The Hazer Group Ltd (ASX: HZR) share price is powering ahead today despite the broader market being sold off.

At the time of writing, the hydrogen producer’s shares are swapping hands for $1.08, up 13.68%.

In comparison, the All Ordinaries (ASX: XAO) is currently 0.86% lower to 7,521.1 points.

What’s the move behind Hazer shares charging higher?

The Hazer share price is climbing after the company announced a framework to develop a low-carbon emission hydrogen production facility in Canada.

In its release, Hazer advised it has signed a memorandum of understanding (MOU) with Suncor Energy Inc and FortisBC Energy Inc.

The proposed hydrogen project will process natural gas feedstock to produce 2,500 tonnes per annum of low-carbon emission hydrogen and approximately 9,000 tonnes of synthetic graphite by-product.

Under the MOU, the three co-parties will work together to advance the project from concept to implementation. This includes conducting a feasibility study, securing funding arrangements, and concluding all binding agreements to establish the project consortium and carry out the project.

Suncor will lead the development of the project and, on completion, will operate the facility. FortisBC will supply natural gas feedstock and will purchase the hydrogen produced from the facility. Lastly, Hazer will supply the technology, lead engineering components, and manage the supply of catalyst to the project.

The feasibility study is expected to begin this month with the award of an engineering services contract.

A final investment decision (FID) is being scheduled for 2023, with operations targeted to kick off in 2025.

As part of the technology sharing program, Hazer will receive royalty payments to support the development of its technology.

The news comes after Australia and New Zealand Banking Group Ltd (ASX: ANZ) released a handbook claiming Australia can play a “pivotal role” in the hydrogen export market.

Management commentary

Speaking on the announcement boosting the Hazer share price today, CEO Geoff Ward said:

We are delighted to enter into this collaboration with Suncor and FortisBC, two leading Canadian energy companies committed to building new business opportunities in decarbonisation.

The proposed hydrogen project will materially advance the Hazer technology building on the work that we are doing at the current Hazer Commercial Demonstration Project at Woodman Point in Perth, Australia.

Canada is an excellent jurisdiction for the Hazer technology, with strong platforms and incentive programs to drive decarbonisation action, access to a well-priced low carbon intensity electrical grid and strong demand for low-carbon energy across power, heating and industrial sectors.

About the Hazer share price

Despite today’s strong gains, the Hazer share price has fallen by 25% over the past 12 months. When looking at the year to date, its shares are down by roughly 7%.

Hazer presides a market capitalisation of about $172.67 million and has approximately 162.89 million shares on its books.

The post Hazer (ASX:HZR) share price rockets 14% on low-carbon hydrogen project appeared first on The Motley Fool Australia.

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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 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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In what would be a disappointing end to the week for ASX investors, the S&P/ASX 200 Index (ASX: XJO) has taken a nasty tumble this Friday thus far. At the time of writing, the ASX 200 is down by a notable 1.1%. But that’s nothing compared to the Appen Ltd (ASX: APX) share price. Appen shares are currently down a nasty 6.67% at $8.39 each.

That puts Appen’s 2022 performance to date at a miserable -24.9%. It also means that Appen shares are now down close to 80% from the all-time highs we saw back in August 2020.

So what’s gone so wrong with the Appen share price today?

Well, we can’t quite be certain. There’s been no major news or announcements out of Appen today, indeed for the past week or so.

But it’s possible that Appen shares have been caught up in the ASX tech share selloff we seem to be witnessing so far this Friday. Although the ASX 200 is down by more than 1% so far, the S&P/ASX All Technology Index (ASX: XTX) is faring far worse. It’s currently down by more than 2.7%.

Down 7%! What’s Appen-ing to Appen shares?

This, naturally, has seen ASX tech shares shed value across the board. For example, Block Inc CDI (ASX: SQ2) shares are down close to 6%. Xero Limited (ASX: XRO) shares have lost close to 4%. And the WiseTech Global Ltd (ASX: WTC) share price is down almost 3%. Poor Nuix Ltd (ASX: NXL) has lost more than 6% today. So it’s not just Appen.

This tech share selloff appears to have been sparked by a savage selloff over in the United States overnight. The tech-heavy US NASDAQ-100 (INDEXNASDAQ: NDX) Index lost 2.33% overnight, resulting in most US tech shares shedding chunks of value.

This in turn could have been induced by the inflation figures that came out last night from the US economy. The US Department of Labor announced last night that inflation Stateside was running at an annualised 7.5%. That’s the highest level in decades.

Investors know that higher inflation typically leads to higher interest rates. And tech shares like Appen are particularly vulnerable to higher rates. This is due to the fact that many of them are still in their ‘growth phases’ of development, and have a higher reliance on debt.

So that might be why the Appen share price, along with many other ASX tech shares, is getting punished today. That might disappoint some Appen investors, but that’s the way the cookie crumbles sometimes.

At the current Appen share price, this ASX tech share has a market capitalisation of $1.03 billion, with a trailing dividend yield of 1.2%.

The post The carnage continues: Appen (ASX:APX) shares tumble 7%, here’s why appeared first on The Motley Fool Australia.

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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. owns and has recommended Appen Ltd, Block, Inc., WiseTech Global, and Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Nuix Pty Ltd. The Motley Fool Australia owns and has recommended Appen Ltd, WiseTech Global, and Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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At lunch on Friday, the S&P/ASX 200 Index (ASX: XJO) has followed the lead of US markets and is sinking. The benchmark index is currently down 1.1% to 7,207.9 points.

Here’s what is happening on the ASX 200 today:

IAG shares rise following half year results

The Insurance Australia Group Ltd (ASX: IAG) share price is pushing higher today following the release of its half year results. The insurance giant delivered a cash profit well short of consensus estimates at $176 million. However, the market appears willing to overlook this due to management upgrading its FY 2022 gross written premium guidance from low to mid single-digit growth.

Magellan shares sink after FUM update

The Magellan Financial Group Ltd (ASX: MFG) share price is tumbling again on Friday. This follows the release of an out of cycle funds under management (FUM) update. That update reveals that Magellan’s FUM has fallen 6.85% since the end of January to $87.1 billion. And with several ratings agencies putting its funds under review or downgrading them, there’s a real chance that its FUM could continue to fall as the month rolls on.

Zip shares tumble

The Zip Co Ltd (ASX: Z1P) share price is tumbling lower today in response to a heavy decline from a rival on Wall Street. The Affirm share price crashed 21.5% during the overnight session and then a further 7% in after-hours trade. Investors were selling down the BNPL provider’s shares after its quarterly update disappointed.

Best and worst ASX 200 performers

The Unibail-Rodamco-Westfield (ASX: URW) share price is the best performer on the ASX 200 today with a 7% gain. This follows news that it is selling a 45% stake in Westfield Carré Sénart and creating a joint venture with Societe Generale Assurances and BNP Paribas Cardif. The worst performer has been the Appen Ltd (ASX: APX) share price with a 7.5% decline. This follows broad weakness in the tech sector and ongoing concerns over demand for its services.

The post ASX 200 (ASX:XJO) midday update: IAG upgrades guidance, Magellan sinks again 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 Appen Ltd and ZIPCOLTD FPO. The Motley Fool Australia owns and has recommended Appen Ltd and Insurance Australia 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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It’s a good day to own Woolworths Group Ltd (ASX: WOW) shares for fans of both start-ups and supermarket giants.

The company’s venture capital leg W23 – which works to partner with start-ups to grow their brands ­– has welcomed a new face. Enter, plant-based meat producer All G Foods.

At the time of writing, the Woolworths share price is $33.64, 1.55% lower than its previous close.

For context, the S&P/ASX 200 Index (ASX: XJO) is down 1.06% right now.

Let’s take a closer look at Woolworths’ latest multimillion-dollar investment.

Here’s Woolworths’ latest investment

Today’s news from the Australian Financial Review (AFR), later shared on W23’s website, details the supermarket’s second investment into plant-based meat.

Woolworths’ W23 also backs Harvest B. Harvest B works to supply plant-based meat producers with ingredients to create their products.

That’s a short hop, skip, and jump from All G Foods’ business. The company is behind plant-based meat brand Love BUDS.

Additionally, its website states it’s working to use precision fermentation to produce animal proteins, therefore creating milk “without the cow”.  

All G Foods’ founder and CEO Jan Pacas is also a co-founder of pet services business Mad Paws Holdings Ltd (ASX: MPA), which floated on the ASX in March 2021.

It welcomed Qantas Airways Limited (ASX: QAN) and Airtasker Ltd‘s (ASX: ART) founder as pre-IPO investors.

Pacas also co-founded unlisted tech company Flare.

It’s not public how much funding Woolworths has provided All G Foods. However, the AFR reported All G Foods’ seed funding round raised $16 million last year.  

“There’s a great attraction to work with Woolies because they’re an innovative company with great distribution capabilities,” Pacas was quoted as saying today. “They’re the dream partner.”

“I want to make this bigger than A2 Milk Company Ltd (ASX: A2M) was at its peak.”

Woolworths share price snapshot

This year so far has been tough on the Woolworths share price.

It has fallen 12% year to date, leaving it 3% lower than it was 12 months ago.

The post Own Woolworths (ASX:WOW) shares? Now you also own part of this niche start-up appeared first on The Motley Fool Australia.

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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 recommended Airtasker Limited. The Motley Fool Australia has recommended A2 Milk. 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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Shares in Codan Limited (ASX: CDA) opened poorly on Friday and now trade less than 2% down at $8.99 apiece.

Codan shareholders have been walking on a saw’s edge these past 3 months with shares descending from highs of $10.44 in November to now trade near 52-week lows.

Zooming out, the picture is even more painful for Codan. Shares have faltered off 52-week highs of $19.33 back in June 2021 and there has been several drops of $2 in a day across that time.

Yet whilst most investors are feeling pessimistic, not all market pundits are as downbeat on Codan. Plus, shares have climbed 4% in the last week of trading, suggesting newfound support as market turbulence begins to settle in 2022. Could it be that Codan is set for a comeback this year? Let’s take a look.

Is Codan set to explode in 2022?

According to Simon Conn, portfolio manager at Investors Mutual Limited, that could very well be the case, should the market agree.

Speaking to an episode of Buy Hold Sell on Livewire, Conn noted that Codan is a stock that’s “probably not well known by investors” although, the company “has a great management team, a good board and it dominates a niche”.

In fact, Codan makes handheld metal detectors and other mining technologies, in addition to defence communications that are used by the military in combat.

It has exposure to the domestic security, NGO’s, military defence, public safety, remote land management and commercial sectors, and was first incorporated in South Australia in 1959.

The portfolio manager explains that Codan has been outselling its competition for many years now, and have a global leadership position in the market.

Importantly for investors, the company reaffirmed its guidance for the first half in an update last month, according to Conn. Investors appeared somewhat galvanised by the results, and bought in at 52-week lows and drove the stock north in vertical fashion.

However, Codan has been caught up in the tech selloff that’s ensued since December and hasn’t been able to recover since. It is down 2% since January 4, but has regained strength recently and is now up 3% for the last month of trading.

Nevertheless, Conn and his team are excited about the company’s balance sheet and growth prospects, especially considering it is such a mature entity.

“But again, a good management team, trades on 15 times [earnings], it’s debt-free, which positions them for further acquisitions. And it’s a business that we think can continue to grow”, he said.

“Their other division is in the radio communications sector. They made some recent acquisitions in that area and they highlighted in their update last week that those businesses have tracked well and there’s further acquisition opportunity for them to build out that portfolio in time”, Conn added.

Although, the market has to agree with this sentiment, and with the S&P/ASX All Technology Index (ASX: XTX) plunging more than 15% so far in 2022, the pressure is on Codan to show up to the party.

Even still, valuation, financial health and a market leading position form the bulk of Conn’s bullish thesis on Codan.

“We think it looks pretty attractively priced at these levels”.

Codan share price snapshot

In the last 12 months, the Codan share price has lost over 24% and is now down 2% this year to date.

Over the last month of trading, shares have regained support and are now up 3%, and another 4% in the past week.

The post Fundie says this beaten up ASX All Ordinaries share is set to surge in 2022 appeared first on The Motley Fool Australia.

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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 Bruce Jackson.

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The REA Group Limited (ASX: REA) share price has been in a funk since the start of the year, plunging by 21%.

The property listings business announced its FY22 half-year results earlier this month. Despite smashing expectations, the REA share price has not responded in kind.

At the time of writing, REA shares are swapping hands for $135.23, down 3.07% for the day so far.

What’s dragging the REA share price lower?

Investors have been selling off REA shares despite the company reporting a robust six-month performance in H1 FY22.

While key financial metrics increased in the double-digits, it appears investors were more focused on the outlook for the second half.

REA advised that growth rates are expected to slow down as it cycles through a strong period of listing volumes. In addition, the federal election and potential regulatory measures to slow house price inflation could also negatively impact listing volumes.

As such, management didn’t provide any earnings guidance for the full year, which appears to have unsettled investors.

In the days following, the REA share price sank to an 11-month low of $134.11 but has since rebounded slightly.

Is this a buying opportunity?

In an interview with Livewire Markets run by Ally Selby, Elston Asset Management’s Bruce Williams and Investors Mutual Limited’s Simon Conn gave their view on the REA share price.

Williams touched on the company’s fundamentals but placed a hold on REA shares. He said:

It’s just a hold for us at the moment, verging on a sell. It is a very good business. The platform business is very strong domestically, and it’s had a great property market. We just struggle to see how they maintain the growth they have achieved because they’ve done a lot on pricing, premium pricing penetration, as they call it. The property market’s been extremely good and it’s likely not to roll off, but become a little more steady, which will promote less activity, which is what this company thrives on. So for us on a valuation basis, it’s hanging on to a hold.

Conn said sell after being asked if the REA share price is cheap enough. He said:

No, not yet. It’s still very full at 41 times going to maybe 35 times next year. There’s a lot of good news in the price and as Bruce alluded to, there’ll be headwinds going forward over the year in the housing market. Look, it’s a great business. It has a great network effect. So they’ve got some pricing power. There’s just a lot of good news baked into the price. We think Domain is a more attractively priced opportunity in that sector and we’re playing that by owning Channel Nine which has a 60% holding in Domain, which is quite a bit cheaper than REA.

About the REA share price

Over the past 12 months, REA shares have dropped by around 13% for shareholders. The company’s share price is treading close to its 52-week low of $131.33.

On valuation grounds, REA commands a market capitalisation of roughly $18.43 billion, with approximately 132.12 million shares on its registry.

The post The REA (ASX:REA) share price has tumbled 21% this year. Is it a bargain? appeared first on The Motley Fool Australia.

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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 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 WiseTech Global Ltd (ASX: WTC) share price has suffered at the hand of a tech-led selloff. Now down 22% since the beginning of the year, could the logistics software company present a buying opportunity?

In early morning trade, shares in WiseTech are feeling the pinch again, trading 2.8% lower to $45.41. The WiseTech share price is now 24.8% below its 52-week high of $60.40.

What does WiseTech do again?

WiseTech aspires to be the operating system for global logistics. Keeping track of all the variables within a supply chain can be complex. However, WiseTech’s cloud-based software solutions — such as CargoWise — bring all of the information into one location.

The technology helps logistics providers be more productive by giving them a broad toolset when it comes to the logistics industry. This includes features for handling customers, warehouse management, geocompliance, transport, etc.

Since its inception in 1994, WiseTech has grown to servicing 24 of the top 25 global freight forwarders on the planet. Likewise, the company’s software is used by 41 of the top 50 global third-party logistics providers.

Is the WiseTech share price in the buy zone?

A slump in the WiseTech share price could be attributed to a broader retreat in sentiment across tech shares. In fact, the S&P/ASX All Technology Index (ASX: XTX) is still down 17% year-to-date.

Staggering rates of inflation have seen investors begin to shift more into value shares. Last night, the United States Federal Reserve recorded its hottest inflation reading in 40 years, hitting 7.5%.

However, Bruce Williams of Elston Asset Management believes the value proposition offered by WiseTech is a good opportunity.

In an interview with Livewire, portfolio manager Williams said:

WiseTech is growing very, very strongly. They’ve got a lot of the sector as clients and it’s a five-year integration program or up to five years. They continually build revenue, not only from new client wins but from existing clients as well.

Fellow Fool, Tony Yoo, recently covered another expert’s take on WiseTech and its share price. Jun Bei Liu of Tribeca noted the company’s shares as a ‘great buying opportunity’ following the recent pullback, adding:

The last result was just incredibly strong and we think they still have a bright future

Lastly, WiseTech is expected to report its first half results on Wednesday 23 February.

The post ‘Bright future’: Is the Wisetech (ASX:WTC) share price on the way back up? appeared first on The Motley Fool Australia.

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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 WiseTech Global. The Motley Fool Australia owns and has recommended WiseTech Global. 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 is on course to end the week with a day in the red.

In early trade, the embattled fund manager’s shares were down 6% to $17.95. They have since recovered a touch but remain down 2.5% to $18.58 at the time of writing.

This means the Magellan share price is now down 62% since this time last year.

Why is the Magellan share price falling?

Investors have been selling down the Magellan share price today after it provided an out-of-cycle funds under management update.

According to the release, at the close of the US market on 9 February, Magellan’s funds under management stood at approximately $87.1 billion. This represents funds under management declines of 6.85% from $93.5 billion at the end of January and 8.8% from $95.5 billion at the end of December.

The release explains that Magellan has experienced net outflows (excluding cash distributions paid) of approximately $5.5 billion since 1 January. This comprises net institutional outflows of $5.0 billion and net retail outflows of $0.5 billion.

These funds under management and net outflows are unaudited and comprise amounts that have been or are being redeemed of $3.6 billion and amounts for which Magellan has received notification of intention to redeem of $1.9 billion.

The latter could well increase as the month rolls on. Particularly given how a number of influential investment ratings agencies have put its funds under review and Zenith Investment Partners has reportedly cut the ratings on five of Magellan’s global funds to just “recommended” from “highly recommended.”

The AFR reports that Zenith Investment Partners has called Hamish Douglass’ indefinite leave a “material loss” for the fund manager.

It quotes Zenith saying: “Given our high regard for Mr Douglass, we consider his leave of absence to be a material loss for Magellan’s global equities suite and overall business.”

All eyes will be on Magellan’s next funds under management update at the start of March.

The post Magellan (ASX:MFG) share price slides 6% as FUM bloodbath continues 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 Bruce Jackson.

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Australia can play a “pivotal role” in the hydrogen export market, a handbook released by Australia and New Zealand Banking Group Ltd (ASX: ANZ) reveals. In what could spell good news for ASX hydrogen shares, the report says, “Australia is remarkably well-positioned to benefit from the growth of hydrogen industries and markets”.

Last year proved to be a good one for ASX hydrogen shares, with five companies gaining more than 100% in 2021.

So what’s the outlook for hydrogen? Let’s take a look.

Clean energy opportunity

Hydrogen as a fuel source will be “key” to reducing carbon emissions in the economy, a foreword to the ANZ Hydrogen Handbook stated.

In comments signed off by ANZ chief executive Shayne Elliot, group executive Mark Whelan and managing director Christina Tonkin, the report said:

The rapid emergence of hydrogen as a low-emissions fuel source offers another pathway to achieving net-zero carbon. With its distinctive properties as an energy carrier, we believe hydrogen will be key.

With abundant wind and solar energy resources, Australia is well positioned to play a pivotal role in developing a hydrogen export market to key customers in Asia, in particular those in Japan, Singapore and South Korea. Our customers are clearly pursuing the commercial production of hydrogen to varying degree.

ASX hydrogen shares

Earlier this week, Goldman Sachs said the hydrogen market could be worth more than US$1 trillion ($1.4 trillion) by 2050 — and predicted Australia to play a major role in it.

A notable ASX hydrogen share that could benefit is Fortescue Metals Group Limited (ASX: FMG) and its green energy subsidiary, Fortescue Future Industries (FFI).

The company last year announced plans to build a hydrogen-equipment manufacturing facility in Queensland. The Global Green Energy Manufacturing Centre, in Gladstone, will produce up to 2 gigawatts of electrolysers each year. Electrolysers split hydrogen from water and, if run on renewable electricity, are entirely carbon neutral.

Fortescue chair Andrew Forrest this week took aim at the Morrison government’s assertion that coal and gas-generated hydrogen can be billed as ‘clean’.

The Fortescue Metals Group share price closed yesterday at $22.28, up 3.97%. It is now up 16% this year to date.

With investors keen to jump on the green energy bandwagon, 2021 saw huge increases for some ASX hydrogen shares. The biggest gainer was Province Resources Ltd (ASX: PRL), which saw its share price skyrocket 1,300% last year.

Other ASX hydrogen shares that recorded big gains in 2021 include Sparc Technologies Ltd (ASX: SPN), Pure Hydrogen Corporation CDI (ASX: PH2), Environmental Clean Technologies Ltd (ASX: ECT), and QEM Ltd (ASX: QEM).

Three key openings

There are three major openings for Australia when it comes to clean hydrogen, ANZ executive director John Hirjee suggests.

The first is energy export. Hirjee commented Japan and South Korea need cleaner energy to meet their reduction targets. He believes clean hydrogen is ideal.

In a research paper forming part of the handbook titled ‘Hydrogen — is it a lot of hot air?’, Hirjee said:

This is a significant opportunity for Australia, given the potential for ample renewable energy and convertible fossil fuel reserves. However, the export industry is likely to take some years to develop to full-scale commercialisation.

The domestic economy is also a major opportunity for Australia, given hydrogen can power our cars, Hirjee stated. Finally, he believes green hydrogen production can help build energy system resilience.

While firmed renewable energy is the least capital intensive form of producing clean hydrogen, green H2 production can respond rapidly to variations in electricity production and contribute to frequency control in the electricity grid.

However, the commercialisation of hydrogen is not without it challenges. the report says. Electrolysis, the method used to produce hydrogen, is expensive. Once produced, hydrogen is difficult and costly to store and transport, due to the gas being highly flammable and volatile.

So what’s the outlook for ASX hydrogen shares?

By 2050, hydrogen could power 400 million cars, 20 million trucks and 5 million buses, Hydrogen Council forecasts cited in the report predicted.

Hydrogen is experiencing “unprecedented momentum” and is vital for a clean and secure energy future, the report noted.

ANZ believes Australia is “uniquely positioned” to become a leader in clean hydrogen. In a research paper forming part of the report, author Jessica Paterson summarised:

The proximity of Australia to the Asia Pacific region provides a key advantage for supplying Asian markets with H2, as other potential competitors could be disadvantaged by additional transport costs.

Furthermore, Australia can capitalise on its proven track record in energy exports such as LNG, especially to comparatively resource-constrained countries.

The post Are ASX hydrogen shares in a ‘hot air’ bubble? appeared first on The Motley Fool Australia.

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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.

from The Motley Fool Australia https://ift.tt/950kG3q

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.

Making electric vehicles mainstream, selling them for a profit, and becoming the richest man in the world in the process — Tesla (NASDAQ: TSLA) CEO Elon Musk has done it all. And by generating profits for two straight years, Tesla has proved its naysayers wrong. The company’s stock has risen some 1,400% over the past three years.

The big question now is whether the stock is still a buy. Again, the investors are sharply divided. Let’s take a closer look at the stock to see whether it’s Tesla bulls or bears who are likely right about the stock.

The growth of electric vehicles

Had there been any doubts earlier, the growth in electric vehicles (EVs) in the past couple of years made it clear that the future of transportation is electric. Electric car sales, including plug-ins, more than doubled in 2021 to 6.6 million units. That was nearly 9% of the global car sales for the year. At 3.4 million units, the EV sales in China alone accounted for more than half of the global sales. Around 2.3 million EVs were sold in the Europe and over half a million in the U.S. 

Tesla sold the most EVs globally in 2021, with 936,000. The company operates in all three major markets for EVs, with 352,000 cars sold in the U.S., 321,000 in China, and 170,000 in Europe last year. Presence in all the major markets not only diversifies Tesla’s revenue, but also allows it to grow faster. Volkswagen followed Tesla, selling 763,000 electric vehicles in 2021.

The demand for EVs right now exceeds the supply. This could well be the case over the next few years until the companies ramp up their EV production. That bodes well for Tesla, which is not only selling the most EVs right now but can continue doing so, considering its focus on expansion. Tesla’s factories in Texas and Berlin are at the equipment test stage, and the company expects to start vehicle deliveries from both factories soon.

Furthermore, the company is doing exceptionally well on the margins front. Tesla reported an operating margin of 14.7% for the fourth quarter.

TSLA Operating Margin (Quarterly) data by YCharts

The EV maker generated industry-leading margins in the third quarter as well.

Tesla stock trades at a premium

Tesla’s leadership position in EVs gets reflected in the premium valuation of its stock. Tesla stock trades at a significantly higher price-to-earnings (P/E) ratio compared to legacy automakers.

TSLA PE Ratio data by YCharts

What’s more, Tesla stock is trading at a significant premium compared to even the top technology stocks.

TSLA PE Ratio (Forward 1y) data by YCharts

Tesla’s P/E to growth (PEG) ratio, which divides its P/E ratio by its expected earnings growth, is less than 1. All other things remaining equal, a lower PEG ratio is better for a stock, and a ratio below 1 indicates that a stock likely isn’t overvalued. Tesla’s lower PEG ratio reflects its high earnings growth.

Tesla faces stiff competition

Tesla had a huge edge over its competition so far. When it started selling EVs, no other manufacturer was doing so seriously. But that isn’t the case anymore. With so many new EV companies as well as traditional car companies pouring billions of dollars into electrification, Tesla faces some stiff competition. Volkswagen intends to make half of its sales electric by 2030. Ford aims to make 40% to 50% of its sales electric by 2030. Then there are new EV companies, such as Lucid and Rivian, trying to capture a share of the EV pie.

In China, apart from global automakers, Tesla also faces competition from domestic EV companies such as BYD, Nio, and XPeng.

Is the EV pioneer’s stock a buy?

Tesla stock’s premium valuation is in large part due to its higher revenue growth and higher margins compared to other automakers. However, with rising competition, the higher growth and margins may not last very long.

Yet, Tesla can enjoy the high growth and margins at least for the next couple of years, till its competitors catch up. That would be enough to further solidify Tesla’s position in the EV market. This growth potential already gets reflected in the stock’s valuation.

However, beyond that, Tesla needs to show that it can sustain the high growth at such high margins. Otherwise, the company will have to look at profitability-enhancing sources — maybe full self-driving, robo-taxis, or car insurance based on drivers’ risk profiles generated using informatics — to justify its valuation.

So, Tesla could be an EV company, with its current offerings, which does not indicate much upside potential for its stock. Or it can continue disrupting the EV space to create still higher value for its shareholders. The latter case is unproven yet, and it is important to note that buying Tesla stock believing that the company will be successful in autonomous driving, or other such endeavor, entails risk. Of course, Tesla can succeed there too, but if you are risk averse, you may not want to jump in right now. 

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

The post Is Tesla stock a buy? appeared first on The Motley Fool Australia.

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Rekha Khandelwal has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and recommends BYD, NIO Inc., Tesla, and Volkswagen AG. 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.

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

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