The ASX mining basket has outstripped its peers in 2022 and is now the leading sector this year to date.

Whilst other domains like financials have crept up in recent weeks, Australian resources players are surging to new heights as underlying markets roar.

The spillover is set to produce hefty free cash flow yields and potentially record dividends and/or buybacks for ASX miners and their shareholders, analysts say.

Compared to ASX large-caps, small-caps, and the wider market, the mining sector has given investors outsized returns in March and over the last 12 months (shown below).

What’s the situation?

The S&P/ASX 300 Metals & Mining Index (ASX: XMM) has surged more than 18% this year and is now up another 6% for the previous month.

Most of the upside in March was underscored by roaring commodity markets that have continued to surpass all expectations.

Iron ore has averaged US$118 per tonne so far in 2022, down from US$140 a year prior, whereas metallurgical coal earnings have been revised up to A$65 billion in 2022, according to Bloomberg data.

Prices are expected to average $348 per tonne before levelling off to $151 in 2027, Bloomberg forecasts show.

Not only that, but LNG exports are tipped to “more than double to A$70 billion in fiscal 2022, with spot prices likely to remain high for some time”, it reports.

Meanwhile, nickel prices have also shot north and are expected to fetch US$33,217 per tonne as the US opens on Monday.

Heavy bullishness on the commodity sector has resulted in global mining baskets surging to record heights in 2022.

With that, Australia is set to be a net benefactor, according to analysis from Bloomberg.

“Australia stands to gain from a surge in energy prices on prospects that the war in Europe will exacerbate global oil and gas shortages as nations shun supplies from Russia,” it reported.

“Exports are expected to hit a record $425 billion in the year to June 30 2022 – revised up by 12% from the December estimate – before dropping to $381 billion in the following 12 months on account of falling prices amid waning demand growth and elevated global output,” it added.

What ASX mining shares are surging?

Resource stocks have surged hard in 2022 on the back of this underlying market activity.

In the hydrocarbons space, Woodside Petroleum Limited (ASX: WPL) has spiked 50% in that time, whereas Santos Ltd (ASX: STO) is up 26%.

Iron ore giant and the world’s largest mining company BHP Group Ltd (ASX: BHP) has also lunged 26% higher whereas diversified miner Rio Tinto Limited (ASX: RIO) is a 21% gainer this year.

For even more diversified products, the Betashares Australian Resources Sector ETF (ASX: QRE) has flamed another 19% this year whilst the Vaneck Australian Resources ETF (ASX: MVR) is up 18%.

Other diversified miners like South32 Ltd (ASX: S32) have spiked 31% in the new year, while gold-bug Gold Road Resources Ltd (ASX: GOR) has surged 44%. Returns for each over the past few weeks is plotted below.

The post What sent ASX mining shares flaming higher in March? appeared first on The Motley Fool Australia.

More reading

• Gas is in hot demand. This is the ASX share I’d buy: expert
• 5 things to watch on the ASX 200 on Tuesday
• What’s on the cards for the Woodside share price in April?
• What are the tailwinds behind BHP shares in April?
• The Santos share price has gained 26% this year. Is it too late to buy?

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 Bruce Jackson.

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Some leading S&P/ASX 200 Index (ASX: XJO) tech shares have been hit heavily since the start of 2022.

A lower price doesn’t necessarily make a business more attractive to look at. However, if these businesses are still growing their operations at an attractive rate, the lower valuation may be interesting for investors.

Here are two ASX 200 tech share contenders:

Xero Limited (ASX: XRO)

The Xero Limited share price has fallen by around 30% since the start of the calendar year.

Citi is one of the brokers that likes Xero at the moment, with a buy rating and a price target of $132.60. That suggests a potential upside of around 30%.

However, the broker points out the amount of new businesses being created in the UK and Australia is dropping, implying that Xero’s supply of potential new clients is slowing. There are also more businesses closing down in those two countries.

Australia and the UK represent two of Xero’s biggest markets. On 30 September 2021, Xero had 1.24 million Australian subscribers and 785,000 UK subscribers. Xero’s global subscriber numbers have continued to rise – it reached three million (up 23%) in the first half of FY22.

The ASX 200 tech share is utilising its revenue growth and high gross profit margin (of more than 87%) to re-invest significantly back into the business. It’s investing in both organic growth and acquisitions. For example, it recently acquired the LOCATE Inventory business, a US-cloud-based inventory management provider, to better support the inventory needs of small business and enhance its e-commerce capability.

Xero is embedding LOCATE’s inventory and e-commerce talent and capability within Xero to enhance its inventory management offering. Management said this would help meet increased small business demand for inventory and cash flow management tools.

REA Group Limited (ASX: REA)

The REA Group share price has fallen by around 20% since the start of the 2022 calendar year.

It’s the largest digital real estate portal business in Australia. Its operations include realestate.com.au, realcommercial.com.au, flatmates.com.au, Smartline Home Loans, Mortgage Choice, PropTrack, and Simpology.

The ASX 200 tech share also has a presence in Asia and North America. It has investments in property sites in India, China, the US, Malaysia, Singapore, Thailand, Vietnam, and Indonesia.

Morgan Stanley is one of the brokers that currently rates REA Group as a buy, with a price target of $178. That implies a potential upside of more than 30%. The broker is optimistic about the business and suggests it could buy a larger stake in Move to boost future growth.

The REA Group FY22 half-year result included double-digit growth with core earnings before interest, tax, depreciation, and amortisation (EBITDA) rising 27% to $368 million and net profit after tax (NPAT) going up 31% to $226 million.

As part of the HY22 report announcement, the ASX 200 tech share’s trading update said residential property market conditions remained favourable. In January 2022, national residential new listings were up 14% year on year, with Sydney listings up 19%.

It’s also targeting full-year ‘positive jaws’, excluding the impact of the REA India and Mortgage Choice acquisitions. In the second half, operating cost growth excluding acquisitions is expected to slow to high-single-digit growth.

The post Carnage in 2022: Are these 2 top ASX 200 tech shares now buys? appeared first on The Motley Fool Australia.

More reading

• Why Xero can become ‘one of the big tech companies’: ASX expert
• Why Bank of Queensland, Block, Premier Investments, and REA shares are dropping
• 2 highly rated ASX 200 shares analysts are tipping as buys right now
• Top ASX shares to buy in April 2022
• Why is the Xero share price sliding 4% lower 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. owns and has recommended Xero. The Motley Fool Australia owns and has recommended Xero. The Motley Fool Australia has recommended REA Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Webjet Limited (ASX: WEB) share price travelled 5% higher last month after registering sluggish performance earlier on.

Nonetheless, investors appear to have mixed feelings when it comes to deciding the value of Webjet shares in the current climate.

At Monday’s market close, the online travel agent’s shares finished at $5.50, down 0.72%.

Is a full-recovery nearby of Webjet’s earnings?

It has been relatively quiet on the news front from Webjet, with its shares in a sideways channel of late.

A catalyst as to why Webjet shares have failed to take off significantly could be because of the war in Ukraine.

The Russian advance on its former soviet ally spooked global markets, sending the price of commodities to astronomical highs. This is particularly in relation to oil, which airlines need to fuel the planes. Most likely this leads to higher ticket prices from airlines, in which Webjet’s profit margins could be squeezed consequently.

In addition, with war raging on Europe’s doorstep, passengers might be less likely to travel to the region. A broader regional war is possible if a simple miscalculation occurs between NATO and Russia.

Webjet operates in 22 countries that include the United Kingdom, Ireland and Europe, the latter which is the biggest market.

In its first half results, the WebBeds division recorded $158 million in total transaction value (TTV) for Europe. Next on the list was the Asia Pacific region with $110 million, and North America at $93 million.

Webjet reported a cash surplus of $3.5 million per month, a significant turnaround compared to FY21. Severe lockdowns led the company to record an average monthly cash burn of $5.5 million in the previous financial year.

Webjet noted that TTV could reach pre-COVID levels by the second-half of FY23. The group portfolio will be a much leaner business, having trimmed 20% of operating costs.

All eyes will be on Webjet’s FY22 results which will be released sometime in late May.

Webjet share price summary

In the last 12 months, Webjet shares have gained around 4% after hitting the brakes in late January 2022. The share price closed at an eight-month low of $4.61 on 27 January.

Nonetheless, the company has gradually been moving on an upwards trend, but is still a long way off from pre-pandemic levels.

Based on valuation grounds, Webjet has a market capitalisation of around $2.09 billion, with approximately 380.51 million shares on issue.

The post How did the Webjet share price travel in March? appeared first on The Motley Fool Australia.

More reading

• These are the 10 most shorted ASX shares
• Top brokers name 3 ASX shares to buy next week
• Federal budget: Goldman Sachs names 4 ASX shares to buy
• Is the Webjet share price set to take off in April?
• Finally! 4 travel ASX shares ready to take off: expert

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Webjet 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 Magellan Financial Group Ltd (ASX: MFG) share price has started the week well, climbing 10% yesterday to start trade on Tuesday at $16.84.

The gain marks an 18% spike in shares over the past month after a harsh selling period that has seen Magellan shares tank 21% since January 4.

What’s up with Magellan shares?

The fund manager has suffered heavy losses in 2022 as it continues to underperform key benchmarks and its staff remains tied up in internal struggles.

Industry analysts at Bloomberg Intelligence, Matt Ingram and Jack Baxter, recently noted that Magellan may “face staff retention issues”, despite its efforts in ensuring more attractive compensation for employees.

“Magellan may face staff retention issues, we believe, despite its compensation initiative, which includes retention bonuses, amends repayment terms of its share-purchase plan (SPP), and offers employee options with a strike price of $35 vs. $16 at present,” the pair said.

“It doesn’t seem to address about $20 million of staff losses on the SPP due to a 71% stock-price slide since July – many employees need the price to top $50 to recoup their investment,” they added.

Fund outflows are likely to compound the problem, with chairman and former CIO Hamish Douglass’ recent departure. That followed soon after its former CEO Brett Cairns’ exit.

“The global fund’s performance issues and outflows, and management instability, could also prompt departures,” both analysts remarked.

“SPP loans funded by the firm, which may be valued around $19 million or $141,000 per employee for about $35 million of stock, were issued as a staff-retention step.”

These loans are required to be fully paid within three months of departure and therefore could disincentivise employees to leave.

Magellan released a prospectus for a special options package for eligible staff and shareholders that could see it raise up to $1.2 billion.

According to company filings in early March the funds giant had around $69 billion in funds under management, down from $110 billion in April 2021.

Meanwhile, 63% of analysts urge their clients to sell Magellan shares right now, with just one analyst saying to buy, according to Bloomberg data.

In the last 12 months, the Magellan share price has erased 65% and is down 21% this year to date.

The post What’s up with the Magellan (ASX:MFG) share price lately? appeared first on The Motley Fool Australia.

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• Magellan (ASX:MFG) share price dips despite free gift bonanza
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• ASX 200 (ASX:XJO) midday update: Telstra CEO steps down, Fortescue confirms E.ON deal
• Why did the Magellan (ASX:MFG) share price soar 7% on Tuesday?

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 Bruce Jackson.

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Energy shares are absolutely buoyant at the moment.

Thanks to skyrocketing oil prices and embargoes on Russian supplies, companies producing the valuable commodity that all parts of the economy need are having a fine time.

Shares for Australia’s Woodside Petroleum Limited (ASX: WPL) have thus jumped an amazing 45.9% for the year so far.

In fact, the stock was the third best performing ASX share in the first quarter, gaining 46.4% in the three months to 31 March.

The company produces both oil and gas, so it’s no wonder.

But despite the massive uptick, one expert would still buy Woodside shares if the price was right.

Aussie gas is probably too far to send to Europe, but…

Shaw and Partners portfolio manager James Gerrish told his Market Matters newsletter that out of all the gas producers, he would buy Woodside if the price fell back to a certain point.

“We like the majors and will buy Woodside Petroleum Limited if it pulls back below $30.”

The stock closed Monday at $33.02.

Many European nations have an energy shortfall after discontinuing their Russian imports.

Australian gas producers, according to Gerrish, can’t directly take advantage of that situation but will cash in indirectly.

“The distance for Australian suppliers is too great in our view,” he said.

“However, higher demand from Europe puts upward pressure on gas in Asia. That supply can head north and we backfill the Asian void.”

According to CMC Markets, analysts are somewhat divided on Woodside.

Out of 16 experts surveyed, eight rate the stock as a “strong buy” and three as a “moderate buy”. However, there are four who are neutral and one who’s recommending a sell.

Woodside shareholders haven’t just enjoyed excellent capital growth in recent months. The stock also gives out a 5.66% dividend yield.

The company, founded in 1954, is headquartered in Perth, employing about 3,600 people around the world.

The post Gas is in hot demand. This is the ASX share I’d buy: expert appeared first on The Motley Fool Australia.

More reading

• What’s on the cards for the Woodside share price in April?
• 5 things to watch on the ASX 200 on Monday
• These were the best performing ASX 200 shares during the first quarter
• What boosted the Whitehaven Coal (ASX:WHC) share price on Friday?
• The Woodside share price gained 12% in March. Here’s why

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 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 for some dividend options for your portfolio? If you are, check out the two ASX shares listed below.

Here’s why these ASX dividend shares have been tipped to as buys:

HomeCo Daily Needs REIT (ASX: HDN)

The first ASX dividend share to look at is the HomeCo Daily Needs REIT. It is a property company that invests in convenience-based assets across target sub-sectors of neighbourhood retail, large format retail, and health and services.

HomeCo Daily Needs has started FY 2022 very positively. During the first half, it reported a 38% increase in funds from operation per share, which was ahead of expectations and led to management upgrading its full year guidance.

Goldman Sachs is positive on the company and believes it is well positioned to benefit from the shift to omni channel retailing. It also notes that the company has additional external growth opportunities to drive earnings growth over the medium-term.

The broker has a buy rating and $1.70 price target on its shares. As for dividends, Goldman is forecasting dividends per share of 8 cents in FY 2022 and 9 cents in FY 2023. Based on the current HomeCo Daily Needs share price of $1.50, this will mean dividend yields of 5.3% and 6%, respectively.

Super Retail Group Ltd (ASX: SUL)

Another ASX dividend share that could be worth considering is Super Retail. It is the retail company responsible for the BCF, Macpac, Rebel, and Supercheap Auto brands.

While trading conditions have been tough in FY 2022 due to COVID lockdowns and other headwinds, Super Retail has been tipped to bounce back by the team at Morgans..

In light of this and its very attractive valuation, the broker think now could be a good time to invest. Its analysts currently have an add rating and $13.80 price target on the company’s shares.

In respect to dividends, the broker is forecasting fully franked dividends of 59 cents per share in FY 2022 and 61 cents per share in FY 2023. Based on the current Super Retail share price of $10.40, this will mean yields of 5.7% and 5.9%, respectively.

The post Analysts name 2 ASX dividend shares with 5%+ yields to buy this week appeared first on The Motley Fool Australia.

More reading

• Budget fuel excise cut: Which ASX shares could benefit?
• 2 ASX dividend with attractive yields that brokers rate as buys
• 7 small-cap ASX shares that have been oversold: Wilsons
• Analysts name 2 ASX 200 dividend shares to buy now
• 2 dividend shares analysts rate as buys with big yields and even bigger upside

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

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If you’re looking for an easy way to invest your hard-earned money, then exchange traded funds (ETFs) could be worth considering.

Rather than deciding on which individual shares you should put your money into, ETFs allow you to invest in a large group of shares through just a single investment.

With that in mind, here are three ETFs that are popular with investors right now:

BetaShares Global Energy Companies ETF (ASX: FUEL)

The first ETF to look at is the BetaShares Global Energy Companies ETF. As its name implies, this ETF provides investors with easy access to a group of global energy companies. These companies look well-placed to benefit from high energy prices, which is being caused by tight supply conditions. Among the ~55 shares included in the funds are energy giants such as BP, Chevron, ExxonMobil, and Royal Dutch Shell.

ETFS Battery Tech & Lithium ETF (ASX: ACDC)

Another ETF to look at is the ETFS Battery Tech & Lithium ETF. It provides investors with exposure to a range of companies involved in battery technology and lithium mining. These are the companies that look set to benefit greatly from the shift to clean energy and electric vehicles. Included in the ETF are AMG Advanced Metallurgical Group, Lockheed Martin, Mineral Resources Limited (ASX: MIN), and Pilbara Minerals Ltd (ASX: PLS). Jessica Amir from Saxo Markets believes this ETF could be a top option for investors. She suggested that it could be good for investors that aren’t keen on stock-picking but want to gain exposure to the carbon neutral megatrend.

VanEck Vectors Video Gaming and eSports ETF (ASX: ESPO)

A final ETF to look at is the VanEck Vectors Video Gaming and eSports ETF. This ETF gives investors easy exposure to a portfolio of the largest companies involved in video game development, hardware, and eSports. The gaming market has been growing strongly in recent years and now has an estimated 2.7 billion gamers globally according to VanEck. This bodes well for companies included in the fund such as Nvidia, Roblox, Take-Two, and Electronic Arts.

The post 3 fantastic ETFs for ASX investors to buy appeared first on The Motley Fool Australia.

More reading

• An exciting ASX ETF to ride along with the global electric vehicle boom
• 3 very exciting ETFs for ASX investors this month
• The ASX 200 just had its longest winning streak since 2017. What’s doing?
• 3 top ETFs for ASX investors in April
• Are these 2 ASX tech shares great buys in April 2022?

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 and has recommended BetaShares Global Energy Companies ETF – Currency Hedged. The Motley Fool Australia has recommended VanEck Vectors ETF Trust – VanEck Vectors Video Gaming and eSports ETF. 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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There are some diversified S&P/ASX 200 Index (ASX: XJO) shares in Australia.

BHP Group Ltd (ASX: BHP) is spread across several different resources including iron ore, copper and nickel. Telstra Corporation Ltd (ASX: TLS) offers a number of different telecommunication services, as well as Telstra Health and telco infrastructure.

But there are a few ASX 200 shares that are spread across multiple industries, such as these two:

Wesfarmers Ltd (ASX: WES)

Wesfarmers is one of the oldest businesses on the ASX. It has origins going back to 1914 as a Western Australian farmers’ cooperative.

But it has become a significantly diversified business.

The biggest business in the stable is Bunnings. A big retailer of home improvement and lifestyle products in Australia and New Zealand, and a major supplier to project builders, commercial tradespeople and the housing industry. Not only does it have hundreds of Bunnings locations, but within this segment are other businesses including Adelaide Tools, Beaumont Tiles and Tool Kit Depot.

Kmart Group includes three large retailers of a large array of products, including Kmart, Target and e-commerce business Catch.

Wesfarmers describes Officeworks as Australia’s leading retailer and supplier of office products.

The ASX 200 share now has a health division after the acquisition of Australian Pharmaceutical Industries, which includes Priceline, Clear Skincare and Soul Pattinson chemists.

Wesfarmers has a chemicals, energy and fertilisers division. Within that, it owns 50% of Covalent Lithium which owns the Mt Holland lithium project. This will be a fully integrated producer of battery quality lithium hydroxide in WA.

It has an industrial and safety division which includes Workwear Group, Coregas and safety gear business Blackwoods.

Finally, the company owns parts of other businesses including Flybuys, BWP Trust (ASX: BWP), Gresham Partners and Wespine Industries.

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

Soul Pattinson is another of ASX’s oldest businesses. It was listed in 1903 as a pharmacy business – the same Soul Pattinson pharmacy business that Wesfarmers just acquired.

These days, the ASX 200 share owns a wide array of private and listed businesses.

It has a portfolio of cornerstone shareholdings in different industries. Soul Pattinson owns 12.6% of TPG Telecom Ltd (ASX: TPG), 43.3% of Brickworks Limited (ASX: BKW), 39.9% of New Hope Corporation Limited (ASX: NHC), 29.8% of Apex Healthcare, 25.4% of Tuas Ltd (ASX: TUA) and 36.5% of Pengana Capital Group Ltd (ASX: PCG).

Next, the investment conglomerate has a portfolio of ASX 200 shares that aim to generate long-term capital and income growth. That includes Commonwealth Bank of Australia (ASX: CBA), Macquarie Group Ltd (ASX: MQG), Woolworths Group Ltd (ASX: WOW), Wesfarmers, Transurban Group (ASX: TCL) and BHP.

Soul Pattinson also owns an ‘emerging’ companies portfolio. Some examples within this portfolio include Bailador Technology Investments Ltd (ASX: BTI), Life360 Inc (ASX: 360), Uniti Group Ltd (ASX: UWL), Clover Corporation Limited (ASX: CLV), Electro Optic Systems Holdings Ltd (ASX: EOS) and Firefinch Ltd (ASX: FFX).

The ASX 200 share also owns a growing portfolio of private companies which it describes as platforms for further growth. Some examples in the private equity portfolio include Round Oak Metals (resources), agriculture and water investments, Ironbark (financial services), Ampcontrol (electrical parts) and Aquatic Achievers (swimming schools).

It also has a structured yield portfolio that invests across the ‘capital structure’. Finally, it has a small property portfolio, partly because of its look-through interest in the Brickworks industrial portfolio.

The post These are 2 of the most diversified ASX 200 shares appeared first on The Motley Fool Australia.

More reading

• Wesfarmers share price in the green amid overhaul news
• 2 ASX 200 dividend shares brokers rate as buys
• What happened to the Wesfarmers share price in March?
• Here’s why Motley Fool analyst Ed Vesely loves this old-school ASX dividend share
• Here’s a look at some ASX shares with ex-dividend dates coming up in April

Motley Fool contributor Tristan Harrison owns Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Bailador Technology Investments Limited, Brickworks, Clover Corporation Limited, Electro Optic Systems Holdings Limited, Life360, Inc., and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns and has recommended Brickworks, Electro Optic Systems Holdings Limited, Telstra Corporation Limited, Washington H. Soul Pattinson and Company Limited, and Wesfarmers Limited. The Motley Fool Australia has recommended Bailador Technology Investments Limited, Macquarie Group Limited, TPG Telecom Limited, and Uniti Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Sonic Healthcare Limited (ASX: SHL) share price has fallen significantly since the start of 2022. But the business could be a long-term opportunity.

Sonic Healthcare is a global pathology business. In the first half of FY22, it generated more than $100 million of revenue from each of the following countries: Australia, the United States of America, Germany, the United Kingdom and Switzerland. It also generated $96 million of revenue in Belgium.

It also has two other divisions in Australia: radiology and clinical services.

Here are three reasons why the Sonic Healthcare share price could be an interesting idea.

Ongoing revenue growth

The company’s base business revenue, which excludes COVID-19 revenue, keeps growing. In fact, it’s achieving organic growth.

FY22 half-year base revenue increased 4.3% year on year. The company expects ongoing growth of its base business, with “strong” underlying drivers, including a catch-up of testing postponed through the pandemic.

But it also made $1.3 billion of COVID-19 testing revenue, up 16% year on year.

Future COVID testing levels depend on the evolution of testing regimes and seasonal outbreaks. However, the company is expecting a sustainable level of COVID testing into the future, including routine COVID testing, screening programs, variant testing, whole-genome sequencing, and antibody tests.

It has also made acquisitions to boost its revenue and scale, including ProPath and Canberra Imaging Group.

The ASX healthcare share continues to look for acquisitions. It has a pipeline of opportunities under evaluation. Management said the company’s balance sheet is well-positioned to fund acquisitions and other growth opportunities.

Shareholder returns

Sonic Healthcare wants to make more revenue and profit. But the company also intends to reward shareholders over the long term.

The company’s gearing levels are currently at a “record low level,” so the board wants to move the business towards its long-term debt average through acquisitions and a share buyback.

That on-market buyback is for up to $500 million over the next 12 months. This will help financial statistics like earnings per share (EPS) and return on equity (ROE).

The company also has a progressive dividend strategy that has seen the dividend climb over the last decade.

The board increased sonic Healthcare’s interim dividend by 11% to 40 cents per share. At the current Sonic Healthcare share price, it has a grossed-up dividend yield of 3.8% with a franking rate of 100%.

Technology investment

The ASX healthcare share recently partnered with Harrison.ai after a global search, buying a 20% stake. Sonic described Harrison.ai as a world leader in healthcare artificial intelligence.

Sonic says that artificial intelligence has significant potential to enhance diagnostic accuracy, ‘reproducibility’ and efficiency in pathology and radiology.

According to Sonic, Harrison.ai has partnered with I-MED Radiology Network to form Annalise.ai, which has, in under two years, developed the world’s “most comprehensive AI solution for chest X-ray”. An AI solution for brain CT will soon be launched. Other radiology AI modules will follow.

Sonic is doing a joint venture with Harrison.ai to develop ‘best-in-class’ AI diagnostic tools for anatomical and clinical pathology. Sonic is deploying the Annalise.ai chest X-ray tool in more than 100 Sonic radiology sites throughout Australia.

To conclude its bullishness about the partnership, Sonic said:

Sonic’s deep clinical expertise, combined with Harrison.ai’s proven AI methodologies, [is] set to create [a] powerful force in healthcare AI.

The post 3 reasons why the Sonic Healthcare (ASX:SHL) share price could be an opportunity appeared first on The Motley Fool Australia.

More reading

• Top ASX shares to buy in April 2022
• Why these 3 ASX healthcare shares could get a boost from the federal budget
• Are these 2 ASX dividend shares top buys for income in April?
• Top brokers name 3 ASX shares to buy today
• 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 no position in any of the stocks mentioned. The Motley Fool Australia has recommended Sonic Healthcare 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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Ask A Fund Manager

The Motley Fool chats with fund managers so that you can get an insight into how the professionals think. In this edition, Atlas Funds Management chief investment officer Hugh Dive names two ASX shares that represent awesome money-making models.

Hottest ASX shares

The Motley Fool: What are the 2 best stock buys right now?

Hugh Dive: So, the two best buys that we’re looking at, we actually have been buying these two stocks. This is not a vague idea. 

The two things we’ve been buying the most lately have been Deterra Royalties Ltd (ASX: DRR), and Atlas Arteria Group (ASX: ALX), our namesake, but has nothing to do with me. It’s a collection of toll roads in eastern France. 

One of the reasons why we like Deterra Royalty Trusts [is] it’s a bit of a novel concept. I think it’s one of the only royalty trusts listed on the ASX. My background is I started off working in funds management in Canada. Royalty trusts are very popular there. I understand them very well. The way a royalty trust works is instead of actually owning a mine or owning an asset and having to operate it, you just get a percentage of the revenues off it. 

Deterra Royalty spun out of Iluka Resources Limited (ASX: ILU) a bit over a year ago, and they get a 1.23% royalty stream off the revenue of BHP Group Ltd (ASX: BHP)’s mining area C. 

One of the reasons why I like that is because mining costs are going up at the moment. We all know that. Labour costs are going up. With a royalty trust, that doesn’t matter. They just get the percentage of the revenue. So, they don’t have to build anything. They don’t have to dynamite any iron ore. They don’t have to pay any wages. They just get a cheque every month. We like that a lot. 

MF: So why do mining companies create these loyalty trusts? Because they just seem like they do nothing and receive money!

HD: Well, for example, Deterra’s thing is they own the land. They own the resource. 

MF: Oh, they’re the landlord. 

HD: Yes. BHP came in there. It has nothing to do with BHP. BHP as the operator, the asset, they needed more iron ore. Their existing nearby mines in Yandi were winding down. They needed to expand it, so they’ve come in and said, “Okay, we’ll do this, and you get to clip the ticket.”

It’s probably not ideal for BHP, but it’s very good for the royalty trust shareholders. It’s a much bigger asset class, particularly in Canada, and also more in precious metals. 

MF: I see. And that’s how it links back to your fund.

HD: Yeah, so it’s a trust structure. Everything gets passed through, which is great. So, the EPS, earnings per share, equals the DPS [dividend per share], minus a fractional amount. There’s, I think, five people in head office. So, yeah, it’s a good little asset, and I think the value of that will be realised over the long term too, quite well.

The other thing we’ve been buying a lot is Atlas Arteria. That is a group of toll roads. It’s listed on the ASX. A group of toll roads in eastern France. That bounced back much faster than we expected when the lockdowns were opened in France. Has extremely low cost of debt. Great set of assets. Dividends are growing quite strongly. 

It gives a bit of a guidance for Transurban Group (ASX: TCL) shareholders in what happens when lockdowns get lifted. People are not catching the trains, but they’re happy to drive, and moving around a lot of goods. Online shopping. 

So we like toll roads. And especially where the revenue goes up each year. Automatically increases each 1st of July with inflation. Unlike a lot of companies, where you have to sort of bargain with your customers to increase your prices, with toll roads like Atlas Arteria or Transurban, it’s a couple of clicks on a keyboard on the 1st of July and it automatically goes up. There’s no bargaining, no sort of anguished meetings. It just automatically increases. 

MF: So both Deterra and Atlas are mainly dividend plays. But do you also look at capital growth?

HD: We’ll see a bit of capital growth. BHP are expanding their operations on Deterra’s assets, so they’ll increase. As the revenues and as dividends increase, you’ll see the price increase. 

So a bit of capital growth. But running an income fund, I’m very conscious of owning companies that have a high and quite stable dividend yield. 

Because when I’m writing calls over the top, I’ve got in the back of my mind, I need it to deliver 7% to investors. And so, there’s little tolerance for companies that are not paying strong dividends and stable dividends, because that volatility is difficult to handle.

The post Here’s an ASX share that makes money doing nothing appeared first on The Motley Fool Australia.

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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 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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