards their October 2021 levels. But this has also sweetened valuation multiples relative to peers.

Fortescue now trades on a price-to-earnings ratio (P/E) of 5.32 times and a price-to-book (P/B) ratio of just 1.9 times.

These are slightly behind the GICS Metals & Mining Industry’s median of P/E of 10.8 times and P/B of 2.01 times respectively, per Refinitiv data.

The discount might be warranted according to some, however. Jabin Hallihan of investment bank Morgans believes that Fortescue is a sell, in The Bull’s 18 Share Tips for 24 October.

“[Foretescue’s] capital expenditure guidance to decarbonise its iron ore business by 2030 is $US6.2 billion,” Hallihan notes.

“Our estimate was $US5.5 billion, highlighting the inflation risk. Our 12-month price target is $15. There’s much to play out in decarbonising the business,” he added.

“Other stocks appeal more.”

Morgans joins 8 other brokers as a sell recommendation for Fortescue shares, with the remaining 9 split to hold, per Refinitiv Eikon data.

The consensus price target from this is $15.71 apiece, behind the current market value.

Meantime, Fortescue shares are down 14% this year to date.

The post Why ‘other stocks appeal more’ than Fortescue shares: expert appeared first on The Motley Fool Australia.

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More reading

• Why is the Fortescue share price surging today?
• Why I’m not worried about Fortescue’s $9.6 billion decarbonisation plans smashing my dividends
• ASX dividend shares ‘likely to remain attractive’ despite rising bank deposit rates: expert
• Why has the Fortescue share price dropped 20% in 6 months?
• Why was the Fortescue share price on such a rollercoaster today?

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

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