The Webjet Limited (ASX: WEB) share price is out of form and trading lower on Tuesday.

In afternoon trade, the online travel agent’s shares are down 2.5% to $6.09.

Is the weakness in the Webjet share price a buying opportunity?

One leading broker that is likely to see today’s weakness in the Webjet share price as a buying opportunity is Goldman Sachs.

This morning the broker released a note looking at the travel sector and spoke very positively about the company.

According to the release, Goldman has retained its buy rating and lifted its price target on the company’s shares to $7.00.

Based on the current Webjet share price, this implies potential upside of 15% for investors over the next 12 months.

What did the broker say?

Goldman notes that there has been yet another change in the outlook for the Australian travel industry, this time in a positive way.

It commented: “The outlook for travel in Australia has yet again changed significantly since the last update, this time in a positive direction with international reopening officially announced. Internationally, while the outbreak of the Delta variant slowed domestic recovery into September, frequent data updates indicate that recovery has since progressed positively, especially in terms of international travel recovery.”

This has led to the broker maintaining its domestic travel recovery estimates but bringing forward its international travel recovery timeline.

Goldman said: “We maintain our expectations for broader domestic travel recovery in Australia to begin through December and return to pre-Delta wave levels by March 2022, but update our views on International travel recovery from Australia to begin by the end of this year. We now expect pre-COVID travel levels to be achieved in late FY23 rather than FY24 in terms of international travel from Australia in view of the quick rebound seen in other regions.”

“We also bring forward our expectations of regaining pre-COVID international travel levels in Europe and the US to FY23, while we expect Asia to continue to lag,” it added.

What does this mean for Webjet?

Goldman believes the sum of the above will be double digit earnings growth for Webjet between FY 2019 and FY 2024.

It explained: “Our revised earnings outlook implies a 5 year CAGR EBITDA growth of +11.6% over FY19-24e for Webjet, with Webbeds expected to grow at c. 16% CAGR over the same period driven by an improved focus in the Americas region and cost improvements at the other end of recovery.”

Though, the good news for shareholders and the Webjet share price is that there could be upside to these forecasts. This is thanks to Webjet’s strong balance sheet.

Goldman added: “We also believe that the recovery curve has now turned, implying a strengthening cash balance offering WEB the firepower to engage in strategic M&A opportunities where available.”

“Overall, the stock currently trades at a 20.2x full dilution P/E at recovery (FY24), below the peer group multiple at 22.8x,” it concluded.

The post Top broker sees 15% upside in the Webjet (ASX:WEB) share price appeared first on The Motley Fool Australia.

More reading

• Why the Webjet (ASX:WEB) share price has beaten the ASX 200 in the last 6 months
• Can the Webjet share price fly to $7 by the end of 2021?
• It hasn’t been a great week so far for the Webjet (ASX:WEB) share price
• These are the 10 most shorted ASX shares
• Why ASX 200 travel shares are having a bumper day

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 owns shares of and has recommended Webjet Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Vicinity Centres (ASX: VCX) share price is edging lower on Tuesday afternoon. This comes after the leading retail property group provided an update in regards to bolstering its asset portfolio.

At the time of writing, Vicinity shares are down 0.18% to $1.68.

What did Vicinity announce?

In its release, Vicinity advised it has reached a conditional agreement with Australian Prime Property Fund Retail (a wholesale fund managed by Lendlease).

The deal will see Vicinity acquire a 50% interest in Harbour Town Premium Outlets Gold Coast, Queensland for $358 million.

The remaining stake in the asset will continue to be held by Australia’s oldest private property developer, Lewis Land Group. Vicinity will undertake all leasing activity, while Lewis Land Group will manage the property.

However, the news has not excited investors. The Vicinity share price edged into the green in morning trade before slipping back.

It’s worth noting the acquisition is conditional upon Lewis Land Group waiving their pre-emptive right. The property developer can purchase the asset as co-owner of Harbour Town.

However, should Vicinity be able to acquire the centre, the investment would yield an additional revenue stream. Harbour Town comprises a Woolworths supermarket, Reading cinemas, 17 mini-majors, 189 specialty stores, 7 kiosks, and 8 offices.

Vicinity plans to tap into its existing debt facilities to fund the purchase. Settlement is expected to occur on 30 November 2021.

Vicinity CEO and managing director Grant Kelley commented:

Today’s announcement reflects our strategy to invest in premium retail assets where we can buy well and add value. Harbour Town is located in an attractive trade area and the centre’s annual MAT [moving annual total] is more than double the average MAT for Vicinity’s current outlet portfolio and is expected to grow at more than 3% per annum to 2031.

We will continue to optimise our asset portfolio by actively considering acquisition opportunities where we can add value as well as divestment opportunities that make strong strategic and economic sense for Vicinity and its securityholders.

About the Vicinity share price

Over the past 12 months, the Vicinity share price has gained almost 20% and is up about 5% year to date.

Based on today’s price, Vicinity presides a market capitalisation of roughly $7.65 billion and has approximately 4.5 billion shares outstanding.

The post Vicinity Centres (ASX:VCX) share price struggles amid acquisition news appeared first on The Motley Fool Australia.

More reading

• Top brokers name 3 ASX shares to sell today
• Leading brokers name 3 ASX shares to sell today
• Don’t bet on a big reopening rebound for ASX 200 retail landlords: Macquarie

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

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With so many shares to choose from on the ASX, it can be hard to decide which ones to buy. The good news is that brokers across the country are doing a lot of the hard work for you.

Three top ASX shares leading brokers have named as buys this week are listed below. Here’s why they are bullish on them:

Altium Limited (ASX: ALU)

According to a note out of Citi, its analysts have retained their buy rating and $35.40 price target on this electronic design software company’s shares. Citi has been looking at Altium’s Octopart search engine business and estimates that site visits were up 68% year on year during the September quarter. This bodes well for its first half results. As does the fact that Altium has not been discounting its licenses in the US, UK, Germany, and Australia. The Altium share price is trading at $33.54 today.

Fortescue Metals Group Limited (ASX: FMG)

A note out of Ord Minnett reveals that its analysts have retained their buy rating but trimmed their price target on this iron ore miner’s shares slightly to $25.00. Although the broker has downgraded its iron ore price estimates for the next few years, it remains positive on Fortescue. This is due to its attractive valuation following a recent and significant pullback. The Fortescue share price is fetching $14.89 today.

IDP Education Ltd (ASX: IEL)

Analysts at Morgan Stanley have retained their overweight rating and lifted their price target on this language testing company’s shares to $40.20. The broker remains very positive on IDP Education’s growth prospects due to its acquisition of the British Council’s (BC) India IELTS operations, its digital business, and efficient cost structure. The IDP Education share price is trading at $34.79 on Tuesday.

The post Leading brokers name 3 ASX shares to buy today appeared first on The Motley Fool Australia.

More reading

• What this leading broker is saying about the Fortescue (ASX:FMG) share price
• It’s building hydrogen equipment, but what else does Fortescue (ASX:FMG) Future Industries do?
• Fortescue (ASX:FMG) share price up 7% this week after iron ore cracks US$130 a tonne
• Why Ampol, Fortescue, IAG, & Perenti shares are charging higher
• Why the Fortescue (ASX:FMG) share price is up 4% today

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 shares of and has recommended Altium and Idp Education Pty Ltd. The Motley Fool Australia owns shares of and has recommended Altium. 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 Rio Tinto Limited (ASX: RIO) share price is edging higher in afternoon trade and is currently exchanging hands at $102.80 apiece.

Despite the gain today, Rio Tinto shares have been on a slippery slope these past few months, having come off highs of $134.40 on 4 August.

That’s well behind the S&P/ASX 200 index (ASX: XJO) which is down around 4% in this time.

Why is the Rio Tinto share price drifting lower?

The Rio Tinto share price has been sliding lower lately in unison with the price of iron ore, which has come off a high of US$222/tonne in July to now trade at US$129/tonne.

Prior to this, it had rallied around 100% from November 2020 to May 2021, hitting an all-time high of US$229.50/tonne.

However, legislative efforts from China to curb steel production and control harmful emissions has drastically reduced the demand for iron ore in the last few months.

More than 80% of China’s domestic steel mills were closed in September, mostly due to maintenance. As such, iron ore prices sunk by about 50% in Q3 2021.

This has translated negatively for the Rio Tinto share price, as it’s an ASX resource that produces iron ore.

As such, its share price can and does fluctuate with the volatility in iron ore prices. With this recent weakness, it is unsurprising to see the effects on Rio’s shares, given that we saw the opposite when iron ore rallied from a low of US$116/tonne last year.

Rio shares had climbed $43 per share in the single-year period to August 2021, or 48%, as iron ore sent it through the roof.

One leading broker isn’t too fazed about the recent downturn in iron ore pricing, and actually foresees it as a good thing for Rio Tinto.

Can RIO Tinto shares recover again?

Analysts at leading investment bank JP Morgan certainly believe so. The top broker believes Rio Tinto’s share price is bolstered by its exposure to the base metal – especially when it begins to weaken in price.

Not only that, the bank reckons that Rio’s dividend yield is attractive, offering a forward yield above 10%. In such a low-rates and low-yield environment, this kind of number sticks out.

It also sees China’s geopolitical factors being a tailwind to Rio shares, once they settle and the growth outlook improves there.

JP Morgan believes “investors will be well rewarded owning the stock, particularly once we see China growth sentiment improve”, which it states will “most likely (be) after the Winter Olympics in February 2022”.

Yet, despite the bullish outlook, JP Morgan trims its price target on Rio Tinto shares, in line with weaker commodity forecasts.

It now holds a buy rating with a price target of $144, down from $150, but still around 33% implied upside potential from the broker’s valuation.

The Rio Tinto share price has struggled this year to date, and finds itself 10% in the red from January 1, after gaining only 6% this past year.

However, it is still trading above the majority of its 2019 and 2020 levels and is well off its 52-week high of $137.33.

The post Why this top broker says the Rio Tinto (ASX:RIO) share price is a buy despite weak iron-ore outlook appeared first on The Motley Fool Australia.

More reading

• ASX 200 (ASX:XJO) midday update: Westpac’s $1.3bn earnings hit, Ansell sinks
• 2 ASX shares set to double in the next year
• 5 things to watch on the ASX 200 on Tuesday
• 5 things to watch on the ASX 200 on Monday
• Why did the Rio Tinto share price struggle in the September 2021 quarter?

The author Zach Bristow 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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The Minerals 260 Limited (ASX: MI6) share price has hit the ground running after making its ASX debut at 1:00 pm on Tuesday.

The company’s oversubscribed initial public offering (IPO) successfully raised $30 million at a listing price of 50 cents per share.

The Minerals 260 share price opened at 75 cents, or 50% higher, and the company’s shares are currently fetching 61 cents each.

You can read more about Minerals 260’s projects here.

What’s driving the Minerals 260 share price?

There’s arguably a lot of hype behind the Minerals 260 share price.

The new company is a spin-off of Liontown Resources Limited (ASX: LTR)’s non-lithium assets.

Liontown is an emerging lithium player with a world-class lithium deposit in Western Australia. Its share price has ballooned 250% year-to-date and 440% in the last 12-months on the back of the bullish lithium sector and surging lithium prices.

Minerals 260’s most advanced exploration project, the Moora Project, is in the same geological terrain as the Julimar discovery by Chalice Mining Ltd (ASX: CHN), located 95 km to the south.

Chalice has been one of the top performing ASX shares, surging some 1,000% since its Julimar discovery in April 2020.

Minerals 260 described its IPO as “oversubscribed” meaning it may have received more than the $30 million it was asking for.

This means some investors might have had their IPO allocations scaled back. If they wanted more shares, they’d have to buy Minerals 260 on-market.

What’s so special about Minerals 260?

Minerals 260 owns four prospective gold, nickel, copper and platinum-group elements (PGE) projects across Western Australia.

The Koojan, Dingo Rocks and Yalwest projects are early-stage exploration projects where the area is relatively underexplored.

The Moora Project is arguably its most exciting prospect at this time, given its proximity to Chalice’s “globally significant” Julimar.

The resources the company is looking for play into the concept of “green metal” used for technologies to decarbonise the global economy and address climate change.

Nickel is a key battery material used in electric vehicles while copper is used extensively in the green energy industry. Platinum also has applications in green hydrogen production and fuel cells.

The post Minerals 260 (ASX:MI6) share price leaps 36% following IPO appeared first on The Motley Fool Australia.

More reading

• ASX lithium shares lift as spot prices hit all-time highs
• Minerals 260 (ASX:MI6) shares set to hit ASX boards today
• Liontown (ASX:LTR) share price lifts ahead of Minerals 260’s IPO
• Here are the top 10 ASX shares today
• How did ASX lithium shares perform in the FY22 first quarter?

Motley Fool contributor Kerry Sun 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 S&P/ASX 200 Index (ASX: XJO) is having yet another day in the red so far this Tuesday. At the time of writing, the ASX 200 is down by 0.41% to 7,269 points. But the Beach Energy Ltd (ASX: BPT) share price is doing quite a bit worse.

Beach Energy shares are currently trading at $1.43 each, down 2.59% so far today. That’s vastly underperforming the broader markets.

So why are Beach shares being so badly punished this Tuesday?

Well, it’s not entirely clear. The usual culprit for a share price fall for an energy share like Beach is the crude oil price. As an oil driller, Beach’s profitability is directly impacted by the underlying price of crude oil.

But oil prices have been rising pretty steadily of late. My Fool colleague James just this morning discussed how prices were up overnight. As it currently stands, West Texas Intermediate (WTI) crude is trading at US$79.35 a barrel, while Brent is asking US$83.65. Both of those prices are pretty close to the top of their respective 52-week ranges.

Perhaps the answer is some good old-fashioned profit-taking. Beach shares have had a wild and volatile year, as you can see in the graph below:

But even so, the Beach share price is also up a very solid 38% over the past month. That includes a bump of around 2% just yesterday. Perhaps investors are seeing the current (and historically high) crude oil pricing and deciding to take some profits off the table.

About the Beach Energy share price

Although the Beach share price has had an amazing month to date, the picture doesn’t quite look as rosy if we zoom out a little. This oil company remains down 22% year to date, although it’s up 2.8% over the past 12 months.

Beach shares are also up 89% over the past 5 years but remain down close to 50% from the company’s all-time high of $2.77 or so that we saw back in January 2020.

At the current share price, Beach Energy has a market capitalisation of $3.25 billion, a price-to-earnings (P/E) ratio of 10.3 and a dividend yield of 1.4%.

The post Why is the Beach Energy (ASX:BPT) share price falling on Tuesday? appeared first on The Motley Fool Australia.

More reading

• Why the Ansell (ASX: ANN) share price is crashing today
• ASX 200 (ASX:XJO) midday update: Westpac’s $1.3bn earnings hit, Ansell sinks
• 5 things to watch on the ASX 200 on Tuesday
• Here are the top 10 ASX shares today
• Here are the 3 heaviest traded ASX 200 shares on Monday

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has 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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Wall Street’s weak overnight performance and surging bond yields paved the way for another weak session for ASX 200 tech shares.

The tech-heavy Nasdaq Composite fell 93 points or 0.64%. Meanwhile, the S&P 500 and the Dow Jones Industrial Average closed a respective 0.69% and 0.72% lower.

Despite it only being Tuesday, the S&P/ ASX 200 Info Tech (INDEXASX: XIJ) index has already declined 4.1% so far this week.

Tech heavyweights Afterpay Ltd (ASX: APT), Xero Limited (ASX: XRO) and WiseTech Global Ltd (ASX: WTC) have led the losses, falling 6.7%, 4.6% and 4.2% this week.

Other notable losers include Zip Co Ltd (ASX: Z1P) and Megaport Ltd (ASX: MP1) which are down a respective 4.6% and 2.6%.

What’s driving ASX 200 tech shares lower?

Tech investors continue to fixate on bond yields, most notably the US 10-year Treasury yield which surged to a 5-month high of 1.64% during overnight trade.

Treasury yields have pushed higher after the US Federal Reserve hinted that it may soon wind back its asset purchasing program and eye a rate hike in late 2022.

The Fed, and central banks globally, are concerned about persistently high levels of inflation.

Factors such as elevated demand, surging energy prices and supply-side shortages are driving up core consumer prices.

“High or rapid increase in energy costs have triggered recessions in the past and there is a possibility that history could repeat itself if energy prices continue to rise. Higher energy prices result in lower disposable income for consumers,” Bernstein’s Neil Beveridge said, according to CNBC.

Rising bond yields and the prospect of higher interest rates in the US have weighed on ASX 200 tech shares.

After all, higher interest rates make all-important future cash flows appear less valuable in the present.

Tech shares are sometimes referred to as “long duration” assets as they are expected to deliver a higher proportion of cash flows in the distant future.

This is why richly-valued tech shares are cratering under the prospect of higher interest rates whereas strong cash flow sectors, like financials and real estate, are standing tall.

The post Why ASX 200 tech shares are struggling this week appeared first on The Motley Fool Australia.

More reading

• NSW has reopened. Time to buy?
• Why did ASX tech shares just have such a good FY22 first quarter?
• Xero (ASX: XRO) subsidiary inks new partnership with CBA
• Why Afterpay, Platinum, Star, & Strike Energy shares are sinking
• ASX 200 (ASX:XJO) midday update: Star shares crash, tech shares tumble

Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO, MEGAPORT FPO, WiseTech Global, Xero, and ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO, WiseTech Global, and Xero. The Motley Fool Australia has recommended MEGAPORT 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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The Australasian Gold Ltd (ASX: A8G) share price has come out of a trading halt today to climb during mid-afternoon trade. This comes after the gold and precious metals mining company provided an update on its recent equity raise.

At the time of writing, Australasian Gold’s shares are swapping hands for 46.5 cents, up 2.20%.

Australasian Gold completes placement

One catalyst for today’s rise in the Australasian Gold share price could be investor concerns over an impending share dilution.

According to its release, Australasian Gold announced it has received firm commitments for its strategic placement to raise $2.5 million.

The company highlighted that it had strong support from major lithium industry players, Ruifu and Xinfeng, investing $1 million each. The remaining amount came from an array of sophisticated and professional investors.

The offer will see approximately 5.55 million new ordinary shares issued at a price of 45 cents apiece. This represents around a 1% discount to the last closing price of 45 cents on 8 October (before going into a trading halt).

Australasian Gold will use its existing placement capacity to create the new shares. Under listing rule 7.1, this allows up to an additional 15% of its total shares to be issued without shareholder approval.

The company will primarily use the proceeds to accelerate lithium exploration at the Mt Peake Lithium project in the Northern Territory. In particular, the funds will be allocated to the following:

• Surface mapping, geochemical sampling, geophysics and future drilling programs at the Mt Peake lithium project;
• Exploration activities at future lithium exploration projects; and
• General working capital.

Australasian Gold managing director, Dr Qingtao Zeng commented:

We are delighted to have attracted major industry participants at this early stage of our discovery journey. We have an exciting lithium project in an under-explored pegmatite province and we look forward to accelerating our exploration efforts over the coming weeks and months.

Settlement of the new shares is expected to occur on or around next Monday 18 October.

About the Australasian Gold share price

Adding to today’s rise, Australasian Gold shares have gained around 130% since listing on the ASX in May. The company’s share price reached an all-time high of 53 cents in late September.

Based on valuation grounds, Australasian Gold presides a market capitalisation of roughly $15.6 million, with over 33.6 million shares outstanding.

The post Australasian Gold (ASX:A8G) share price lifts on capital raising update appeared first on The Motley Fool Australia.

More reading

• Why has the Australasian Gold (ASX:A8G) share price gained 14% in 2 days?
• Australasian Gold (ASX:A8G) share price explodes 65% on project updates

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

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The Wesfarmers Ltd (ASX: WES) share price is in the red on Tuesday. This follows a new development in the tussle for the right to buy Priceline Pharmacy owner Australian Pharmaceutical Industries Ltd (ASX: API).

At the time of writing, shares in the diversified conglomerate are fetching a price of $54.07, down 0.68%. However, the latest news more so involves an action carried out by fellow API bidder, Sigma Healthcare Ltd (ASX: SIG).

Let’s dive into what is going on with the Wesfarmers share price today.

No more due diligence for you

The 111-year-old Australian pharmaceutical retailer API has the luxury of choosing between two different suitors. However, the latest revelation might mean one of those is removed from the equation.

According to the Australian Financial Review, Sigma Healthcare has decided to close its data room off to API. This means API can no longer review Sigma’s financials, contracts, etc. Considering Sigma’s merger proposition involved a scrip portion to the deal, it was important for API to run its own checks and balances on what it might be getting itself into.

Reportedly, the action was spurred on by Wesfarmers’ exercising its option to acquire a 19.3% stake in the pharmaceutical retailer. On 7 October, 95.1 million API shares swapped hands from Washington H. Soul Pattinson and Co Ltd (ASX: SOL) to Wesfarmers. Despite this, the Wesfarmers share price slipped 0.29% on the news.

Likely, Sigma has been put on the back foot after the large partial acquisition. In turn, the company has gone on the defence as a Wesfarmers takeover looks more likely.

Furthermore, without access to Sigma’s data room, how API is expected to carry out its own due diligence remains a mystery. Although, a formal announcement has not yet been made by either company to the ASX.

Wesfarmers share price recap

It has been a challenging past 7 weeks for the Wesfarmers share price. Over this period, shares in the multi-billion dollar company have sunk by about 18%. It seems investors weren’t pleased with the moderating sales growth in the company’s FY21 full-year result. Additionally, the warning of supply chain disruptions is likely lingering in the minds of the market.

Despite these challenges, the Wesfarmers share price has increased by 5% since the beginning of the year. Unfortunately, this means Wesfarmers shares have underperformed the S&P/ASX 200 Index (ASX: XJO), with the benchmark delivering an 8.8% rise year-to-date.

Finally, Wesfarmers currently holds a market capitalisation of $61.7 billion. Astonishingly, that is more than 45 times greater in size than API and Sigma combined.

The post Wesfarmers (ASX:WES) share price dips as API battle heats up appeared first on The Motley Fool Australia.

More reading

• Wesfarmers (ASX:WES) share price struggles amid latest API speculations
• API (ASX:API) share price lifts following guidance upgrade
• Can the Wesfarmers (ASX:WES) share price reach $60 by Christmas?
• Wesfarmers (ASX:WES) share price lifts in latest push for API
• Australian Pharmaceuticals (ASX:API) share price lifts following Wesfarmers 19% stake

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 owns shares of and has recommended Washington H. Soul Pattinson and Company Limited and 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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The Ampol Ltd (ASX: ALD) share price is edging higher in afternoon trade with the company’s shares changing hands at $30.04 each at the time of writing.

For reference, the S&P/ASX 200 Index (ASX: XJO) is ticking lower today, down 0.46% at 7,266.2 points.

Ampol shares have soared into the money lately, coming off a low of $26.18 on 29 September to cannonball north to today’s price.

Why is the Ampol share price charging higher lately?

Ampol has been on the receiving end of several tailwinds that have contributed positively to its share price in the last month.

The first thing factor that may be behind its momentum is the company’s exposure to the price of both oil and gasoline.

Each of these commodities has ticked upwards since mid-September, in line with Ampol’s share price.

For instance, Brent Crude now trades at US$83/Bbl – up from US$73.9/Bbl on 20 September. During the same time frame, the price of gasoline has spiked 13% after a wonky few months.

A number of factors, including strong demand from the reopening of economies and a recent US hurricane, have contributed to the rise.

One other factor in recent months is soaring natural gas and energy prices around the globe. This has also led to increased demand for oil, with it being used in energy production as a lower-cost alternative.

Ampol has also been in the headlines lately after it entered into an agreement to acquire NZ fuel retailer Z Energy Ltd (ASX: ZEL).

It is set to buy the NZ company on a cash consideration of NZ$3.78 per share, allowing for a NZ$0.10 per share dividend.

And one leading broker reckons Ampol’s timing couldn’t be more perfect in light of the strength in the oil and gasoline markets.

Is Ampol’s proposal a good buy?

Analysts from leading broker RBC Capital Markets have weighed in on the acquisition and believe it will be accretive to the Ampol share price.

The broker likes Ampol’s timing on the deal and believes it will capitalise on the rebound in NZ travel as the pandemic winds down.

It particularly sees the company profiting from jet and fuel oil as travel numbers begin to return to pre-pandemic volumes. For reference, in 2019, over 11 million international visitors visited and departed New Zealand’s shores.

Aside from this, the broker reckons the Z Energy acquisition could strengthen Ampol’s balance sheet. It’s cited Z Energy’s high cash flows and the sale of Gull New Zealand – a likely requirement of the NZ regulator to approve the deal.

But RBC understands the regulator will look favourably on the deal as “Ampol firmly believes a larger, more capable company will enhance New Zealand’s fuel security needs”.

Ampol shares have struggled this year to date, posting a return of just 5% but are up 22% over the last 12 months.

The post What this top broker is saying about the Ampol (ASX:ALD) share price appeared first on The Motley Fool Australia.

More reading

• Why Ampol, Fortescue, IAG, & Perenti shares are charging higher
• Ampol (ASX:ALD) share price zooms higher on NZ$2.8bn Z Energy acquisition
• Z Energy (ASX:ZEL) share price leaps 6% on Ampol takeover news
• Ampol (ASX:AMP) share price on watch after Z Energy takeover agreement

The author Zach Bristow 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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