In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to record a decline. At the time of writing, the benchmark index is down 0.3% to 7,070.2 points.

Four ASX shares that are not letting that hold them back are listed below. Here’s why they are rising:

Amcor (ASX: AMC)

The Amcor share price is up 3% to $16.84. Investors have been buying this packaging company’s shares after brokers stayed positive on it despite its half year results falling short of expectations. One of those brokers was Morgans. This morning the broker retained its add rating but cut its price target to $18.35.

Boral Limited (ASX: BLD)

The Boral share price has continued its positive run and is up a further 2% to $6.58. Investors have been buying this building materials company’s shares since it announced a multibillion-dollar capital return for shareholders. According to the release, Boral intends to return $3 billion of surplus capital to shareholders. This will be via a $2.65 per share capital reduction and an unfranked 7 cents per share dividend.

Nufarm Ltd (ASX: NUF)

The Nufarm share price has jumped 17% to $5.45 following the release of a trading update. According to the release, the agricultural chemicals company’s first quarter revenue grew 36% over the prior corresponding period. Management advised that this was supported by favourable weather conditions.

Westpac Banking Corp (ASX: WBC)

The Westpac share price is up 2% to $21.02. This follows the release of the banking giant’s first quarter update. Westpac reported cash earnings of $1.58 billion for the three months. This was up 1% excluding notable items over the quarterly average during the second half of FY 2021. Goldman Sachs notes that this means the bank is run-rating 4% ahead of its first half estimates.

The post Why Amcor, Boral, Nufarm, and Westpac shares are rising today appeared first on The Motley Fool Australia.

More reading

• Why these brokers think that the CBA (ASX:CBA) share price is a sell
• Nufarm (ASX:NUF) share price leaps 15% as revenue soars
• Energy stocks surge and RBA hoses down the chances of a rate rise. Scott Phillips on Nine’s Late News
• Here’s what this broker thinks of the Westpac (ASX:WBC) Q1 result
• ASX 200 (ASX:XJO) midday update: Westpac higher on Q1 update, tech shares sink

Motley Fool contributor James Mickleboro owns Westpac Banking Corporation. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns and has recommended Amcor Limited. The Motley Fool Australia has recommended Westpac Banking Corporation. 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 S&P/ASX 200 Index (ASX: XJO) has undergone some major changes over the past month. For one, BHP Group Ltd (ASX: BHP) is now the largest share on the ASX. Now that BHP’s unification program, which ended its London dual-listing, has come into effect, it has pipped Commonwealth Bank of Australia (ASX: CBA) for the top spot on the ASX. But another major change was the removal of Afterpay. So does Afterpay’s departure mean that ‘WAAAX’ is officially dead?

Afterpay officially left the ASX boards earlier this week. This comes after the company was acquired in full by the US payments giant Block Inc (NYSE: SQ), which was formerly known as Square. In Afterpay’s place, Block now has an ASX listing under Block Inc (ASX: SQ2).

But this poses a question. Since Afterpay was a core member of the WAAAX group of shares, does this mean it’s finally WAAAX off?

WAAAX is the acronym given to WiseTech Global Ltd (ASX: WTC), Altium Limited (ASX: ALU), Appen Ltd (ASX: APX) and Xero Limited (ASX: XRO). Afterpay, of course, makes (or made) up the final ‘A’.

WAAAX on or WAAAX off?

When investors first started throwing around the WAAAX acronym a few years ago, it was arguably a response to the famous ‘FAANG stocks. Those were the US tech giants that continued to give investors stellar gains over the past decade or so. Those were Facebook, now Meta Platforms Inc (NASDAQ: FB), Apple Inc (NASDAQ: AAPL), Amazon.com Inc (NASDAQ: AMZN), Netflix Inc (NASDAQ: NFLX) and Google-owner Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL).

The companies that were to become the WAAAX shares were all home-grown ASX tech darlings that quickly all started giving investors very pleasing gains. Those were especially evident across 2017, 2018 and 2019.

But even before Afterpay’s ASX departure, the wheels had arguably started to fall off the WAAAX train. If Afterpay was the only hitch here, we could perhaps move to change WAAAX to BWAAX, or perhaps WAAXB. My personal pick would be ABWAX…

But Afterpay’s morph into Block isn’t the only problem. Not all participants had kept the gains coming. The Altium share price is at the same level today as it pretty much was back in February 2019. Appen has faired even worse. It’s down almost 80% from its August 2020 all-time high. And Xero shares haven’t gone anywhere in close to 2 years either.

So perhaps WAAAX is dead for a different reason – there’s arguably just not too much to gain from grouping these companies together anymore.

The post With Afterpay shares no longer listed, is WAAAX officially dead? appeared first on The Motley Fool Australia.

More reading

• ASX 200 (ASX:XJO) midday update: Westpac higher on Q1 update, tech shares sink
• Why is the Appen (ASX:APX) share price down 7% today?
• The Xero (ASX:XRO) share price is trailing the ASX 200 by a whopping 18% so far in 2022. What’s next?
• Why Amcor, Ansell, Block, and Credit Corp shares are sinking today
• Here’s why the Altium (ASX:ALU) share price is ‘significantly undervalued’

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Motley Fool contributor Sebastian Bowen owns Alphabet (A shares) and Meta Platforms, Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Afterpay Limited, Alphabet (A shares), Altium, Appen Ltd, Block, Inc., Meta Platforms, Inc., WiseTech Global, and Xero. The Motley Fool Australia owns and has recommended Afterpay Limited, Appen Ltd, WiseTech Global, and Xero. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Meta Platforms, Inc., and Netflix. 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 Jindalee Resources share price has risen 22% in 2 days
• The move comes after a successful lithium interception at its United States mine
• A global supply shortage of lithium may be on the horizon

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The Jindalee Resources Limited (ASX: JRL) share price is soaring again today on the back of 2 updates released yesterday.

The miner announced a pleasing interception at its US mine and a corporate snapshot of its latest activities.

These announcements coincided with the Jindalee Resources share price shooting up by 16% yesterday. And the gains are continuing today. At the time of writing, the Jindalee Resources share price is up a further 5.15% to $3.06.

Let’s take a look underground…

Multiple new near-surface lithium intercepts

Yesterday, the miner announced it had intercepted 6 mineralised zones of lithium (Li) at its McDermitt Lithium Project. The mine is 100% owned by Jindalee and is located in Malheur County on the Oregon-Nevada border.

Jindalee describes McDermitt as a “low cost mining operation” and “one of the largest lithium deposits in the US”.

The site hit “six mineralised zones of lithium with a best result of 29.0m of 1,801 ppm Li that included a 12.2m wide zone grading over 2,500 Li”.

These results mirror the mineral estimate predicted in April last year.

Jindalee Resources said assays from 6 diamond holes are still pending. The results are expected to follow this quarter.

Growing global demand for lithium

Based on the miner’s scoping study in September, the US site has the potential “to support a viable standalone lithium mining and processing operation” and to be a “long-life source of future supply to the rapidly growing US battery manufacturing industry”.

Looking forward, the next phase of drilling for the year is ready to go with all permits acquired.

In its corporate report yesterday, Jindalee Resources reported a cash holding of $8.7 million, no debt, and an enterprise value of $129.5 million.

The miner also believes a “significant supply shortage” is on the horizon. This will be driven by rising demand for electric vehicles and by US President Joe Biden’s commitment to zero emissions by 2050.

Jindalee Resources share price snapshot

Over the past 12 months, the Jindalee Resources share price has increased by 53%. It saw its highest price of $3.90 in August and its lowest of $1.40 in February last year.

The company has a market capitalisation of $168 million.

The post New lithium discovery sends this ASX mining share soaring 22% in 2 days appeared first on The Motley Fool Australia.

More reading

• Why has the Advanced Human Imaging (ASX:AHI) share price plummeted 57% in a month?
• Why is this broker so bullish on the IGO (ASX:IGO) share price?
• ASX gold shares in focus amid “whale” rumours
• Why these brokers think that the CBA (ASX:CBA) share price is a sell
• Morgans names the best ASX resources shares to buy in February

Motley Fool contributor Alice de Bruin 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

• It’s been a tough month for the Advanced Human Imaging share price
• In that time, the company has announced a new binding term sheet and released its quarterly report
• Its stock might have also been impacted by the tech sector’s struggles

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The Advanced Human Imaging Ltd (ASX: AHI) share price has tumbled over the last 30 days.

It has slumped from 99 cents this time last month to trade at 42 cents today. That represents a 57% dip and includes today’s 11% plummet.

For context, the broader market has also fallen over the last month, but not nearly as severely. The S&P/ASX 200 Index (ASX: XJO) has fallen 6.9% while the All Ordinaries Index (ASX: XAO) is down 7.1%. They are down 0.3% and 0.5% respectively today.

Let’s take a look at what might be dragging the imaging software creator’s shares downwards.

What’s weighing on the Advanced Human Imaging share price lately?

It’s been a rough few weeks for the Advanced Human Imaging share price despite the company’s silence for most of the last month. However, over the last 7 days, it has released 2 price-sensitive announcements to the market.

First, the company announced it had signed a binding term sheet with digital health provider Activate Health OÜ.

The term sheet will see Activiate integrating the AHI MultiScan digital health solution into its Estonian medical device platform.

Additionally, the company released an update on its performance over the December quarter on Monday.

Advanced Human Imaging listed on the Nasdaq Index last quarter. The company ultimately ended up raising around US$12 million through its United States IPO.

It also noted progress on products made by Nexus-Vita and Tinjoy using its CompleteScan platform.

So far, the company has received US$100,000 for work to integrate its Complete Span platform into Nexus-Vita’s offering. However, Tinjoy’s launch has been dampened by China’s government’s COVID-19 strategy.

Finally, in non-price sensitive news, Advanced Human Imagining announced the signing of another binding term sheet yesterday, this time with South Africa-based Vertica Health. It will see Vertica Health integrating the AHI MultiScan SDKs.

However, the tech sector’s movements might have helped weigh down the Advanced Human Imagining share price over the last month.

While the ASX 200 has undoubtedly fallen, the S&P/ASX 200 Information Technology Index (ASX: XIJ) has tumbled 23%, including today’s 6% fall.

The post Why has the Advanced Human Imaging (ASX:AHI) share price plummeted 57% in a month? appeared first on The Motley Fool Australia.

More reading

• Why is this broker so bullish on the IGO (ASX:IGO) share price?
• ASX gold shares in focus amid “whale” rumours
• Why these brokers think that the CBA (ASX:CBA) share price is a sell
• Morgans names the best ASX resources shares to buy in February
• The 2022 outlook for Beach Energy (ASX:BPT) shares is sunny: expert

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 IGO Limited (ASX: IGO) share price is edging lower in Thursday’s session and is currently down 1.40% at $11.97.

Zooming out over the last 3 months and we see the mining giant’s shares have crawled northwards with barely a hiccup along the way.

Its shares have rallied as high as 47.5% in that time to kiss 52-week highs of $13.35 just two weeks ago, before settling back down.

As seen on the chart below, IGO has broken away from the benchmark S&P/ASX 200 Index (ASX: XJO) and the divergence is becoming wider as time goes on.

As such the team at JP Morgan has been constructive on IGO for some time, particularly favouring the mining giant’s exposure to lithium within its portfolio. It touts IGO as a “one-stop stock for [electric vehicle] EV raw material”. Let’s see what it had to say in a note from Monday.

IGO beats analyst estimates

Speaking on the company’s most recent quarterly results released on January 31, analysts at JP Morgan noted that a robust quarter led to an outperformance at the net profit after tax (NPAT) level.

Specifically, NPAT came in at $52 million for Q2 FY22 – totalling $91 million for the first half – and a 1H FY22 net cash balance of $570 million. That was ahead of the broker’s forecasts of $84 million and $558 million respectively.

Not only that, but guidance for the Greenbushes lithium mine is for higher production and lower cost in FY22 versus the broker’s internal estimates.

Notably, resources at the mine have increased to 45 million tonnes (Mt) at 2.0% versus old resource levels of 38.5Mt at 2.1% in 2018.

Production guidance for IGO’s lithium segment in FY22 is also forecast well ahead of JP Morgan’s estimates. The company is expecting to produce 1,100–1,250kt versus the broker’s 1,057kt figure.

Meanwhile, costs are expected to fall in the range of $300–$400 per tonne. That’s 20-40% below what JP Morgan was baking into its models.

Nonetheless, the broker still forecasts $681 million in revenue for the company in FY22 and $652 million in FY23. This should carry through to earnings before interest, taxes, depreciation, and amortisation (EBITDA) of $492 million and $1.07 billion respectively in its model.

Hence, while it sees IGO’s top-line growth begin to slow (and perhaps even decrease) over the next 2 years, it anticipates a massive run-up in operating income and free cash flow (FCF).

In fact, the broker forecasts $262 million of FCF in FY22, accelerating to $930 billion in FY23 – a 254% jump. That represents FCF yields of 3.3% and a mammoth 11.5% respectively.

Profits in the offing

JP Morgan reckons IGO is set to be incredibly profitable over the coming years. It is forecasting a return on equity (ROE) of 26–27% over the next 2 years.

It also forecasts the resource giant’s dividend yields to track from less than 1% this year to almost 4% in FY23 and 6% the year after.

Plus at the current IGO share price, combined with JP Morgan’s earnings estimates, the company is trading on a forward price to earnings (P/E) ratio of 9x in FY23, dropping to 8.2x in FY24. Currently, it trades at 58x P/E on last check.

The firm is heavily bullish and values IGO at $12.90 per share. Fellow brokers Jefferies, Credit Suisse, and Canaccord Genuity set price targets of $15.50, $15.30, and $13.00 on the stock in January.

IGO share price summary

In the last 12 months, the IGO share price has climbed around 85% and has outpaced all benchmark indices.

This year to date, the company’s shares are up more than 4%.

The post Why is this broker so bullish on the IGO (ASX:IGO) share price? appeared first on The Motley Fool Australia.

More reading

• Leading brokers name 3 ASX shares to sell today
• IGO (ASX:IGO) share price lower as revenue slides 18%
• Leading fund manager says these blue-chip ASX shares are buys right now
• Leading brokers name 3 ASX shares to buy today
• What is JP Morgan saying about ASX lithium shares?

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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Highlights:

• There’s speculation that a central bank is snapping up gold at around US$1,800/ounce, reports Bloomberg
• The whale (large buyer) is covering its tracks well with little evidence of buying frenzy
• But gold’s 19 failed attempts to break below US$1,800 since July 2020 points to strong support for bullion

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Rumours that a large buyer is snapping up gold could bring relief to ASX gold shares after a poor start to 2022.

The gold price has repeatedly tried and failed to drop significantly below US$1,800 an ounce despite worsening fundamentals.

This prompted Bloomberg to speculate that there is a “whale” stepping in to buy the precious metal every time the price dips below that price point.

Why ASX gold miners have lost their shine

That would be great news for ASX gold producers. The Newcrest Mining Ltd (ASX: NCM) share price, Evolution Mining Ltd (ASX: EVN) share price and Northern Star Resources Ltd (ASX: NST) share price are all nursing losses of around 10% each since January.

The dimming outlook for the store of value is driven by the prospects of a sharp rise in global interest rates.

Unlike bonds, gold doesn’t pay a dividend or coupon. Higher rates will make it more attractive for safe haven investors to buy government bonds instead of holding gold.

Whale buyer as elusive as Moby Dick

If there is a very substantial buyer of gold that’s backstopping the gold price, ASX gold shares could find renewed buyer interest. This is particularly so if the Australian dollar continues its downtrend against the greenback.

There is no evidence to prove or disprove the whale theory. But it might explain why the gold price attempted 19 failed attempts to drop below US$1,800 since July 2020.

“In the past year, the modeled value of gold, based on a regression study that includes the dollar, real rates and ETF holdings, dropped nearly 10%,” reported Bloomberg.

“Yet the metal’s price only fell around 2%. Clearly, there is a big buyer who considers the metal a long-term hold.”

On the hunt for a whale

Whale or not, the buyer or buyers are skilled at avoiding detection. The buying activity is not showing up in Exchange Traded Fund (ETF) holdings or in the futures market.

This means that the big buyer is making its purchases in the London over-the-counter market, speculated Bloomberg.

But again, finding evidence of such activity is hard. Gold holdings at vaults under the London Bullion Market Association purview only showed a small two million troy ounces rise to 309 million troy ounces in the year to December 2021.

The London Bullion Market Association’s vaults include holdings from ETFs and some central banks.

Big gold buyer likely to be a central bank

“That would suggest that whoever is buying is able to buy in scale, leave little footprint in the market and then take delivery and store the metal in secure, invisible vaults,” added Bloomberg.

“And that points strongly toward a sovereign buyer.”

While central banks usually declare their gold inventory to the International Monetary Fund (IMF), history shows this isn’t always the case.

Bloomberg noted that China did not report any changes to its gold store from 2009 to 2015. It only confessed later that it purchased 53 million ounces of the yellow metal over the period.

ASX gold shares thriving in the mystery

Given the threat of US sanctions and heightened geopolitical tensions, it certainly makes sense for some central banks to favour gold in the event that they get cut off from the world’s reserve currency – the US dollar.

This is one hypothesis that shareholders in ASX gold shares will be gleefully backing.

The post ASX gold shares in focus amid “whale” rumours appeared first on The Motley Fool Australia.

More reading

• Why is this broker so bullish on the IGO (ASX:IGO) share price?
• Why these brokers think that the CBA (ASX:CBA) share price is a sell
• Morgans names the best ASX resources shares to buy in February
• The 2022 outlook for Beach Energy (ASX:BPT) shares is sunny: expert
• Nufarm (ASX:NUF) share price leaps 15% as revenue soars

Motley Fool contributor Brendon Lau owns Newcrest Mining Limited. 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

• Some brokers reckon that the CBA share price is a sell, thinking it’s going to drop this year
• The bank may be facing income pressure in the first half of FY22
• CBA is expected by some brokers to pay a grossed-up dividend yield of 5.8% in FY22

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The Commonwealth Bank of Australia (ASX: CBA) share price has dropped around 10% since the start of the 2022 calendar year. But some brokers think that there are more declines to come.

Historically, CBA shares have been priced more expensively than the other ASX banks of Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group Ltd (ASX: ANZ) and National Australia Bank Ltd (ASX: NAB).

But some brokers like Macquarie and Morgans believe that the CBA share price valuation is too high.

Sell calls on the CBA share price

Morgans rates CBA as ‘reduce’ and Macquarie thinks that CBA is going to ‘underperform’.

Macquarie reckons that CBA is going to fall around 5% over the next 12 months, with a price target of $88.50. After looking at how US banks performed, the broker thinks there is a risk of a drop of market income in HY22.

Morgans is much more pessimistic about the prospects of the CBA share price, with a price target of just $74. That would be a drop of more than 20% over the next 12 months. This broker is expecting CBA to generate half-year cash profit of $4.3 billion and pay an interim dividend of $1.74 per share.

Full year estimates

Looking at the broker’s estimates for FY22, Macquarie thinks that CBA is valued at 20x this year’s projected earnings. Morgans’ numbers put the bank at 18x FY22’s estimated earnings.

Turning to the dividend, which plenty of retail investors like CBA for, Macquarie thinks Australia’s biggest bank will pay a grossed-up dividend yield of 5.8% in FY22 at the current CBA share price. Morgans’ estimate is very similar, with the broker having a forecast grossed-up dividend yield of 5.8% from the bank.

Latest insight into profitability

The best insight that investors can get is what the bank itself says. In November 2021, the bank reported how well it did in the three months to 30 September 2021.

In that quarter, it generated statutory net profit of $2.3 billion and cash net profit of $2.2 billion. Reported continuing cash net profit was up 20% year on year, but down 9% against the FY21 second half quarterly average. Pre-provision profits were “stable”.

Income was down 1%, with above system volume growth helping to offset continued margin pressures and lower non-interest income. The net interest margin (NIM) was “considerably lower” because of higher liquid balances, home loan price competition and customers switching to lower margin fixed rate loans, as well as the continued impact of a low interest rate environment.

Looking at the costs, operating expenses (excluding remediation costs) were actually 3% higher, mainly due to higher staff costs from lower annual leave usage during the lockdowns.

CBA share price snapshot

Whilst CBA shares are down 1% today and around 10% this year, it still registers a gain of approximately 7% over the last 12 months.

The post Why these brokers think that the CBA (ASX:CBA) share price is a sell appeared first on The Motley Fool Australia.

More reading

• Here’s what this broker thinks of the Westpac (ASX:WBC) Q1 result
• ASX 200 (ASX:XJO) midday update: Westpac higher on Q1 update, tech shares sink
• Westpac (ASX:WBC) share price on watch after reporting $1.58bn Q1 profit
• 5 things to watch on the ASX 200 on Thursday
• How are ASX bank shares responding to the RBA’s interest rate call?

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 Macquarie Group Limited and Westpac Banking Corporation. 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 the start of each month, the team at Morgans picks out its best ideas for investors. These are the ASX shares that it believes offer the highest risk-adjusted returns over a 12-month timeframe and are supported by a higher-than-average level of confidence.

Yesterday we looked at financial shares that have made the list this month. You can read about them here. Whereas on this occasion we’ll take a look at the resources sector. Here are the picks:

BHP Group Ltd (ASX: BHP)

This mining giant has made the broker’s list. It currently has an add rating and $48.60 price target on its shares.

The broker believes BHP is a “relatively low risk given its superior diversification relative to its major global mining peers.” In addition to this, its analysts like BHP due to its “attractive combination of upside sensitivity, balance sheet strength and resilient dividend profile.”

Newcrest Mining Ltd (ASX: NCM)

If you’re looking for exposure to the gold sector then Newcrest could be the share to buy according to Morgans. It has an add rating and $26.05 price target on its shares.

Morgans believes it could be a good option for investors “looking for gold exposure without development risk.” It also likes the company’s geographic spread, which it expects to provide “some relief from the cost and labour challenges WA focussed companies are currently feeling.”

Santos Ltd (ASX: STO)

Another option in the resources sector to consider is this leading energy producer. Morgans has an add rating and $9.15 price target on its shares.

The broker likes Santos due to the resilience of its growth profile and diversified earnings base, which it believes puts the company in a position “to outperform against a backdrop of a continuing broader sector recovery.”

South32 Ltd (ASX: S32)

Another resources share that makes Morgans’ best ideas list is South32. The broker has an add rating and $5.00 price target on the mining giant’s shares.

It commented: “We see attractive long-term value potential in S32 from de-risking of its growth portfolio, the potential for further portfolio changes, and an earnings-linked dividend policy.”

Woodside Petroleum Limited (ASX:WPL)

Finally, Morgans is positive on this energy producer and currently has an add rating and $30.55 price target on its shares. It is a fan of its “transformative” merger with the petroleum assets of BHP and believes it is getting the better end of the deal.

Morgans explained: “We think WPL is clearly getting the better of the deal, with synergies not baked into deal metrics and BHP willing to accept a discount. The deal is transformative, lifting WPL into being a top 10 global E&P with +2 billion barrels of 2P reserves, with EBITDA of US$4.7bnpa and growth options.”

The post Morgans names the best ASX resources shares to buy in February appeared first on The Motley Fool Australia.

More reading

• Own ASX 200 energy shares? Here’s what OPEC’s been up to
• What rising inflation could mean for Newcrest (ASX:NCM) shares
• Here’s why the BHP (ASX:BHP) share price is rebounding in 2022
• 5 things to watch on the ASX 200 on Thursday
• These 3 ASX 200 shares are topping the volume charts on Wednesday

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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Shares in Beach Energy Ltd (ASX: BPT) have reversed course and begun the ascent back up north over these past 3 months.

Prices have skidded off a low of $1.16 last year and are trading at $1.48 at the time of writing, having gained more than 13% in the past week.

As such, Beach Energy has started the year off well, with the most recent surge in its share price stemming from the release of its quarterly report last week.

It now leads the S&P/ASX 300 Metals and Mining Index (ASX: XMM) and several other competitors in 2022 after breaking away from the pack at the start of the year, as seen on the chart below.

These results haven’t gone unnoticed either. The team at JP Morgan are constructive on Beach Energy shares, assigning an overweight rating on the stock. Analysts at the firm have analysed Beach’s quarterly results in the grand scheme of its long-term growth story, and like what they’ve found. Let’s take a look.

Strong prices support revenue

Beach Energy grew quarterly revenue by 3% year on year to $398 million in the three months ending 31 December 2021, above the broker’s internal estimates. Much of the upside was driven by strengths in the commodity markets.

“Stronger-than-expected revenue was primarily due to higher realised prices for liquids. The realised crude oil price of A$117/bbl was 16% above our estimate. This was only partially offset by lower-than-expected gas prices”, the broker said.

In fact, Beach Energy realised a gas price of $7.60/GJ this quarter, a 2% gain on the prior period, but still 6% below JP Morgan’s forecasts.

The firm is also constructive on the company’s project pipeline, noting that “the key highlight from Beach’s growth projects was the delivery of first gas from the Geographe 4 and 5 wells to the Otway gas plant”.

These catalysts, it reckons, will add to an already superior balance sheet that suggests Beach Energy is well-positioned to pull the trigger on future growth opportunities.

“We think Beach provides good exposure to a diversified suite of assets in Australia. Net debt is close to zero and therefore Beach has the strongest balance sheet of the large caps under our coverage”, analysts at the firm wrote.

In fact, Beach Energy is one of JP Morgan’s preferred stocks in the sector, given a healthy blend of driving forces behind its share price.

“While we acknowledge recent issues at the Western Flank and the sudden departure of the CEO last year has increased operational risk” the firm said, “we would highlight: the company’s exposure to East Coast gas; the balance sheet is also net cash and in a strong position to fund its growth projects; and the stock is trading at a P/NPV of 0.72x”

It also says that in order for Beach Energy to achieve current production guidance of 21-23mmboe, it needs to produce a minimum of 10-12mmboe in the remaining 2 quarters of FY22.

Capital expenditures also appear to have fallen well short of full year guidance of $900 million-$1.1 billion, with just $417 million spent year-to-date. The broker noted that this represents a substantial saving.

JP Morgan rates Beach Energy as a buy and values the company at $1.85 per share.

In a list of analysts covering Beach Energy provided by Bloomberg Intelligence, 79% have it as a buy whereas just 1 broker has it as a sell.

Beach Energy share price snapshot

In the last 12 months, the Beach Energy share price has fallen 14% and is well behind the benchmark indices in that time.

This year to date however, shares have reversed course and are now trading up around 17% after soaring another 13% in the last week of trading.

The post The 2022 outlook for Beach Energy (ASX:BPT) shares is sunny: expert 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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Key points

• The Nufarm share price is soaring today
• The company’s latest trading update and outlook was released this morning
• The agricultural company has reported a 36% increase in revenue for Q1 FY22

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The Nufarm Ltd (ASX: NUF) share price is enjoying another good day on the ASX, currently up 15.05% to $5.35. It follows 4 successive days of gains for the company. Its shares are now up by 22% since Monday.

The developer and manufacturer of crop protection solutions and seeds released its latest trading update today. The update covers the first quarter of FY22. It reported an increase in revenue and strong adaptation to global supply demands.

Nufarm also released its outlook for the rest of the financial year. Let’s take a look at what the company announced.

Nufarm share price surges on 36% revenue increase

The Nufarm share price is rocketing today on the back of the company’s trading update for Q1 FY22 and outlook. The highlights included:

• A substantial increase in revenue
• Favorable trading conditions
• Adjusted net working capital (ANWC)/sales remain within target of 35-40%.

Nufarm reported a 36% increase in revenue for the first quarter of FY22 (against the previous corresponding period), citing “favourable weather conditions” as a factor. New products also made up more than 20% of its revenue.

The company “expects earnings in FY22 will be heavily weighted for the first half of the financial year and is increasingly confident of revenue and earnings growth for the full FY22 financial year”.

In fact, Nufarm predicts its revenue could increase to more than $4 billion by FY26, due to its existing and upcoming products, and above market growth at an expected 2.3%.

However, the company also reported it was experiencing “upward pressure on costs due to raw material costs and global logistics challenges which are being offset by the increased revenues”.

What’s next for Nufarm?

The Aussie grower is committed to adapting to global growth demands and challenges, including:

• Catering to a growing global population (estimated 9.7 billion by 2050) and higher living standards by increasing yields
• Using more sustainable agricultural practices, such as “biologicals, bio-stimulants, mechanical, electric and other novel solutions”
• Reducing greenhouse gas emissions at manufacturing sites by 30% before 2030 and protecting crops

Among other essentials, Nufarm expects fuel demand to increase by 50% by 2050. On Tuesday, the farmer reported that it had entered into an agreement with BP to supply sustainable biofuels through its product, Nuseed Carinata oil.

All in all, 22 of its primary products target an addressable market valued at $6.6 billion (FY22 projected). Nufarm hopes to push its portfolio towards higher margin and growth products, with customer relevance front of mind.

Nufarm share price snapshot

Over the past 12 months, the Nufarm share price has increased by 7%. It reached its highest price of $5.60 in April 2021 and its lowest of $4.12 in September 2021.

The company has a market capitalisation of $2 billion and a price-to-earnings ratio (P/E) of 35.

The post Nufarm (ASX:NUF) share price leaps 15% as revenue soars appeared first on The Motley Fool Australia.

More reading

• ASX 200 (ASX:XJO) midday update: Westpac higher on Q1 update, tech shares sink
• Nufarm (ASX:NUF) share price climbs higher on BP low-carbon fuel deal

Motley Fool contributor Alice de Bruin 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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