2021 was an okay year for the Woolworths share price.

The supermarket giant ended 2020 trading at $33.30 and, despite a rocky start to the year, had surged to a 52-week high of $44.06 by June 2021.

However, as of the final close of last year, the Woolworths share price was trading at $38.01. That represents a 14.14% gain for the year.

While that’s a decent result, it only beat the broader market by a nose. Over the course of 2021, the S&P/ASX 200 Index (ASX: XJO) gained 13%.

Let’s take a look back at the news that moved the Woolworths share price last year.

Here’s what drove the Woolworths share price in 2021

The Woolworths share price had a decent run last year, driven by a major demerger, an attention-grabbing takeover offer, and, finally, a disappointing trading update.

Endeavour demerger

Let’s start with possibly the biggest news from Woolworths last year; its multi-billion demerger of its drinks and hotels leg, Endeavour Group Ltd (ASX: EDV).

That saw the company split from many renowned businesses, including Dan Murphy’s and BWS.

The Woolworths share price tumbled 11% on 24 June – the day Endeavour floated – likely reflecting the loss of the branch.

Through the demerger, Woolworths’ shareholders received 1 share in the newly formed company for each share they owned in the parent company.

Financial year 2021 earnings

Of course, the supermarket giant released its results for financial year 2021 shortly after.

Over the 12 months ended 30 June, Woolworths’ sales grew by 5.7% to reach approximately $67 billion.

It was likely little surprise that its e-commerce sales also boomed, increasing 58% to around $5.6 billion.

The company ended up with a net profit after tax of around $1.9 billion ­– a 22.9% increase on that of financial year 2020.

The next major news to move the Woolworths share price came in December.

API takeover bid

Then, the company jumped in the middle of a long-standing takeover arrangement, outbidding Wesfarmers Ltd (ASX: WES) for Australian Pharmaceutical Industries Ltd (ASX: API) by more than $100 million.

Woolworths offered API shareholders $1.75 per security to acquire the company. That was 12.9% more than Wesfarmers’ $1.55 per share bid.  

However, the supermarket’s bid to acquire the owner of Priceline was looked at with suspicion by some, including the Pharmacy Guild of Australia.

While 2021 ended with the takeover offer hanging in the balance, Woolworths ultimately withdrew its bid last week. Wesfarmers is expecting to acquire API in the current quarter.

The Woolworths share price’s final hurdle

Finally, the retailer ended the year on an unfortunate note.

It released a trading update detailing the impact of COVID-19′s Delta strain – which took hold of much of Australia in the first half of financial year 2022 – on 14 December.

Within the update, Woolworths CEO Brad Banducci commented:

The first half of [financial year 2022] has been one of the most challenging halves we have experienced in recent memory due to the far-reaching impacts of the COVID Delta strain and its impact on our end-to-end stock flow and operating rhythm.

The news saw the Woolworths share price dip 7.6%, ending the final month 6.8% lower than it started it.

And it hasn’t performed much better since. Year to date, the Woolworths share price has slipped 6.2%, ending Wednesday’s session trading for $36.06.

The post How did the Woolworths (ASX:WOW) share price perform in 2021? appeared first on The Motley Fool Australia.

More reading

• There were the 5 best performing ASX 200 retail shares of 2021
• Woolworths (ASX:WOW) supply woes continue with retailer receiving half of normal deliveries
• ASX 200 (ASX:XJO): Woolworths withdraws API proposal, tech shares rebound
• If supermarkets are ‘COVID winners’, why is the Woolworths (ASX:WOW) share price sliding into 2022?
• API (ASX:API) share price crashes 12% after Woolworths withdraws takeover offer

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 owns and has recommended Wesfarmers 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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Goldman Sachs has been running the rule over the Australian mining sector and is feeling very positive.

The broker believes that the current commodity up-cycle is different from the last two commodity booms. It notes that the 2003-2007 super cycle was driven by demand growth from China coupled with a slow supply response from the mining sector after decades of low supply growth. Whereas the 2009-2011 boom was driven by a post-GFC demand rebound but then a strong supply response.

On this occasion, Goldman believes things will be different.

Its analysts explained: “Five years of mining sector deleveraging and capital discipline from 2015-2021 and a lack of high-quality greenfield projects across most commodities, the rapid emergence of decarbonisation capex by the major miners, and ongoing challenges of permitting new projects, set this cycle up as more supply-side driven over the medium term before switching to more demand driven from 2025 with increased global investment in green capex.”

In light of this positive commodity price backdrop, the broker expects free cash flow and earnings per share growth will remain strong in the Australian mining sector. This is even in the face of increasing opex and capex inflation.

Goldman also highlights that a lot of value can be found in the sector at current levels.

“From a valuation perspective, the sector is trading on an attractive 4x NTM EBITDA but at 1.05x NAV, although we note that in the 2003-2007 and 2009-2011 commodity bull markets, most stocks (diversified miners and pure plays) traded at premiums to NAV, indicating the sector can move higher,” it explained.

But which mining shares should you buy?

Among Goldman’s top picks in the mining sector are Rio Tinto Limited (ASX: RIO) and South32 Ltd (ASX: S32).

Its analysts commented: “We are Buy rated on RIO trading at 0.9x NAV and discounting a long run iron ore price of US$62/t (vs. GSe long run of US$67/t real) and trading on a FCF yield of 12% in 2022E (based on our US$110/t Fe forecast for 2022) and our view that RIO will return to production growth in mid-2022 on higher iron ore and copper volumes.”

The broker has a $125.60 price target on Rio Tinto’s shares.

As for South32, Goldman said: “We are Buy rated on S32.AX (on Conviction List) with strong FCF (19% base case for FY22), exposure to base metals (aluminium & alumina c. 50% of FY22 EBITDA; we are bullish aluminium on a multi-year view, zinc/nickel c. 20%), and earnings upside from the Sierra Gorda copper acquisition (c. 15% upside to our EBITDA; not in our numbers pending deal completion; expected 1Q22).”

Goldman has lifted its price target on South32’s shares to $4.70.

One mining share that the broker thinks investors should avoid is Fortescue Metals Group Limited (ASX: FMG). This is due largely to its current valuation, which Goldman feels is excessive compared to peers.

It explained: “We remain Sell rated on FMG on relative valuation (1.8x NAV) and trading at a significant premium to BHP & RIO on a EV/EBITDA basis (5.4x vs. BHP & RIO on c. 4x), low grade iron ore price risk (GSe 68% price realisation for Dec Q), low FCF yield (3-5%) vs. BHP & RIO (10-12%) and capex and execution risks on the Iron Bridge & FFI set of projects.”

The broker believes the Fortescue share price is only worth $13.50 today. This implies significant downside from current levels.

Fellow mining giant BHP Group Ltd (ASX: BHP) is currently not rated by Goldman Sachs. This is due to its team advising on the Woodside Petroleum Limited (ASX: WPL) merger.

The post Goldman Sachs says buy Rio Tinto and South32 shares but sell Fortescue now appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
• Why Domino’s, Fortescue, Medibank, and Metcash shares are falling
• Why is the South32 (ASX:S32) share price hitting all-time highs today?
• Leading brokers name 3 ASX shares to sell today
• ASX 200 (ASX:XJO) midday update: Afterpay-Block deal approved, Fortescue downgraded

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 BHP Group Ltd (ASX: BHP) share price finished 2021 in the red despite a positive start and end to the year.

The mining giant’s shares shed 2% during the year, falling from $42.43 to $41.50. In contrast, the S&P/ASX 200 Index (ASX: XJO) gained around 13%.

Let’s take a look at what was behind the BHP price fall in 2021.

The year that was

BHP shares performed well up to the start of August, with the company’s share price hitting a yearly high of $54.06 on 4 August. In fact, between market close on 31 December 2020 and this 52-week high, shares increased 27%.

Iron ore prices gained 15% during this time, rising from US$158.15 to $182.51. In February, investors reacted positively to strong financial results for the first half of the 2021 financial year. The board revealed a record half-year dividend of US$1.01 per share.

In April, BHP released a well-received quarterly review showing record production at Western Australia Iron Ore. The company also delivered the best ever production at the Goonyella Riverside metallurgical coal mine in Queensland. This was followed by more record production in July in Western Australia, while Olympic Dam achieved the highest ever copper and gold production.

But then the company’s shares came crashing. The BHP share price fell 33% between market close on 4 August and 4 November. During this time, the iron ore price fell nearly 47% from US$182.51 to $97.17.

Around this time, BHP also announced it would merge its oil and gas portfolio with Woodside Petroleum Limited (ASX: WPL) to create a global energy company.

In late November and December, the BHP share price started lifting again. Rising iron ore prices likely contributed to the increase. Between market close on 17 November and 31 December, the company’s share price gained more than 15%. In the same time frame, iron ore prices increased by nearly 30% from US$92.76 to US$120.20.

In December, the company moved forward on its plan to unify its two companies structure into a single listing on the ASX. BHP’s current dual listing corporate set-up followed its amalgamation with Billiton in 2001.

Also that month, the Australian Competition and Consumer Commission (ACCC) gave the tick of approval on the sale of BHP’s petroleum assets to Woodside.

Shares also gained on news the company had pulled out of its bidding war with Wyloo Metals for nickel miner Noront Resources (TSXV: NOT).

Looking ahead

Looking ahead, Macquarie analysts rate BHP as a buy with a price target of $52. As my Foolish colleague Tristan reported recently, Macquarie believes the company’s shares are valued at under 10x FY22’s estimated earnings.

Morgans has also given BHP shares a buy rating, with a price target of $45.70. Shares in BHP have already gained more than 12% in the past month.

Share price snap shot

While the BHP share price underperformed the benchmark index in 2021, the new year is starting well for the company, Its shares are up 8.6%% so far in January.

BHP has a huge market capitalisation of nearly $133 billion based on its current share price.

The post Why did the BHP (ASX:BHP) share price struggle so much in 2021? appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
• Own BHP (ASX:BHP) shares? Here’s the lowdown on the miner’s latest nickel play
• Dividend beasts: 5 ASX 200 shares with the highest dividend yield
• These are the 10 most shorted ASX shares
• Experts tip the ASX sectors that are set to outperform in 2022

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. 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 TPG Telecom Ltd (ASX: TPG) share price has just been rated as a buy by one of the leading brokers that looks at ASX shares.

Brokers and analysts are always keeping a lookout for investments that could be attractive long-term opportunities.

Since the end of November 2021, the TPG share price has actually fallen by almost 10%.

The drop of the telecommunications business is being seen as an opportunity by some brokers.

A new buy rating on the TPG share price

It’s the broker Ord Minnett that now thinks that TPG is a buy. It is no longer ‘neutral’ on the business.

Remember that TPG is a much larger telco these days after the merger with Vodafone Australia.

Ord Minnett thinks that TPG shares are good value and it will do well as COVID impacts subsides.

There are a couple of different things that the broker noted.

Growth and monetisation

A retail telecommunications business can affect its operating profit in two different ways – the average profit margin generated from customers and how many customers it has.

Returning to mobile subscriber growth continues to be a key focus with new price plans and promotional activity across the company’s three major mobile brands – Vodafone, TPG and iiNet.

The ASX share is confident that its mobile business, which has been impacted by factors including COVID restrictions, will return to growth when Australian borders reopen and its 5G network reaches scale in the major cities.

Postpaid mobile subscriber declines started to flatten in the first half of TPG’s FY21, with the customer base ending the period at 3.19 million, a 1.8% decrease in the half-year.

The prepaid mobile subscriber base ended at 1.91 million, a 3.4% drop in the half-year.

In HY21, the total fixed broadband subscriber base increased to 2.2 million.

TPG is also seeing rapid early growth in its NBN alternatives with its 4G home wireless customer base more than tripling in the first six months of the year, and it’s building on the launch of its 5G home wireless option in June.

In terms of potentially selling assets, which Ord Minnett thinks could be a useful idea, TPG is going through a strategic review of its telecommunications tower assets.

The telecommunications ASX share operates a mobile network of 5,800 rooftops and towers, and owns the passive infrastructure on around 1,200 of those sites. The majority of those 1,200 sites are in metro areas and have a high average tenancy ratio.

TPG notes that demand for telecommunications infrastructure assets is strong, and TPG has commenced this review to obtain a preliminary market assessment.

While the company is continually seeking opportunities to maximise shareholder value, it has not made any commitment about these assets yet.

TPG share price valuation

According to Ord Minnett’s calculations, the TPG share price is valued at 32x FY22’s estimated earnings.

The post This top broker just rated the TPG (ASX:TPG) share price as a buy appeared first on The Motley Fool Australia.

More reading

• 2 beaten-up blue chip ASX shares rated as buys

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 TPG Telecom Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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On Wednesday, the S&P/ASX 200 Index (ASX: XJO) was a positive performer and charged higher. The benchmark index rose 0.65% to 7,438.9 points.

Will the market be able to build on this on Thursday? Here are five things to watch:

ASX 200 expected to edge higher

The Australian share market looks set to edge higher on Thursday. According to the latest SPI futures, the ASX 200 is expected to open the day 5 points or 0.1% higher this morning. This follows a positive night on Wall Street, which in late trade sees the Dow Jones up 0.1%, the S&P 500 up 0.25%, and the Nasdaq up 0.35%.

Oil prices rise

Energy shares including Santos Ltd (ASX: STO) and Woodside Petroleum Limited (ASX: WPL) could have a solid day after oil prices pushed higher overnight. According to Bloomberg, the WTI crude oil price is up 2% to US$82.82 a barrel and the Brent crude oil price is up 1.4% to US$84.90 a barrel. Traders bid oil prices to two-month highs after concerns over the Omicron threat eased.

Crown given neutral rating

The Crown Resorts Ltd (ASX: CWN) share price could be fully valued according to analysts at Goldman Sachs. This morning the broker put a neutral rating and $11.03 price target on the casino and resorts operator’s shares. Goldman thinks investors should buy the shares of rival Star Entertainment Group Ltd (ASX: SGR) instead.

Gold price edges higher

Gold miners Evolution Mining Ltd (ASX: EVN) and Regis Resources Limited (ASX: RRL) could have a good day after the gold price pushed higher. According to CNBC, the spot gold price is up 0.45% to US$1,826.8 an ounce. The gold price rose after the US dollar softened following the release of US inflation data.

Iron ore price rises

It could be a good day for mining giants BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO) after the iron ore price continued its rise. According to Metal Bulletin, the benchmark iron ore price is up 2.3% to US$131.60 a tonne. On Wall Street, both of their US listed shares are up over 2% in late trade.

The post 5 things to watch on the ASX 200 on Thursday appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX shares today
• Here are the 3 most heavily traded ASX 200 shares this Wednesday
• The best and worst ASX sectors of 2021. Why this year could be different
• Here are the 5 best performing ASX ETFs of 2021
• ASX 200 (ASX:XJO) midday update: Afterpay-Block deal approved, Fortescue downgraded

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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If you’re a fan of small caps, then you’re in luck. Because there are a number of exciting ones on the Australian share market that have been tipped as buys.

Here are two small cap ASX shares that analysts rate highly:

Airtasker Ltd (ASX: ART)

The first small cap ASX share to consider is this growing online marketplace for local services.

Analysts at Morgans are very positive on Airtasker. This is due to their belief that the company has a very attractive business model and a significant market opportunity.

Morgans highlights that the company’s product works for both sides of the marketplace, has attractive unit dynamics with healthy gross and contribution margins, an enormous total addressable market (TAM) in the early stages of ecommerce adoption, and a large international expansion opportunity. The latter provides the company with a long growth runway in the future.

The broker has an add rating and $1.27 price target on the company’s shares.

Nitro Software Ltd (ASX: NTO)

Another small cap that is rated highly is Nitro. It is a fast-growing global document productivity software company aiming to accelerate digital transformation in a world that demands the ability to work from anywhere, anytime, on any device.

It is doing this with its Nitro Productivity Platform, which offers comprehensive business solutions including powerful PDF productivity, eSigning, and industry-leading analytics. At the last count, Nitro had over 2.8 million licensed users and 12,000+ business customers in 155 countries. This includes over 68% of the Fortune 500 and three of the Fortune 10.

This has underpinned strong annualised recurring revenue (ARR) growth in recent years and has continued in FY 2021. For example, during the third quarter, Nitro reported a 50% increase in its ARR. This puts it on course to achieve its ARR guidance of US$39 million to US$42 million in FY 2021. This is still only a fraction of its estimated total addressable market of $28 billion.

Bell Potter is very positive on Nitro. It currently has a buy rating and $4.50 price target on its shares.

The post 2 exciting small cap shares named as buys appeared first on The Motley Fool Australia.

More reading

• These 3 ASX tech shares just hit 52-week lows. What’s going on?
• 2 buy-rated ASX tech shares with huge upside potential
• 3 exciting small cap ASX shares rated as buys
• 2 compelling ASX shares that could be buys in 2022
• Analysts say these small cap ASX shares could be going places in 2022

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Airtasker Limited. 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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ASX 200 tech shares are in the green today, following in the footsteps of their counterparts in the United States.

The S&P/ASX All Technology Index (ASX: XTX) gained 1.66% today to 2,840.70 points at market close. This was 1% more than the benchmark S&P/ASX 200 Index (ASX: XJO), which jumped 0.66%.

Let’s take a look at why ASX technology shares performed well today.

What is happening to ASX tech shares?

The All Technology Index recovered after a tough start to the year. The index fell 6.39% between market close on 31 December and market close on 11 January before clawing back some of the losses today.

One clue to the trend may be the performance of US markets. The NASDAQ-100 Technology Sector Index (NASDAQ: NDXT) gained 1.73% today to 9,146.78 points.

Apple Inc (NASDAQ: AAPL) gained 1.68%, while Amazon (NASDAQ: AMZN) jumped 2.4%. US tech shares rebounded after a sell-off in the new year due to rising interest rate fears, CNBC reported.

The Australian technology sector often follows the Nasdaq index. Afterpay Ltd (ASX: APT) was one of the top ASX 200 tech shares on Wednesday, gaining 4.75%.

The company’s shares surged after the Bank of Spain approved Block’s takeover of the company.

Other ASX 200 and All Technology Index shares in the green today included Appen Ltd (ASX: APX), up 5.52%, and Megaport (ASX: MP1), which hiked 3.43%.

Altium Limited (ASX:ALU) also climbed 1.69%, Novonix (ASX:NVX) jumped 0.95%, and TechnologyOne (ASX: TNE) gained 1.05%. None of these companies released any news to the market today.

Foolish takeaway

The All Technology Index climbed 3.60% the past year, underperforming the broader ASX 200 index by roughly 8 percentage points.

In the past month, the All Technology index is down 6.45% and 6.78% lower in the last week.

Since market close on 31 December, it has fallen 4.83%.

The post Here’s why ASX 200 tech shares (ASX:XTX) outperformed today appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX shares today
• Here are the 3 most heavily traded ASX 200 shares this Wednesday
• The best and worst ASX sectors of 2021. Why this year could be different
• Here are the 5 best performing ASX ETFs of 2021
• Why Afterpay, Appen, Liontown, and Nickel Mines shares are surging higher

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Afterpay Limited, Altium, and Appen Ltd. The Motley Fool Australia owns and has recommended Afterpay Limited and Appen Ltd. The Motley Fool Australia has recommended Amazon and Apple. 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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With growth shares falling out of favour with investors this month, readers may be wondering what options there are out there for value investors.

With that in mind, listed below are two top ASX shares which could be candidates for the value-focused investor. They are as follows:

Adairs Ltd (ASX: ADH)

The first ASX share to look at is this leading homewares and furniture retailer. It has a presence online and offline with its core Adairs brand and its online-only Mocka brand. It has also signed an agreement to acquire Focus on Furniture for $80 million, giving it exposure to the $8.3 billion bulky furniture category.

The team at Morgans is very positive on Adairs and currently has an add rating and $4.80 price target on its shares. Its analysts are forecasting an earnings per share (EPS) compound annual growth rate of 21% between FY 2020 and FY 2024.

Despite this, the Adairs share price is trading at just 10.5x FY 2022 earnings based on Morgans’ forecast of 36 cents EPS. Furthermore, the broker estimates that its shares offer a very generous fully franked 6% dividend yield.

Inghams Group Ltd (ASX: ING)

Another ASX share for value investors to consider is this leading poultry producer. With the Inghams share price down 21% from its 52-week high, the team at Goldman Sachs believe it has created a buying opportunity. This is even after factoring in its disappointing performance in FY 2022 due to COVID headwinds.

This morning the broker retained its buy rating with a trimmed price target of $3.90. Goldman estimates that Ingham’s shares are trading at 13.5x FY 2022 earnings and offering investors a fully franked ~5% yield.

It feels this makes it great value, particularly given its strong balance sheet, relatively defensive revenue stream, and the duoploy industry structure.

The post 2 cheap ASX shares for value investors appeared first on The Motley Fool Australia.

More reading

• Brokers name 2 ASX dividend shares to buy today
• 5 things to watch on the ASX 200 on Wednesday
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• ASX 200 (ASX:XJO) midday update: PolyNovo rockets, Inghams sinks
• Inghams (ASX:ING) share price sinks as Omicron bites

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 ADAIRS FPO. The Motley Fool Australia owns and has recommended ADAIRS FPO. 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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ASX financials are front and centre again this week, as rising yields on US Treasuries and a rotation out of risk assets play havoc on international equity markets.

Investors are flocking to defensive classes – such as financials –  in the wake of shifting interest rates talk emerging from central banks in Australia, the US, and Europe.

For instance, the iShares U.S. Financials ETF (NASDAQ: IYF) saw inflows of $126.3 million in the final week of December. That’s a 5% gain on the same time in 2020.

Meanwhile, the Financial Select Sector SPDR Fund (NYSEARCA: XLF) saw the highest volume of inflows last week, reaching $2.34 billion.

In comparison, the SPDR S&P 500 ETF Trust (ASX: SPY) – which is currently 27% weighted towards the rates sensitive tech sector – saw net outflows of $6,523.72 million in the first week of 2022 alone.

Why then, is the Bank of Queensland Ltd (ASX: BOQ) share price struggling of late? It is currently in a 40% drawdown, meaning that’s how far it’s trading off its previous record high.

Let’s take a look at the situation.

What’s up with the BOQ share price?

Over a much wider time frame, say the last 5 years, the downward pressure on the BOQ share price has been more than evident.

The company’s shares have trended downwards from a high of $12.47 back in 2018 and have shown little sign of recovery since.

The COVID-19 selloff in March 2020 was unkind to BOQ shares. Only in October 2021 did the company return to its pre-pandemic levels.

However, whilst it’s prudent to consider a stock’s history, today’s forward estimates on the BOQ share price are equally as important. As legendary fund manager Peter Lynch correctly states, the market prices shares on a combination of past earnings history and future earnings expectations.

Fast forward to the present and the commentary on BOQ is centred around its ability to absorb sector-wide pressures to net interest margins (NIMs) in FY22.

Goldman Sachs considers BOQ’s deposit book is more rate-sensitive while Jefferies is upbeat on the bank’s cost-budgeting measures targeted for 2022. Both are positive inflection points, according to the brokers.

The bank is set to embark on a number of new year’s resolutions as well, following a flurry of complaints at its AGM last year about the old technology underpinning its operations.

As such, the bank has committed to its new “digital transformation strategy”, launched last year.

So, is it a buy in 2022?

When examining the list of brokers provided by Bloomberg Intelligence, the majority of coverage on BOQ is bullish for the remainder of 2022.

Citing the bank’s net interest margin, Jefferies bakes in a 9 basis point contraction in NIM from the previous year in its forward estimates on BOQ.

It values the bank at a bullish $8.50 per share, alongside the team at Citi who rate it a buy on a $10 per share price target.

Goldman Sachs has BOQ as a buy as does Macquarie, each valuing the company at $9.67 and $10 per share respectively.

Meanwhile, JP Morgan favours BOQ the most out of its ASX financial shares. It values the company at $9.80 a share. It also forecasts cash earnings of $507 million for the bank in FY22.

When comparing the BOQ share price with Commonwealth Bank of Australia Ltd (ASX: CBA), Australia’s largest bank by market cap, most brokers unquestionably prefer BOQ shares right now.

With this in mind, it’s not surprising to see more than 70% of analysts covering BOQ advocate the share as a buy, as opposed to just 1 broker urging clients to sell.

As such, going by these predictions, BOQ could be a buy in 2022. However, with equity markets, and risk assets in general, poised for a year of lumpy performance, only time, market mechanics, company fundamentals, and Captain Hindsight will tell.

The post 40% drawdown: The Bank of Queensland (ASX:BOQ) share price is struggling. Is it a buy? appeared first on The Motley Fool Australia.

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The author has no positions 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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If you’ve marked the turning of the calendar year with a resolution to start investing, congratulations! Investing in ASX shares and the share market is one of the most tried and tested ways of building wealth and income. Investing has helped millions of people around the world get ahead and participate in the wealth-generating effects of the capitalist system. But for many would-be new investors, it can quickly get overwhelming. There’s jargon and financial knowledge to get around, not to mention the timeless question of what to actually put your hard-earned dollars into. That’s why many new investors turn to exchange-traded funds (ETFs).

ETFs are one of the most popular methods of investing in the share market, especially so for new investors. Let’s look at some of the reasons why:

What are the benefits of investing in ETFs?

Simplicity

This one mainly applies to index funds like the Vanguard Australian Shares Index ETF (ASX: VAS). An index ETF is a fund that simply mirrors a popular index. The most prevalent of these on the ASX boards would be the S&P/ASX 200 Index (ASX: XJO). The ASX 200 simply holds the largest 200 shares on the Australian share market, weighted according to market capitalisation (size). An ASX 200 ETF will hold everything from Commonwealth Bank of Australia (ASX CBA) and Coles Group Ltd (ASX: COL) to JB Hi-Fi Limited (ASX: JBH)) and Adairs Ltd (ASX: ADH).

If a company’s success grows over time, so will its presence in the ETF. Conversely, if a company loses its way and shrinks in size, it will lose its place in the ETF. As such, the ETF holder (you) doesn’t need to lift a finger to manage this investment. This is why many beginner investors find ETFs attractive

Cost

Traditionally, paying someone else to manage and invest your money ain’t cheap. Managed funds can charge annual fees as high as 2%, which can markedly drag down your returns over time. But another key advantage an ETF can offer is low fees. For example, the Vanguard ETF listed above only charges an annual fee of 0.1%, or $10 for every $10,000 invested every year. That can make a big difference for an investor paying $200 a year to a managed fund, given how long-term compound interest works.

Diversification

If you’ve only just begun your investing journey, you may have come across this oft-bandied term (if not, you soon will). Diversification, or ‘not putting all your eggs in one basket’, is something most investors (including we Fools) preach. Life is unpredictable and you never know what kinds of unforeseen problems can hit a well-run business. For example, an investor who only held travel-related companies in January 2020 would have discovered the pitfalls of not being diversified a month or two later.

This is another area where an ETF can shine. Remember the ASX 200? An ETF tracking this index has your money spread across 200 different companies, all operating in different ways and across all facets of the economy. You have the banks like CBA, grocers like Coles, travel shares like Qantas Airways Limited (ASX: QAN), retailers like Adairs, internet providers like Telstra Corporation Ltd (ASX: TLS)… you get the idea. An index ETF has diversification built in, adding to the ‘bottom drawer’ appeal that we discussed above.

A final caveat

Of course, no investment in shares is risk-free, and an ETF is no different. Just because an ETF is low-cost and diversified doesn’t mean that it can’t be whacked in a market crash. That’s why you should always have a long-term time horizon with any share market investment.

Also, not all ETFs are equal. These days, you can get an ETF that covers just about anything. Some ETFs solely invest in gold bullion, oil futures or biotech shares. These are not diversified in the same way an index ETF is, and are often more expensive too. So make sure the ETF you pick does what you want it to. Otherwise, you may be in for a rude shock.

Foolish takeaway

ETFs can be a powerful tool in any investors portfolio, as well as a great choice for a beginenr investor. So if you’ve made the admirable New Year’s resolution to begin your investing journey, ASX ETFs can be a great place to start. Due dilligence, a consistent investing strategy (such as dollar cost-averaging), and a steady hand will come in handy, but if you are keen to get a slice of our economies’ prosperity, an ETF can be a fantastic choice.

 

The post Made a New Year’s resolution to start investing? Here are some of the benefits of ASX ETFs appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen owns ADAIRS FPO and Telstra Corporation Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended ADAIRS FPO. The Motley Fool Australia owns and has recommended ADAIRS FPO, COLESGROUP DEF SET, and Telstra Corporation 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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