After a poor start, in afternoon trade the S&P/ASX 200 Index (ASX: XJO) is on course to start the week with a gain. At the time of writing, the benchmark index is up 0.3% to 7,242.7 points.

Four ASX shares that have failed to follow the market higher today are listed below. Here’s why they are sinking:

Altium Limited (ASX: ALU)

The Altium share price is down 6% to $32.44. This morning the electronic design software provider reported a 28% increase in half year revenue to US$102 million and a 38% lift in net profit after tax to US$23 million. While this was strong, its guidance appears to have disappointed the market. Management now expects to hit the high end of its revenue guidance range, but only the low end of its margin guidance range. This implies a miss on earnings based on consensus forecasts.

PointsBet Holdings Ltd (ASX: PBH)

The PointsBet share price is down 11% to $4.00. Investors have been selling this sports betting company’s shares following the release of a disappointing update form rival DraftKings. Its shares crashed 22% on the Nasdaq on Friday after revealing a loss of US$326 million for the fourth quarter. It also warned that it was likely to make a loss of US$1 billion in FY 2022. This is being driven largely by marketing activities.

Tyro Payments Ltd (ASX: TYR)

The Tyro share price has crashed 28% to $1.56. The catalyst for this was the release of the payments company’s half year results. Although Tyro reported a 31% increase in transaction value to $15.8 billion, its EBITDA tumbled 67% to just $2.8 million. Tyro’s margins were impacted by investments in growth initiatives, wage inflation, and the removal of JobKeeper.

Zip Co Ltd (ASX: Z1P)

The Zip share price has tumbled 7% to $2.38. This follows the release of an update from the buy now pay later (BNPL) provider ahead of its half year results later this week. While that update revealed strong top line growth, it was the bottom line which spooked investors. Due partly to Zip’s net bad debts rising to 2.6% of transaction volumes, the company expects to post a cash EBTDA loss of $108.1 million for the half.

The post Why Altium, PointsBet, Tyro, and Zip shares are sinking today appeared first on The Motley Fool Australia.

More reading

• These 3 ASX 200 shares are topping the volume charts this Monday
• Why is the PointsBet (ASX:PBH) share price crashing 11% today?
• Tyro (ASX:TYR) share price plummets 25% as COVID takes its toll
• Zip (ASX:Z1P) share price sinks to new 52-week low after revealing rising debts and big loss
• ASX 200 (ASX:XJO) midday update: AGL rejects takeover offer, A2 Milk shoots higher

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 Altium, Pointsbet Holdings Ltd, Tyro Payments, and ZIPCOLTD FPO. The Motley Fool Australia has recommended Pointsbet Holdings Ltd and Tyro Payments. 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 IGO Ltd (ASX: IGO) share price is sliding after the company confirmed it’s in discussions to acquire one of the world’s richest copper mines.

The exploration and mining company responded to rumours this morning, saying it’s in exclusive talks to buy the CSA Copper Mine from Glencore.

But the potential acquisition hasn’t excited the market. The IGO share price has tumbled 6.2% to trade at $11.49, at the time of writing.

Let’s take a closer look at today’s news from the $9 billion resources giant.

IGO confirms more acquisition discussions

The IGO share price is struggling today after the company confirmed it is making yet another move to acquire a major Australian resource.

It’s currently digging through the copper mine’s books as part of acquisition discussions. In the meantime, IGO has warned investors not to get too excited just yet.

The company said it hasn’t made any decisions and often partakes in acquisition talks.

IGO’s confirmation of takeover discussions followed reporting by the Australian Financial Review claiming IGO was named the preferred bidder for the CSA Copper Mine.

Additionally, according to the publication, IGO is expected to undergo an equity raise to pay for it.

The mine, at Cobar in regional New South Wales, is reportedly worth upwards of $1 billion.

As of 31 December 2021, IGO had $570 million of cash and no debt.

The CSA mine produces around 50,000 tonnes of copper annually with average grades of 5% to12%. According to Glencore, that makes it one of the world’s richest copper mines.

The news comes just days after Fortescue Metals Group Limited (ASX: FMG) boss Andrew ‘Twiggy’ Forrest gave the ‘thumbs up’ for IGO’s proposed $1 billion acquisition of Western Areas Ltd (ASX: WSA). Forrest confirmed his intent to vote in favour.

Twiggy’s investment vehicle, Tattarang, holds a 9.8% stake in the nickel producer.

IGO placed an all cash $3.36 per share offer for the company in December.

IGO share price snapshot

Today’s dip has almost wiped the IGO share price gains for the 2022 calendar year.

The company’s share price is now less than 1% higher than it was at the start of this year.

However, the exploration and mining company’s stock has gained 74% over the last 12 months.

The post IGO (ASX:IGO) share price tumbles 6% on new acquisition talks appeared first on The Motley Fool Australia.

More reading

• IGO (ASX:IGO) share price lifts as Twiggy greenlights nickel acquisition
• Why is this broker so bullish on the IGO (ASX:IGO) share price?
• Leading brokers name 3 ASX shares to sell today
• IGO (ASX:IGO) share price lower as revenue slides 18%

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 Bruce Jackson.

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The Dicker Data Ltd (ASX: DDR) share price is pushing higher today following the company’s acquisition announcement.

During early afternoon trade, the IT distributor’s shares are exchanging hands for $14.60, up 1.39%.

In comparison, the S&P/ASX 200 Index (ASX: XJO) is hovering around 7,230 points, up 0.12% for the day.

Dicker Data moves to takeover Hills’ Security and IT division

Investors are bidding up the Dicker Data share price following the latest announcement by the company.

According to its release, Dicker Data advised it has entered into a conditional business sale agreement with ASX-listed Hills Ltd (ASX: HIL).

Under the deal, Dicker Data acquired the Security and Information Technology (SIT) distribution division of Hills for around $20 million.

Dicker Data stated that the purchase price represents a premium to the net assets sold. Thus, the final amount is largely dependent upon inventory related balances at the completion date.

Headquartered in New South Wales, Hills is Hills is the largest distributor of physical security products in the Australian market.

In FY21, the SIT division generated $123.2 million in revenue, comprising $98.7 million to security and $24.4 million to IT products.

Once the acquisition is finalised, Dicker Data will be the leading distributor in the SIT space. This will see the company gain not only the business, but inventory, customer and vendor relationships, employees, along with other net assets of the business.

Notably, the Hills SIT division currently has over 2,000 customers, of which 85% are new to Dicker Data. This is expected to grow the company’s total active customer base to over 10,000 businesses across Australia and New Zealand.

The proposed acquisition is subject to Hills shareholder approval, which will be at a general meeting sometime in April 2022.

What did management say?

Dicker Data chair and CEO, David Dicker commented:

This will add an entirely new Business area to our company and introduce us to a wide range of new customers, as well as adding significant new revenue with the promise of significant expansion on that, going forward.

Ultimately, we have determined that a change of ownership to an organisation with strong capability in technology distribution and solutions, is in the best interests of the Hills shareholders and the future success of the SIT division, its people, suppliers and customers.

Despite being flat in 2022, the Dicker Data share price has risen by almost 30% since this time last year.

The post ‘Adding significant revenue’: Dicker Data (ASX:DDR) share price edges higher on takeover announcement appeared first on The Motley Fool Australia.

More reading

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• Why CBA, Computershare, Dicker Data, and Temple & Webster shares are on fire today
• Here’s why the Dicker Data (ASX:DDR) share price is having such a great week

Motley Fool contributor Aaron Teboneras owns Dicker Data Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Dicker Data Limited. The Motley Fool Australia owns and has recommended Dicker Data 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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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) has fought back from a poor start and is pushing higher. At the time of writing, the benchmark index is up 0.3% to 7,242.7 points.

Four ASX shares that are climbing more than most today are listed below. Here’s why they are charging higher:

A2 Milk Company Ltd (ASX: A2M)

The A2 Milk share price has surged 11% higher to $5.88. This follows the release of the infant formula company’s half year results. Although A2 Milk reported a 53.3% decline in its net profit to NZ$56 million, management’s upbeat commentary appears to have offset this. It is expecting a stronger than previously expected second half thanks to growth in China label and English label infant formula.

AGL Energy Limited (ASX: AGL)

The AGL share price has jumped 12% to $8.01. This morning the energy giant received and rejected a takeover approach from a consortium led by Brookfield Asset Management and Atlassian co-founder Mike Cannon-Brookes’ private investment firm, Grok Ventures. At $7.50 per share, AGL believes the offer undervalues the company. It intends to push ahead with its demerger plans instead.

Endeavour Group Ltd (ASX: EDV)

The Endeavour share price is up 10% to $7.18. This follows the release of the drinks company’s half year results. Although Endeavour reported broadly flat revenue at $6.3 billion, that couldn’t stop it from growing its net profit after tax by 15.6% to $311 million. The latter was driven by premiumisation trends and a reduction in promotional spend.

TPG Telecom Ltd (ASX: TPG)

The TPG share price is up 3% to $5.97. This morning the telco announced a surprise deal with rival Telstra Corporation Ltd (ASX: TLS). Telstra and TPG have signed a ten-year regional Multi-Operator Core Network (MOCN) commercial agreement. This will see TPG gain access to around 3,700 of Telstra’s mobile network assets in regional and urban fringe areas, increasing its current 4G coverage from around 96% to 98.8% of the population.

The post Why A2 Milk, AGL, Endeavour, and TPG shares are charging higher appeared first on The Motley Fool Australia.

More reading

• A2 Milk (ASX:A2M) share price jumps 12% on ‘improved’ outlook
• ASX 200 (ASX:XJO) midday update: AGL rejects takeover offer, A2 Milk shoots higher
• Telstra (ASX:TLS) share price rises on surprise TPG deal
• Crack a bottle! Endeavour (ASX:EDV) share price jumps 11% on profit lift
• The week ahead: Earnings, wages and business conditions. Scott Phillips on Nine’s Late News

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 A2 Milk and TPG Telecom 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 have gone about your investment in 2022 so far without hearing the word ‘inflation’, then you’d be doing very well. Inflation, and the prospect of higher interest rates that usually come with it, has been a dominant theme of the year so far. Speculation that central banks around the world will raise interest rates and curb quantitative easing (QE) programs has been spooking investors for months now, and is a major factor in the volatility we have seen on the share market recently.

So if higher inflation is coming, will it really be terrible for all ASX shares?

Well, the answer is complicated. Inflation is a challenge for all businesses, seeing as it comes with rising input costs. In a high inflation environment, costs such as labour, transport and raw materials typically rise and keep rising. That means a business has to match these rises with passed-on price increases of its own. Not exactly a recipe to keep customers happy and loyal.

But when it comes to a business’s ability to pass these costs on, some businesses are more equal than others.

Fund maanger: How to beat inflation in your ASX share portfolio

Tim Carleton is principal at fund manager Auscap Asset Management. He recently gave an interview with the Australian Financial Review (AFR). He says that some companies can handle inflation better than others. And finding them isn’t always difficult:

It’s not rocket science… It’s finding companies that have proven themselves to be high-quality companies. And broadly, you’ve got a bit of a cheat function to determine whether something’s a high-quality company, and that’s go and have a look at its statutory ROI [return on investment]…

Everyone talks about moats and competitive advantages. Well, if they have a demonstrably higher ROI than their peers, there’s obviously something there.

So there you have it, what to look out for if you’re searching for an inflation-proof investment in this Brave New World of inflation we are entering. For starters, Carleton names BHP Group Ltd (ASX: BHP) and REA Group Limited (ASX: REA) as two shares that he sees as fitting into the above criteria.

But if you’re still a bit worried about what the future holds, remember this. The ASX and global markets have seen periods of high inflation before. And while it has always caused some disruptions, markets have never failed to move higher, sooner or later. That’s a sentiment Mr Carleton echoes:

The reality is, the Aussie market, the US market, most markets have climbed walls of worry in the last 100 years, and still delivered the best returns over different asset classes.

A silver lining for every cloud!

The post Why inflation doesn’t impact all ASX shares equally appeared first on The Motley Fool Australia.

More reading

• Fund manager reveals one key metric in finding quality ASX shares during a correction
• Do ASX investors simply have to get used to volatility?
• ASX 200 (ASX:XJO) midday update: AGL rejects takeover offer, A2 Milk shoots higher
• Is the BHP (ASX:BHP) record interim dividend the best use of the miner’s cash?
• 5 things to watch on the ASX 200 on Monday

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 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 Mesoblast Limited (ASX: MSB) share price is marching higher today, up 2%.

Mesoblast shares closed Friday at $1.12 and are currently trading for $1.14.

Below we look at the clinical trial results that appear to be spurring investor interest in the ASX biotech share.

What trial results were announced?

The Mesoblast share price is in the green after the company reported positive results from its first patient cohort in a randomized, controlled study of remestemcel-L.

Mesoblast said that remestemcel-L was administered by direct endoscopic delivery to areas of inflammation in patients with medically refractory ulcerative colitis. You may be more familiar with the other term for the disease, Crohn’s colitis.

According to the release, rapid mucosal healing and disease remission were recorded following a single local delivery of remestemcel-L by colonoscopy. Without treatment, the patients are at high risk of needing surgery which, Mesoblast said, can have a “devastating impact on quality of life”.

Commenting on the trial, Amy Lightner, Associate Professor of Surgery at Cleveland Clinic said:

Mesenchymal stromal cells [remestemcel-L] offer a safe therapeutic for the treatment of medically refractory Ulcerative Colitis and Crohn’s colitis,” said Dr. Lightner. “Early data suggests improved clinical and endoscopic scores as early as two weeks following remestemcel-L delivery.

Mesoblast’s chief medical officer, Eric Rose added:

This randomized controlled trial is the first to evaluate local delivery of remestemcel-L directly into the inflamed colon, using objective endoscopic measures of mucosal healing, in patients with colitis who are at high risk of surgical resection of their colon.

One of the key results of the interim analysis performed in the first 12 enrolled patients was that none of them displayed any treatment related adverse effects.

And all of them had improved clinical and endoscopy scores within two weeks of treatment.

Mesoblast share price snapshot

The Mesoblast share price has struggled over the past 12 months, down 56%. That compares to a gain of 6% posted by the All Ordinaries Index (ASX: XAO) in that same period.

So far in 2022, Mesoblast shares are down 19%.

The post Here’s why the Mesoblast (ASX:MSB) share price is climbing today appeared first on The Motley Fool Australia.

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• These are the 10 most shorted ASX shares
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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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CSL Limited (ASX: CSL) shares have come back into investors’ view over the last week. This has been in response to the company releasing its first-half results to the market on Wednesday.

Investors have now had some time to digest the announcement which included a 2.8% reduction in net earnings. In turn, the CSL share price has settled roughly in line with where it finished after handing down its results.

The Australian biotechnology company has missed out completely on any kind of COVID-19 vaccine boost. Meanwhile, pharmaceutical giants such as Pfizer Inc (NYSE: PFE) snagged a winner.

The US-based vaccine maker said it generated US$13 billion in COVID-19 vaccine revenue. In addition, Pfizer expects to reach US$36 billion in revenue from its vaccine for the full 2021 calendar year. To put that into perspective, CSL booked US$10.61 billion in revenue for 2021 across all its segments.

Despite this, CSL’s CEO is not getting hung up on the missed opportunity. Let’s take a look at why.

Focusing on the flu

After canning its efforts to develop its own COVID-19 vaccine in partnership with the University of Queensland, CSL has fallen back on its key expertise — developing influenza vaccines.

In the first half, CSL’s influenza vaccine division — Sequirus — notched up a record volume of roughly 110 million doses distributed. The achievement also translated into financial performance as Seqirus’ revenue increased 17% to US$1.685 billion.

To move away from its majority weighting towards egg-based flu vaccines, CSL is expanding upon its cell-based manufacturing capability. This involves an $800 million cell culture facility in Tullamarine set for completion in 2023.

Cell-based vaccines are made without the need for growing a flu virus inside of an egg. Essentially, this removes the need to worry about egg supply. Additionally, some studies suggest cell-based vaccines may offer better protection compared to egg-based.

Another consideration for CSL shares is the company’s push for its own mRNA development. However, CSL is tackling what is being heralded as the next evolution of mRNA vaccines — self-amplifying messenger RNA (sa-mRNA).

However, ASX-listed CSL lost a bid against Moderna Inc (NASDAQ: MRNA) to build a specialised research facility in Australia for mRNA technology.

Talking about this, CSL CEO Paul Perreault said:

Australia doesn’t want us as part of that, OK. In the US we have a new contract with BARDA that includes Self Amplifying Messenger RNA (sa-mRNA). In the UK we have very strong relationships and they’re interested and when we look at Europe there’s interest there as well. So I’m not fussed from that perspective.

Analysts’ take on CSL shares

Following the company’s half-year results, analysts have gone back to the drawing board to work out what CSL shares could be worth going forward.

The team at Morgans has concluded the biotechnology giant is worth a price target of $327.60. This would suggest a 24% upside from the current CSL share price. Improvement in plasma collections was a pleasing sight to the analyst team.

The post Own CSL shares? Boss reveals why biotech is ‘not fussed’ about exiting COVID vaccine race appeared first on The Motley Fool Australia.

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• The ‘tide is beginning to turn’: CSL (ASX:CSL) share price tipped to rise
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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended CSL Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Santos Ltd (ASX: STO) share price is in the red on Monday despite no news having been released by the company.

However, there is one explanation for the oil producer’s suffering. Santos’ shares are trading ex-dividend today.

At the time of writing, the Santos share price is $6.86, 2% lower than its previous close.

For context, the S&P/ASX 200 Index (ASX: XJO) has recovered from a morning dip to trade 0.12% higher.

Additionally, the S&P/ASX 200 Energy Index (ASX: XEJ) – Santos’ home sector – is up 0.04% right now.

Let’s take a closer look at what could be weighing on the Santos share price today.

What’s driving the Santos share price lower on Monday?

The Santos share price is sliding lower as traders buying into the company miss their chance to secure its upcoming dividend. That’s right, Santos’ stock is now ex-dividend.

For those who aren’t familiar with the term, it means that Santos will only be paying dividends out to investors who held its shares as of yesterday’s close.

Generally, stock’s tend to fall in line with the value of their dividend on their ex-dividend dates, as potential buyers will miss out on the value of the payout.

Santos’ final dividend for 2021 is worth 8.5 US cents – around 12 Australian cents – and is 70% franked.

It represents 1.71% of the oil producer’s previous closing price – $7. That likely helps explain some of the energy giant’s falls today.

The company’s latest final dividend will be paid to yesterday’s investors on 24 March 2022.

Impressively, Santos’ upcoming dividend is 70% higher than the company’s final dividend for 2020, which was worth just 5 US cents – around 6.9 Australia cents at today’s exchange rate.

It’s also Santos’ highest dividend since its 2015 interim dividend. Back then, it handed investors 15 US cents – around 21 Australian cents.

The post Why is the Santos (ASX:STO) share price underperforming today? appeared first on The Motley Fool Australia.

More reading

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• Why BHP, Fortescue, Netwealth, and Santos shares are falling

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 Bruce Jackson.

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The PointsBet Holdings Ltd (ASX: PBH) share price has started the week on a very disappointing note.

In afternoon trade, the sports betting company’s shares are down 11% to a new 52-week low of $3.99.

This means the PointsBet share price is now down 44% since the start of the year.

Why is the PointsBet share price sinking again?

The weakness in the PointsBet share price on Monday has been caused by an update from one of the company’s biggest rivals.

On Friday, Nasdaq-listed sports betting giant, DraftKings, released its quarterly update. And as you might have guessed, this update did not go down well with the market. In fact, the DraftKings share price crashed 22% on Friday night and hit a 52-week low of its own.

DraftKings revealed that it made a massive loss of US$326 million during the fourth quarter of FY 2021. And unfortunately, these losses aren’t expected to end any time soon. The company advised that it expects to post a loss of ~US$1 billion in FY 2022.

These losses are largely being driven by customer acquisition costs. This has many in the market questioning the long-term profitability of sports betting companies.

And while PointsBet finished the second quarter with a cash balance of A$523.3 million, investors may be wondering how long that will last if it wants to keep up with the likes of DraftKings.

Is this a buying opportunity?

While it is never a good idea to catch a falling knife, the team at Goldman Sachs sees a lot of value in the PointsBet share price.

At the end of January, the broker retained its buy rating with a $9.97 price target. This is more than double where its shares trade at today.

Goldman appears optimistic the company can navigate successfully through the difficult operating environment.

It said: “In our view, the company has been able to thus far execute on the balancing act of juggling the forces of handle share, marketing promotional activity and margins. We think this highlights the strong foundation of its US franchise, underpinned by its leading proprietary tech stack and product offering.”

The post Why is the PointsBet (ASX:PBH) share price crashing 11% 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. owns and has recommended Pointsbet Holdings Ltd. The Motley Fool Australia has recommended Pointsbet Holdings 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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One of the country’s respected fund managers has outlined a key metric to look for when it comes to finding some ASX share opportunities.

The ASX share market saw a correction during January 2022. There is plenty of speculation about what interest rates are going to do this year as central banks try to keep inflation under control.

But Auscap Asset Management Tim Carleton believes that there’s a metric that investors can focus on to find opportunities, according to the Australian Financial Review. He also outlined some ASX shares that could be opportunities.

Mr Carleton actually thinks some of the companies being sold-off are opportunities:

The one thing that I think is getting confused is this correction, particularly in highly priced stocks in the market, has nothing to do with the outlook for the domestic economy. For us, it’s very positive.

The special investment metric

It was pointed out that just because the economy is seeing inflation, that doesn’t mean that all businesses and ASX shares will be affected in the same way. Certain ones could benefit from higher inflation.

Which ones are high-quality? The answer, for Mr Carleton, is to look at the return on investment (ROI):

It’s not rocket science. It’s finding companies that have proven themselves to be high-quality companies. And broadly, you’ve got a bit of a cheat function to determine whether something’s a high-quality company, and that’s go and have a look at its statutory ROI.

Everyone talks about moats and competitive advantages. Well, if they have a demonstrably higher ROI than their peers, there’s obviously something there.

A good business isn’t a popular business, it’s not a business that’s getting a lot more users. A business to its owner is only valuable to the extent that it produces cash flow that the owner can take out of the business.

Which ASX shares are high-quality?

The investment manager gave a few different examples, as reported by the AFR.

First was BHP Group Ltd (ASX: BHP). This is one of the world’s biggest resources businesses which has operations focused on commodities like iron ore, copper and nickel. It’s divesting oil and expanding into potash. The fund manager said that BHP has got better deposits than peers.

Another mentioned business was REA Group Limited (ASX: REA). It’s the owner of digital Australian real estate portals realestate.com.au and realcommercial.com.au, as well as other real estate-related businesses. REA Group also has a number of international property portal investments in Asia and the US. Mr Carleton notes that REA Group has a very strong position in the online property portal space.

Another two ASX shares that were mentioned as potential opportunities were JB Hi-Fi Limited (ASX: JBH) and Nick Scali Limited (ASX: NCK).

JB Hi-Fi generated a “very, very strong result” as well as ongoing positive year-on-year growth for January 2022. Commenting on expectations that consumer demand for electronics would drop at JB Hi-Fi, the fund manager said:

And so as a result, that stock is trading at a very deep discount to the rest of the market, despite the fact that it’s an extremely high-quality retailer, very, very well run, generates a truckload of cash and has a very strong capital position.

Nick Scali was also named as an ASX share facing a similar narrative despite the strong housing cycle and high earnings before interest and tax (EBIT) margin. But it’s on a “low double-digit earnings multiple”. But the ASX share has one of the best management teams and is conservatively run, according to the fund manager.

The post Fund manager reveals one key metric in finding quality ASX shares during a correction appeared first on The Motley Fool Australia.

More reading

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• Own BHP (ASX:BHP) shares? CEO says inflation is here to stay and it’s positive for the miner
• 2 buy-rated ASX dividend shares with big yields
• 2 ASX dividend shares with BIG yields

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 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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