Key points

• Rio Tinto shares have surged nearly 14% in a month
• The company has recently executed a deal on its Oya Tolgoi copper mine
• But Rio has been rocked by Serbia revoking an exploration licence, and a workplace culture report

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The Rio Tinto Limited (ASX: RIO) share price has performed well over the past month despite multiple challenges.

The mining giant’s shares have gained 15% since market close on 4 January. In today’s trading, the company’s share price closed 0.41% higher at $114.61.

Let’s take a look at why the Rio Tinto share price has surged this month.

Why has Rio Tinto beat the storm?

The Rio Tinto share price has risen steadily in the past month with a few minor bumps along the way.

The shares fell on January 24 amid Serbia revoking Rio Tinto’s exploration licences on its $2.4 billion lithium project. The Serbia Prime Minister stated “all permits were annulled…we put an end to Rio Tinto in Serbia”, the BBC reported.

In response, Rio chief executive Jakob Stausholm expressed Rio was “very concerned” about the comments made by the Serbian PM, Reuters reported.

I’m very proud of what we’ve done there. We have always followed the laws and regulation in Serbia as we focused on that amazing project.

On Monday, the company released a review of its workplace culture. The report included findings of bullying, racism, and sexual assault.

Leadership is promising to implement change and put in place all recommendations of the report. WA Mines Minister Bill Johnston has urged other companies to follow Rio Tinto’s lead, the Western Australian reported.

The report does not seem to have adversely impacted the company’s share price, with Rio Tinto shares gaining around 5% since February 1.

A lot has also gone right for the company in the past month.

On January 25, Rio announced it had made a deal with stakeholders to restart work at its Oyu Tolgoi copper mine in Mongolia. This is predicted to be the fourth biggest copper mine in the world by 2030.

Rio’s share price inched slightly higher on the back of its quarterly trading update. Pilbara iron ore shipments fell 5% to 84.1 million tonnes (Mt).

Copper and aluminum volume also declined. However, Rio forecast iron ore shipments of 320Mt–335Mt in 2022 and copper production of 500kt–575kt.

The iron ore price increased from US$117 per tonne at market close on 4 January to US$143.50 per tonne on 3 February. That’s a 22.6% increase. Copper has also edged 0.44% higher in the same time period.

Rio Tinto share price snap shot

The Rio Tinto share price has only risen about 0.3% in the past 12 months but has increased nearly 5% in the past week alone.

For perspective, the S&P/ASX 200 Index (ASX: XJO) has returned around 5% over the past 12 months.

Rio has a market capitalisation of $42 billion based on its current share price.

The post Rio Tinto (ASX:RIO) share price withstands the drama to surge 15% in a month. Here’s why appeared first on The Motley Fool Australia.

More reading

• Is now the time to buy shares of ASX 200 iron ore giants? Expert weighs in
• Do any ASX lithium shares pay dividends?
• Rio Tinto (ASX:RIO) boss: ‘This is not the type of company we want to be’
• Rio Tinto (ASX:RIO) vs Traditional Owners: $400m battle continues
• These were the best performing ASX 200 shares last week

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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Today, the S&P/ASX 200 Index (ASX: XJO) surged into the close to post a green finish to the week. At the end of the session, the benchmark index finished 0.59% higher at 7,120.1 points.

Prior to the last hour, the Aussie index had been swinging between positive and negative consistently throughout the day. The indecision came to an end as most of the red sectors flipped and proceeded to rally into the close. Industrials and tech led the gains today, despite a harrowing performance across US tech companies last night.

However, the question is: which shares delivered the biggest returns to investors on the ASX today? Here are the top ten stocks that came through for investors:

Top 10 ASX shares countdown today

Looking at the top 200 listed companies, AVZ Minerals Ltd (ASX: AVZ) was the biggest gainer today. Shares in the mineral exploration company rallied 6.21% without any obvious catalyst. Shares AVZ Minerals are now up more than 315% in the last year. Find out more about AVZ Minerals here.

The next biggest gaining ASX share today was Liontown Resources Ltd (ASX: LTR). The battery metals explorer served up a solid 6.18% gain today. This upwards move came amid the company announcing the successful completion of its share purchase program, raising $12.9 million in the process. Uncover the latest Liontown Resources details here.

Today’s top 10 biggest gains were made in these ASX shares:

ASX-listed company	Share price	Price change
AVZ Minerals Ltd (ASX: AVZ)	$0.77	6.21%
Liontown Resources Ltd (ASX: LTR)	$1.46	6.18%
Qantas Airways Ltd (ASX: QAN)	$5.19	4.85%
Virgin Money UK PLC (ASX: VUK)	$3.83	4.08%
South32 Ltd (ASX: S32)	$4.11	3.27%
Ebos Group Ltd (ASX: EBO)	$37.46	3.20%
Zip Co Ltd (ASX: Z1P)	$3.00	3.09%
Nine Entertainment Co Holdings Ltd (ASX: NEC)	$2.75	3.00%
Paladin Energy Ltd (ASX: PDN)	$0.71	2.90%
Super Retail Group Ltd (ASX: SUL)	$12.14	2.79%

Our top 10 ASX shares today countdown is a recurring end-of-day summary to ensure you know which companies were making big moves on the day. Check-in at Fool.com.au after the market has closed during weekdays to see which stocks make the countdown.

The post Here are the top 10 ASX shares today appeared first on The Motley Fool Australia.

More reading

• Freaky Friday: Why was the ASX 200 so indecisive today?
• Expert sounds the warning bell on ASX ETFs… Here’s why
• These 3 ASX 200 shares are topping the volume charts on Friday
• ‘Strong support’: Here’s why the Liontown (ASX:LTR) share price is pouncing higher today
• ASX 200 (ASX:XJO) midday update: REA and News Corp impress, Boral plummets

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 Super Retail Group Limited and ZIPCOLTD FPO. 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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Key points

• The global cybersecurity industry is a growing sector due to to the rising amount of cybercrime as more activity and information is online
• Betashares Global Cybersecurity ETF is an ASX share that allows investors to invest in a quality group of cybersecurity businesses
• It has plenty of the world’s biggest players in the portfolio such as Cisco Systems, Accenture, Palo Alto Networks and Crowdstrike

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Betashares Global Cybersecurity ETF (ASX: HACK) is an ASX share that can give investors exposure to some of the world’s leading cybersecurity businesses in an exchange-traded fund (ETF) structure.

Why is cybersecurity a growth industry?

Worldwide spending on cybersecurity is predicted to increase to almost US$250 billion.

The PWC 2022 global digital trust insights report showed that around 70% of entities which responded expect to grow their cybersecurity spending in 2022. Just over a quarter said they were expecting to increase cyber defence expenditure by at least 10%.

Around the world, cybercrime continues to rise. According to Australian statistics, there were over 67,500 cybercrime reports in FY21, an increase of nearly 13% from the previous financial year. The self-reported losses from cybercrime totalled more than $33 billion.

Approximately one quarter of the reported cyber security incidents affected entities associated with Australia’s critical infrastructure.

Fraud, online shopping scams and online banking scams were the top reported cybercrime types.

In FY21, there was an increase in the average severity and impact of reported cybersecurity incidents, with nearly half categorised as ‘substantial’.

By 2023, the global cybersecurity market is expected to rise to US$248.26 billion.

How does the Betashares Global Cybersecurity ETF fit in?

The HACK ETF portfolio owns many of the businesses involved in the hardware and software that is keeping organisations and individuals safe (or at least safer) in the digital world.

Readers may have heard of some of the 35 businesses in the ETF’s top holdings. These are the biggest 10 positions: Cisco Systems, Accenture, Palo Alto Networks, Crowdstrike, Check Point Software, Juniper Networks, VMware, Akamai Technologies, Leidos and Cloudflare.

The above businesses offer services like firewalls, secure logins, cybersecurity accreditation, important equipment and so on.

Getting exposure to this industry through the HACK ETF comes with an annual management fee of 0.67%.

Performance of the ETF

Past performance is not a reliable indicator of future performance. However, since inception the Betashares Global Cybersecurity ETF has produced net returns of an average of 22.3% per annum to December 2021. In the past three years, the ETF’s net returns have been an average of 30.5% per annum.

The post This ASX share can give investors access to the compelling cybersecurity world appeared first on The Motley Fool Australia.

More reading

• 2 excellent ASX tech shares for investors in February
• 3 high quality ETFs for ASX investors in February
• 2 excellent ETFs for ASX investors in February
• 2 strong ETFs for potential growth
• 2 popular ETFs for ASX investors in 2022

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 BETA CYBER ETF UNITS. The Motley Fool Australia owns and has recommended BETA CYBER ETF UNITS. 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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Key points

• The ASX 200 Index floated between gain and loss multiple times today
• Despite a reduction in volatility, investors are having a hard time deciding on whether or not now is the time to buy
• Uncertainty around interest rates could be playing a role

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The S&P/ASX 200 Index (ASX: XJO) had a rollercoaster of a day on Friday. Since market open this morning, the benchmark index swung between negative and positive seven times in the session.

At market close, the index tracking the top 200 listed Australian companies finished the day at 7,120.1 points, up 0.60%. An improvement from its position a week ago, when the index was tracking below 7,000 points for the first time since May 2021.

However, the wobbly behaviour of the market suggests that investors were drawn in two directions today.

Here’s a look at what might have aided in the swinging of sentiment on Friday.

Contending ways of looking at the ASX 200 today

Investors showed signs of difficulty in deciding whether they want to buy or sell ASX 200 shares today. None of the 11 sectors made substantial moves in either direction.

This follows an apparent peak in the volatility index on 27 January. Since then, the velocity of moves in either direction of the ASX 200 has trended lower, as shown in the chart below. The milestone coincided with another, the index officially crossing into correction territory.

However, the ASX 200 has since been able to find its footing and avoid further losses. Meanwhile, investors have been watching two different stories being played out in the world of monetary policy.

Last week, Federal Reserve chair Jerome Powell sent shivers down the spine of market participants as he hinted at a potential rate rise as early as March. In contrast, Reserve Bank of Australia governor Philip Lowe remained relatively dovish on Tuesday.

Our own central bank maintained that it was too early to raise interest rates. Although, the next day it seemed Lowe backtracked to a degree, saying a rate rise this year was “plausible”. The governor did add that while there is a chance, it remains “extremely unlikely”.

The conflicting takes on inflation and the potential of rate rises possibly have investors unsure until further notice.

The post Freaky Friday: Why was the ASX 200 so indecisive today? appeared first on The Motley Fool Australia.

More reading

• Expert sounds the warning bell on ASX ETFs… Here’s why
• These 3 ASX 200 shares are topping the volume charts on Friday
• ASX 200 (ASX:XJO) midday update: REA and News Corp impress, Boral plummets
• Should you buy ASX shares now or wait just a little bit?
• 5 things to watch on the ASX 200 on Friday

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. 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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Key points

• The Nitro share price has fallen out of favour with investors but Goldman Sachs thinks it’s too cheap to ignore
• The ASX tech shares operate in a US$34bn market that has a positive growth outlook
• The broker initiated coverage on its shares with a ‘buy’ recommendation and $2.95 price target

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The Nitro Software Ltd (ASX: NTO) share price rebounded on Friday after Goldman Sachs listed the company as its latest ASX tech ‘buy’ idea. This comes after Nitro ended the previous two days in the red.

Shares in the global document productivity software company jumped 1.85% to close at $1.93 apiece.

In contrast, the S&P/ASX 200 Index (ASX: XJO) ended the day up 0.59% at 7,120 points.

Nitro share price falls from grace

The threat of interest rate hikes is weighing on ASX tech shares but Goldman Sachs believes the Nitro share price is cheap.

The broker initiated coverage on the company and pointed out that its total addressable market (TAM) stands at US$34 billion.

“Nitro operates in large, underpenetrated markets supported by structural growth tailwinds including remote work, enterprise digitisation, and e-signing adoption,” said the broker.

“We estimate Nitro can increase its TAM penetration from 0.15% to 1.4% by FY40 implying 9x uplift to Nitro’s current revenue base.”

That assumption may sound too aggressive to some, but Goldman believes it’s achievable for three reasons.

First is Nitro’s core competitive advantages. Its products are cheaper, easy to use, and come with good customer service.

Further, there is strong underlying market growth. Additionally, the large market leaves plenty of room for Nitro and its competitors to grow sales.

The fact the Nitro share price has fallen so hard shows how much investors are underappreciating its growth potential.

How much is the Nitro share price worth?

Goldman noted the Nitro share price trades at around a 70% discount to its software-as-a-service (SaaS) peers.

The broker’s 12-month price target is $2.95 a share. This implies a 53% upside to the current share price.

But investing in Nitro isn’t without risks. Competition from larger rivals and other challengers and execution risks are some of the factors investors should be cognisant of.

Other concerns highlighted by Goldman include higher-than-expected investment levels and currency risks.

The post ‘Plenty of uplift’: Here’s why the Nitro (ASX:NTO) share price took off today appeared first on The Motley Fool Australia.

More reading

• 3 excellent ASX tech shares Goldman Sachs rates as buys
• Why AnteoTech, Newcrest, Nitro, and ResMed shares are falling
• Here’s why the Nitro (ASX:NTO) share price is backtracking 6% today
• 3 exciting small cap ASX shares to watch
• 2 buy-rated ASX tech shares with 100% upside in 2022

Motley Fool contributor Brendon Lau 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 Nitro Software 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 rise of the exchange-traded fund (ETF) has been one of the most prominent investing themes of the ASX over the past decade or so.

From the humble beginnings of the index fund, ASX ETFs now cover almost every sector and theme imaginable on the share market. ETFs have also exploded in popularity in recent years. In fact, 2021 was the best year ever for the sector which saw both record inflows and funds under management.

But one investing expert is sounding the warning bell for ASX ETF investors.

Investment strategist and former chief investment officer at JB Were, Giselle Roux recently appeared on The Australian‘s Money Cafe podcast to discuss the emergence of ETFs in Australia.

She made some interesting points about the modern structure of the ETF market.

So a common misconception amongst some investors is that ETFs are all structured in a similar way, or even that all ETFs are index funds. That was perhaps more or less true once upon a time but is certainly not in 2022.

The rise of the ‘active ETF’ poses challenges

Roux said that the ETF sector has been increasingly seeing more ‘active ETFs’. These ETFs function in a manner similar to a managed fund, rather than an index fund.

Roux called out this phenomenon as ‘trying to have the best of both worlds’. She explained that they harness the ‘passive-nature’ reputation of ETFs but use active stock selection to build portfolios.

Roux said:

What you have seen is the ETF space had diversified to where in many cases a lot of the ETFs currently on offer are arguably active funds, because they have narrowed their universe to a set of companies in an industry or to a factor… Then you’re starting to muddy the water between the purest ETF, a simple index tracker… versus an active manager that does fundamental research and makes a decision on stocks that is not based on an algorithm.

She pointed to how ETFs such as the BetaShares Robotics and Automation ETF (ASX: RBTZ) and the ETFS S&P Biotech ETF (ASX: CURE) have recently taken tumbles far nastier than the S&P/ASX 200 Index (ASX: XJO) as an example of this playing out.

Roux stated that some of these ‘thematic ETFs’ hold very concentrated portfolios. This can give the provider liquidity issues if there are large volumes of inflows or outflows at any given time.

So, some things to think about when you’re considering your next ASX ETF investment!

The post Expert sounds the warning bell on ASX ETFs… Here’s why appeared first on The Motley Fool Australia.

More reading

• These 3 ASX 200 shares are topping the volume charts on Friday
• ASX 200 (ASX:XJO) midday update: REA and News Corp impress, Boral plummets
• Should you buy ASX shares now or wait just a little bit?
• 5 things to watch on the ASX 200 on Friday
• Here are the top 10 ASX shares today

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

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It has been a difficult couple of years for the Transurban Group (ASX: TCL) share price.

With its toll roads becoming a ghost town during the height of the pandemic, its earnings and distributions have suffered and this has put significant pressure on its shares.

Is the TCL share price about to get some TLC?

According to the team at Morgans, the Transurban share price could be heading a lot higher from current levels.

The note reveals that Transurban is one of its best ideas at the moment and could offer investors significant upside potential.

Morgans currently has an add rating and $14.57 price target on the toll road giant’s shares. This implies potential upside of almost 13% over the next 12 months based on the current Transurban share price.

In addition, the broker is expecting the company to reward its shareholders with a 35 cents per share distribution in FY 2022. If we add this into the equation the total return stretches to beyond 15%.

And it is also worth noting that Morgans expects a big recovery in its distribution in FY 2023, with its analysts pencilling in a 58% increase to 55.3 cents per share.

Why is Morgans positive on Transurban share price?

Morgans is positive on the company due largely to its exposure to regional population and employment growth and urbanisation trends.

It explained: “TCL owns a pure play portfolio of toll road concession assets located in Melbourne, Sydney, Brisbane, and North America. This provides exposure to regional population and employment growth and urbanisation. Given very high EBITDA margins, earnings are driven by traffic growth (with recovery from COVID) and toll escalation (roughly half at CPI and the remainder fixed c.4% pa).”

“We think TCL will continue to be attractive to investors given its market cap weighting (important for passive index tracking flows), the high quality of its assets, management team, balance sheet, and growth prospects. Watch for rapid recovery in DPS alongside traffic recovery and WestConnex acquisition prospects,” it concluded.

The post Here’s why Transurban (ASX:TCL) shares could be in for some investor TLC appeared first on The Motley Fool Australia.

More reading

• Morgans names 4 more of the best ASX shares to buy in February
• Broker names 2 ASX 200 dividend shares to buy in February
• Why has the Transurban (ASX:TCL) share price tumbled 12% so far in 2022?
• 2 ASX dividend shares Morgans rates as buys
• Brokers name 2 ASX 200 dividend shares to buy

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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The REA Group Limited (ASX: REA) share price has edged lower despite the company’s impressive half-year results released earlier today.

In its report, the real estate classifieds company recognised a 37% year-on-year gain in revenue and a similar jump in net profit and earnings per share (EPS).

Not only that, but REA’s board declared a juicy 75 cents per share interim dividend for shareholders to bite into – a spike of 27% on the last payment.

The REA share price ended today’s session at $142.83, down 0.65% after a wild ride today.

Earlier this morning, the REA share price soared by 5.5% to $151.99. In intraday trading though, it dropped as low as $139.83, representing a 2.9% decline on yesterday’s close.

With such a strong business performance clearly on display, and a fluctuating share price, is REA a buy right now? Let’s see what these experts have to say.

Is REA Group a buy?

According to analysts at investment bank Citi, REA is worth considering for ASX investors.

The broker said REA’s strong performance took the market by surprise, as it beat expectations on both revenue and expenditure.

Of particular note was the circa 25% growth in turnover from financial services. This was alongside the company’s outsized growth in its India operations, both of which impressed the broker.

Even though REA missed Citi’s forecasts on commercial developer revenues by approximately 10%, it reckons this half’s outcome is sure to result in a suite of analyst upgrades on FY22 estimates.

Not only that, but the earnings surprise should bode well for the REA share price, Citi says. This is especially because market pundits were baking in lower results from the company.

As such, analysts at Citi recommend REA as a buy and price the company at $144.04 per share.

Analysts at Citi weren’t the only ones chiming in with an update on REA today.

Andrew McLeod of Morgan Stanley also reaffirmed their overweight/attractive rating for REA shares, assigning a $182.50 price target in the process.

However, the team at Barrenjoey Markets were less constructive, leaving a neutral rating on REA. They have a $175 per share valuation. That’s substantially lower than other price targets, but curiously, higher than the bullish Citi’s valuation.

According to a list of analysts provided by Bloomberg Intelligence, more than 56% of coverage has REA as a buy. Just 1 broker has it as a sell.

The consensus price target on the company is $165.54 (ex-dividend), suggesting a potential 16% upside.

REA share price snapshot

The REA share price has collapsed by 17% since 1 January amid a broad market sell-off in classifieds shares.

However, the trend has been in situ for some time, with classifieds shares tumbling over the previous quarter to trade at around 52-week lows. Other classifieds shares caught up in the sell-off include Carsales.com Ltd (ASX: CAR) and Seek Limited (ASX: SEK), which are down 13% and 17% respectively.

The post Stellar earnings beat but REA (ASX:REA) share price dips… Do brokers say buy? appeared first on The Motley Fool Australia.

More reading

• Why Boral, Magellan, REA, and SEEK shares are falling today
• ASX 200 (ASX:XJO) midday update: REA and News Corp impress, Boral plummets
• REA (ASX:REA) share price higher after smashing first half expectations
• 5 things to watch on the ASX 200 on Friday
• Top brokers name 3 ASX shares to buy next week

Citigroup is an advertising partner of The Ascent, a Motley Fool company. 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 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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Key points

• ASX 200 iron ore majors struggled through 2021
• This expert believes the slump means they are now trading for bargain prices
• Additionally, with China expected to grow in 2022, they might be set to take off

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There’s been a lot going on with S&P/ASX 200 Index (ASX: XJO) iron ore giants in 2022. Notably, BHP Group Ltd (ASX: BHP) has unified with its London listing to become the biggest company on the ASX.

But with the 3 majors – BHP, Rio Tinto Limited (ASX: RIO), and Fortescue Metals Group Limited (ASX: FMG) – having ended 2021 in the red, they might not seem like the best investment in 2021.

However, Randal Jenneke, head of Australian equities at T. Rowe Price, disagrees. He believes 2022 will be China’s year and the iron ore majors will be taken along for the ride.

Let’s take a closer look at what the expert is predicting will be in store for ASX 200 iron ore giants this year.

Are iron ore giants 2022 in the ‘buy’ zone?

The 3 major iron ore stocks of the ASX 200 ended last year in the red. The Fortescue Metals share price led the fall, tumbling 18%.

Meanwhile, those of BHP and Rio Tinto slid 2% and 12% respectively.

However, Jenneke is predicting blue (green?) skies for the companies in 2022, driven by growth in China.

He said the Chinese market was one of the only global markets to fall in 2021 – slipping 21%. That leaves the nation pushing for more growth while much of the world attempts to slow down inflation.

“If you think about the story for China for 2021, it was a story about deceleration of growth, dealing with the property market issues, and high levels of leverage,” said Jenneke.

“But China slowed too much. China finished 2021 with about 4% GDP growth. Their target for 2022 is 5.5% to 6%.

“So, that’s really interesting because what that means is, we think the demand environment is going to improve for commodities … therefore, the big miners should be positioned to do much better.”

He said the recent poor performance may have put ASX 200 iron ore stocks back into the buy zone.  

“When you come back to the valuations of some of the big miners like BHP and Rio, they’re quite cheap versus their history and on most valuation metrics they screen attractive,” said Jenneke.

How have ASX 200 iron ore shares performed in 2022 so far?

This year has been a good one so far for ASX 200 iron ore giants.

The Fortescue Metals share price – last year’s worst performer – has gained 7% year to date.

Meanwhile, the BHP share price is also in the green, perhaps unsurprisingly given its unification. It has surged 10%.

Finally, the Rio Tinto share price is leading the pack with a gain of 14%.

The post Is now the time to buy shares of ASX 200 iron ore giants? Expert weighs in appeared first on The Motley Fool Australia.

More reading

• Do any ASX lithium shares pay dividends?
• Why this broker thinks the Fortescue (ASX:FMG) dividend will come under significant pressure
• Top brokers name 3 ASX shares to sell today
• These 3 ASX 200 shares are topping the volume charts this Thursday
• Morgans names the best ASX resources shares to buy in February

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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Key points

• ASX 200 energy shares have been boosted by rising oil prices
• OPEC may not be able to increase supplies enough to meet demand
• US shale oil producers are planning huge production increases

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S&P/ASX 200 Index (ASX: XJO) energy shares like Santos Ltd (ASX: STO), Woodside Petroleum Limited (ASX: WPL) and Beach Energy Ltd (ASX: BPT) have been enjoying some welcome tailwinds from rocketing oil prices.

The index itself is up 0.25% in afternoon trading.

But buoyed by rocketing oil prices, the Santos share price is up 0.68%, the Woodside share price is up 0.65% and Beach Energy shares are up 1.70%.

With Brent crude oil soaring from US$77.80 at the start of 2022 to US$91.60 today, an almost 18% increase, these ASX 200 energy shares have also smashed the benchmark’s year-to-date returns.

What’s driving surging crude prices?

After falling off a cliff in the early months of the global pandemic, the oil price has been marching higher.

That’s partly been due to a dearth of new investment in exploration and capacity expansion. Now, as the world reopens, energy demand is outpacing supply.

Then there’s the Organization of Petroleum Exporting Countries and its partners (OPEC+). The cartel managed to drastically cut its combined oil output after the 2020 price crash. And it’s only gradually lifting its production quota.

Yet even with the modest lifts in permitted capacity (see here for more), many of the member states aren’t able to pump up to their quota levels.

Commenting on that situation, John Driscoll, director of JTD Energy Services said (quoted by Bloomberg), “Oil prices remain constructive on solid fundamentals. OPEC continues to fall short of its target, although it is promising to do better.”

Throw in various geopolitical tensions in oil rich areas – from Russia and Ukraine to Libya and the United Arab Emirates – and you’ve got the perfect recipe for rising energy prices. And soaring ASX 200 energy shares.

And crude prices could head significantly higher yet. Goldman Sachs is forecasting US$100 per barrel.

But wait. Haven’t we been here before?

How US producers could spoil the party for ASX 200 energy shares

If you have a look at the crude oil price charts in 2018, you’ll see that Brent was steadily gaining and notched just over US$84 per barrel on 5 October. Then it cratered.

By 28 December 2018, that same barrel was trading for US$52. A loss of 38% in less than 3 months.

That drop wasn’t due to a pandemic or any other major events impacting energy demand.

Rather it came as US shale producers, spurred by the high market prices, pumped record amounts of oil. At times this saw the US top Saudi Arabia as the world’s number 1 oil producer. And for the first time in many decades, the world witnessed the US export its first oil shipments.

Now 2022 and 2023 could be shaping up in a similar way.

According to US oil giant ConocoPhillips, output from the oil rich Permian Basin is set to grow by a phenomenal 900,000 barrels per day (bpd) in 2022, far above the latest estimates from the Energy Information Administration.

As Bloomberg reports, ConocoPhillips CEO, Ryan Lance’s forecast of a 900,000 bpd output lift points to “surprise announcements in recent days by Exxon Mobil Corp. and Chevron Corp. to aggressively ramp up Permian Basin production“.

With West Texas Intermediate (WTI) crude also topping US$90 per barrel, the US shale industry is tipped to generate record cash flows in 2022.

Lance said he was caught off guard by Exxon’s announcement this week that it intends to ramp up its Permian Basin output by 25%. Chevron is also opening the spigots wider, with a 10% increase on the cards.

That much new supply could certainly bring down the crude price and throw up some headwinds of ASX 200 energy shares.

“We were a bit surprised at the strength of some of the numbers that we were hearing,” Lance said.

From an oil trader’s perspective he added, “I’m absolutely concerned about. If you’re not worried about it, you should be.”

How these ASX 200 energy shares have been performing

With oil prices running hot so far in 2022, the Santos share price has gained 18%, the Beach Energy share price is up 19%, and Woodside shares have gained 19%.

This over a period that’s seen the ASX 200 fall 5%. 

The post Could US producers spoil the party for ASX 200 energy shares? appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Friday
• Morgans names the best ASX resources shares to buy in February
• The 2022 outlook for Beach Energy (ASX:BPT) shares is sunny: expert
• Own ASX 200 energy shares? Here’s what OPEC’s been up to
• 5 things to watch on the ASX 200 on Thursday

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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