Ask a Fund Manager

The Motley Fool chats with fund managers so that you can get an insight into how the professionals think. In Part 2 of this edition, Katana Asset Management’s co-founder Romano Sala Tenna reveals 4 ASX shares every investor should consider adding to their portfolio.

(You can find Part 1 of the interview here).

We covered the key criteria an ASX share needs to meet before you’ll consider buying it in Part 1 of our interview. Flipping that, when do you decide to sell out of a share?

That’s a harder thing. There’s an enormous amount of work that’s been done on theories of when to buy. When to sell hasn’t received the same sort of air time.

We do try to look for a tangible change in sentiment as indicated by technical signals.

We can buy a company and it can reach its price target where we value it. But if the sentiment is strong –then we’re prepared to hold the course on some of these stocks. For example, over the past year or two, we experienced tech stocks trading above their long term discounted cash flow valuations.

By the same token, when we see a break in sentiment, then we’re prepared to take some off the table. We generally do that in stages, not sell the holding out in one parcel.

A good example is FMG [Fortescue Metals Group Ltd (ASX: FMG)].

We established a trade on the last pullback around $19 and sold half at $24.40 when the technicals were turning. We’re close to selling the balance. We think the sentiment, based on what we’re seeing, is probably turning down in those companies.

What was your best performing investment over the past 12 months?

Our number 1 contributor to benchmark outperformance over the last 12 months is Mineral Resources [Mineral Resources Ltd (ASX: MIN)], which is an ASX 100 company. It’s a company we’ve invested in since 2006 and traded actively. Over the last 5 years, we’ve averaged 3.3% of the portfolio in Mineral Resources, but it’s ranged from 0–8% over that time frame.

One of the things we do is get to know companies, very well. And then we take advantage of the month to month fluctuation in share prices,

What attracted you to Mineral Resource shares?

One of the things we really like about Mineral Resources is that they’ve got 2 real drivers from here.

First, they’re looking to grow their production from 20 million tonnes per annum to 90 mtpa over the next 3-5 years. So even though we’re expecting the price of iron ore to come down, that’s going to provide a huge buffer in terms of volume growth.

The second thing is they have the largest hard rock lithium mine in the world, Wodgina, which is currently on care and maintenance and not contributing anything to earnings. But what we’re seeing right now is that the market for lithium hydroxide and lithium carbonate is firming up quite solidly.

And we expect to see, in the not too distant future, that mine will be brought out of care and maintenance and back into production. And that could be quite a substantial revenue generator

You have a strong focus on risk management. Part of that involves your flexibility to move to higher cash levels if required. How did that play out in the lead up to the February 2020 crash and over the months that followed?

That’s a great question and really comes to the core of what we do.

We were sitting right about at 20% cash in early February [2020]. And we were tracking COVID very closely from late December. But by mid-February, we still had no idea as to the magnitude of what was about to transpire and how it would spread.

What we were nervous about is that by late February the Nasdaq reached a record high, while we’re getting very clear daily reports out of China that COVID was having a profound impact on one of their major factory districts. So we started to get the view that global supply chains would be notably impacted. And Chinese demand for a variety of goods and services, especially things that Australia produces, would be impacted.

It looked like the world wasn’t giving this any credence. So, we started to move cash, around 35% in cash before the bottom fell out of the market. Ideally, we would have liked to have a bit more.

But by the 13th of March, I wrote a piece saying “now’s the time to buy, because we’ve reached peak fear”. So, we were down to about 7-8% cash by the third week of March.

We would have gone lower, but we were under the impression that there was going to be a plethora of capital raisings coming down the pipeline. And we wanted to keep aside some capital.

Nonetheless, it set us up for outperformance over the next 12 months.

What are a few top ASX shares you think our readers should consider adding to their portfolios?

We’re watching gold closely to see if there’s a confirmed breakout there. Gold share valuations are very good. If we get a confirmed breakout in the gold price there’s going to be some good upside. We’re not there yet, but we’re watching it very closely.

I think Regis [Regis Resources Ltd (ASX: RRL)] is outstanding value. The acquisition they made was poorly timed and poorly priced, when they picked up 30% of Tropicana [gold mine] from IGO [IGO Ltd (ASX: IGO)]. Not poor as in a bad asset. I think that’s a very high-quality asset, but I don’t think they needed to do that when they diluted their capital base by so much.

But if you look at consensus analyst forecasts for Regis, now it’s 6.5 times earnings for the coming financial year. And it’s one of the highest paying dividend-yielding stocks in the gold space, with high free cash flow, and 2 tier-1 assets… I think that’s the pick of the gold stocks at the large end.

On the small end, there are probably 10 gold stocks I could mention that are worth taking a look at. But there’s a lot more of a speculative element to them.

You mentioned energy prices earlier. Do ASX energy shares stand out for you?

In energy, there’s a massive disconnect between where the oil price and LNG spot prices are versus where a share like say Woodside [Woodside Petroleum Ltd (ASX: WPL)] is trading.

Last time the oil price was here, Woodside was at $34 per share. Now it’s at $21.88 per share.

If you look at the LNG price, you can actually sell LNG cargoes in the spot market right out to March next year, almost 12 months out, at north of $10 per MBTU. If you go back a few months ago you’re looking at $4.50–5.00 for spot cargoes. So it’s in the vicinity of double that.

Now we could always be wrong. We could always see the oil price retrace and the LNG spot price retrace substantially. But I think it’s more likely that we see a reverse there and a recovery in Woodside.

We’ve also been doing a fair bit of work in the copper space and finding ways to play that. Copper is at multi-year highs and could potentially push into record highs here.

Any other promising ASX 200 shares?

You also have to be looking a little bit to where most people aren’t looking. We’re trading Elders [Elders Ltd (ASX: ELD)] as a short-term momentum/earnings growth play. I still think there’s more to come there.

And some of the shopping centre REITs [real estate investment trusts] are being treated like they’re dinosaur assets. But we have a different view on that.

We actually see things like SCG [Scentre Group (ASX: SCG)] as being monopolistic assets. Imagine a 40-acre shop in the middle of your suburb; trying to replicate that asset just isn’t physically possible to do.

As these centres continue to morph into life centres, I think there’s going to be more growth than is currently forecast. And you’re not going to be able to get 40 acres and get a Council to sign-off to build a competing centre. Who wants a shopping centre next door?

I think they’re going to be solid long-term property banks that morph into lifestyle centres with great upside.

**

(You can find Part 1 of the interview here).

More reading

• 5 things to watch on the ASX 200 on Tuesday
• Are ASX 200 iron ore shares in for a rough ride?
• Why AnteoTech, Fortescue, Synlait, & TPG shares are tumbling lower
• ASX 200 Weekly Wrap: ASX whipsaws in volatile week
• 5 things to watch on the ASX 200 on Monday

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Some ASX dividend shares might be able to pay retirees steady income in retirement.

Plenty of businesses that were known as dividend shares in the S&P/ASX 200 Index (ASX: XJO) cut their payments in the COVID-19 year of 2020. Commonwealth Bank of Australia (ASX: CBA) and Sydney Airport Holdings Ltd (ASX: SYD) were just two that had to implement cuts.

But these two ASX dividend shares increased their payments in 2020 and have done so again in the first half of FY21:

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

Soul Patts, an investment house, increased its dividend by 3.4% to 60 cents per share. The FY21 interim dividend was grown by 4% to 26 cents per share.

The business declares dividends from the cash it receives from its investment portfolio, rather than accounting earnings.

The net cash flows from investments received by the ASX dividend share in FY20 was 49% higher than FY19. It’s the only company in the All Ordinaries (ASX: XAO) that has increased its dividends every year for 20 years.

It has investments in plenty of other ASX shares like TPG Telecom Ltd (ASX: TPG), Brickworks Limited (ASX: BKW), New Hope Corporation Limited (ASX: NHC), Milton Corporation Limited (ASX: MLT) and Bki Investment Co Ltd (ASX: BKI).

Management explain that one of Soul Patts’ key advantages is a flexible mandate to make long-term investment decisions and adjust the portfolio by changing the mix of investment classes over time.

Soul Patts Chair Robert Millner said:

Our aim is to pay a stable and growing dividend year on year. During the GFC many companies cut their dividends while WHSP was able to increase dividends and we are seeing the same thing occur this year as a result of our diversified portfolio and long-term investment decisions.

At the current Soul Patts share price, it has a grossed-up dividend yield of 3%.

APA Group (ASX: APA)

APA is one of the biggest infrastructure businesses on the ASX. It’s also the ASX dividend share with one of the longest consecutive distribution growth streaks, aside from Soul Patts. That consecutive improvement goes back more than a decade and a half.

In FY20 APA grew its overall distribution by 6.4% to 50 cents per security. In the FY21 interim result, it grew the distribution by another 4.3% to 24 cents per security.

It owns a wide array of energy assets. Predominately, its assets relate to gas pipelines, gas storage and gas energy generation. APA also has a growing portfolio of renewable energy assets.

The business funds its growing distribution by the cashflow from its assets and projects.

APA says that it has maintained a consistent growth strategy and has built a significant portfolio of energy infrastructure assets that are essential today to ensuring the ongoing supply of gas and electricity for Australians.

The company believes the pool of investment opportunities remains significant. The US remains an attractive opportunity and it remains focused on applying its disciplined approach to finding the right investment there. At the current APA share price, it has a current distribution yield of 5.4%.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• ASX 200 up, Zip rises, Aristocrat Leisure reports
• Are ASX 200 iron ore shares in for a rough ride?
• Why is the AMP (ASX:AMP) share price falling again today?
• How to tell if an ASX 200 share is risky

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The A2 Milk Company Ltd (ASX: A2M) share price just can’t seem to catch a break of late, tumbling on downgrade after downgrade. Without the A2 protein milk seller’s growth engine in China, positive investor sentiment has waned in a big way.

While it has been a bleak time for the Australian milk company, things are looking brighter further afield. In the United States, there is a newly listed alternative milk producer on the block. Swedish plant-based milk company Oatly Group (NASDAQ: OTLY) successfully listed on the NASDAQ last week, with its shares now sitting almost 22% above their initial public offering (IPO) price.

Let’s take a moment to compare the two.

ASX-listed A2 Milk’s Achilles’ heel

Firstly, A2 Milk and Oatly are both traditional cow’s milk alternatives, though there’s still a significant difference between the two. While A2 Milk offers an easier to digest product that lacks the A1 protein, Oatly goes a step further and cuts the cows out completely.

Oatly is the world’s largest oat milk company. Being made from oats, it is a vegan-friendly alternative to cow’s milk for those who are lactose intolerant.

Although the company is new to public markets, Oatly was founded in 1994. Today, its products are sold in 60,000 shops and more than 32,000 coffee shops across 20 countries.  

This points out a recent area of weakness for the ASX-listed milk company. While only 13% of Oatly’s revenue is derived from Asia, over 48% of A2 Milk’s FY21 first-half sales were from China and other Asian geographies. That leaves A2 heavily exposed to geopolitical risks associated with China.

Oatly is truly lactose free

A2 Milk acts an alternative for those who may have difficulty digesting standard cow’s milk. Without getting into the nitty-gritty details, the company’s milk still contains lactose. However, Oatly’s oat milk is completely dairy-free, lactose-free, and milk protein-free. Therefore, it is arguably an option for a wider audience of people with allergies or significant intolerances.

The plant-based food and beverage market is a high-growth industry. An expected growth in the vegan population and an increasing intolerance to animal protein is set to provide strong tailwinds. Already, Oatly estimates its total addressable market is in the realm of US$600 billion.

How the numbers stack up

Looking at the financials, Oatly achieved approximately A$617.5 million in revenue for the full year ending 31 December 2020. For comparison, A2 Milk’s revenue for the trailing twelve months ending 31 December 2020 came in at A$1,490 million.

Additionally, the US-listed Oatly is currently loss-making on the bottom line. Meanwhile, A2 Milk remains profitable despite challenging conditions.

Although A2 Milk generated more than double the revenue of Oatly in FY20, its freshly listed foe commands a market capitalisation of around A$13 billion – which is more than triple the valuation of ASX-listed A2 Milk, based on its current share price.

More reading

• Where next for the a2 Milk (ASX:A2M) share price?
• Synlait (ASX:SM1) share price on watch after guidance downgrade
• Top brokers name 3 ASX shares to buy next week
• Why is the A2 Milk (ASX:A2M) share price up 7% today?
• Why a2 Milk, EML Payments, Webjet, & Xero shares are pushing higher

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The Aristocrat Leisure Limited (ASX: ALL) share price edged higher on Monday.

The gaming technology company’s shares rose 0.1% to $40.70 following the release of its half year results.

How did Aristocrat Leisure perform?

Aristocrat was on form during the first half and delivered a result in line with expectations previously laid out by management.

For the six months ended 31 March, the company reported a normalised net profit after tax (NPAT) of $362.2 million. This is an increase of 18.4% on the prior corresponding period. This normalised result excludes a $1.1 billion deferred tax benefit from a year earlier.

Management advised that Aristocrat’s profit growth was driven by strong performances from both its Gaming and Digital businesses. Positively, almost 80% of its revenue was derived from recurring sources during the period.

What did analysts think of the result?

Analysts at Goldman Sachs were pleased with the result.

They said: “ALL reported normalised 1H21 Sales/EBITA/NPATA which was in line with GSe given the preannounced result. That said, we note that digital continues to deliver better-than-expected results, and was 6%/9% better than GSe across sales/segment profit respectively (we were above consensus on digital). Balance sheet remains robust, with net leverage now down to 1.2x (vs. 1.4x in FY20), and the group notes that it has in excess of A$2 bn of liquidity as at Mar 2021, allowing it to preserve full optionality for additional investments to accelerate its strategy.”

What about the Aristocrat Leisure share price?

Goldman has retained its buy rating and lifted its price target to $42.30. While this may only imply 5% upside (6% including dividends) for the Aristocrat Leisure share price over the next 12 months, it still sees it as a buy.

It explained: “We revise our FY21-23E EBITA by 7% to 3% reflecting: i) better digital trajectory, and ii) improved ANZ outlook. Our 12m TP (EV/EBIT SOTP based, method unchanged) increases to A$42.30 (from A$39.53) and with ~6% TSR; we stay Buy given relative earnings momentum and balance sheet strength/optionality.”

More reading

• ASX 200 up, Zip rises, Aristocrat Leisure reports
• Aristocrat (ASX:ALL) share price rises on half-year results
• ASX 200 up 0.1%: Aristocrat results, Zip’s global expansion continues
• 5 things to watch on the ASX 200 on Monday
• 3 top-performing ASX shares this week

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More reading

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• 2 ASX 200 blue chip shares that might be the best to buy
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• 5 things to watch on the ASX 200 on Tuesday
• Why the Infinity Lithium (ASX:INF) share price has rocketed 38% higher

The post LIVE COVERAGE: ASX expected to rise; TechnologyOne half year result appeared first on The Motley Fool Australia.

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Most of our readers would be familiar with exchange-traded funds (ETFs) and listed investment companies (LICs) by now.

They’re both handy ways to get diversified exposure to the share market and to outsource the study involved in picking individual stocks.

LICs are the more ‘traditional’ concept, acting like private funds in that they take a higher commission in return for portfolio manager expertise.

ETFs have made their name in recent years as ‘index’ or ‘passive’ funds. They’re well-known for allowing everyday folks to put their money in to just follow a particular index while paying extremely low fees.

Even the most famous stock-picker of them all — Berkshire Hathaway Inc (NYSE: BRK.A) (NYSE: BRK.B) boss Warren Buffett — is a big fan of them.

“A low-cost index fund is the most sensible equity investment for the great majority of investors,” he said in Vanguard founder Jack Bogle’s book The Little Book of Common Sense Investing.

“By periodically investing in an index fund, the know-nothing investor can actually out-perform most investment professionals.”

ETFs have thus become massively popular, with 2020 seeing all sorts of records broken for the industry.

The rise of active ETFs

Of course, if a concept becomes popular with punters, the industry is spurred on to create more products.

So it feels like in the last couple of years, there are new ‘active’ ETFs launched every week.

These ETFs act like LICs in that they require some sort of stock-picking expertise. 

Often the fund follows a particular theme, such as ethical investing, Asian technology, or value stocks.

This means some subjectivity — or at least analytical smarts — are required to know which shares to include into the fund. And which stocks to sell.

So if you now have both LICs and ETFs that are actively managed, what is the difference?

LICs vs active ETFs

Marcus Today director Marcus Padley last week explained the distinctions between the two products.

The big difference is that LICs are a ‘black box’, while ETFs are more transparent.

“The LIC may or may not be that transparent with reporting its holdings or its NTA [net tangible assets]/performance figures and the fees are much higher — plus they usually get a kicker if they outperform,” Padley said.

“An active ETF though gives you the power of an actively managed fund with greater disclosure of the underlying assets and the NTA at regular intervals. No ‘trust me I have a black box’ investment philosophy.”

The way the share prices are set is also a massive difference.

LIC share prices, like for any other listed business, fluctuate according to supply and demand. This means the fund might hold $1 worth of assets per share but the stock could be selling for 80 cents… or $1.20.

Meanwhile, ETFs have their prices artificially maintained at roughly what the underlying asset value is. This is done by “market makers”, who have buy and sell mechanisms in place to achieve price stability.

“So, no requirement on the LIC to provide liquidity and close up a discount to NTA and arbitrage any price discrepancy away.”

LICs that sell for less than they’re worth

Theoretically, a LIC that’s trading at a heavy discount to the NTA could be bought out by a big fish to be liquidated for profit.

“LIC managers tend to get upset when their fund gravy train gets taken away from them,” said Padley.

“They try to close up the discount through better communication (more updates) buybacks and even directors buying the shares. They try but… sometimes fail miserably.”

For some investors, this complication would cause them stress and they would prefer to park their money with ETFs, knowing the stock price always reflects the underlying worth.

But according to Padley, LICs can sometimes offer up tasty bargains.

“If there are transparent, good communicators and still trading at a big discount with known assets that are liquid, I have referred to them in the past as the Hot Tub Time Machine,” he said.

“Sometimes especially during periods of extreme loss of confidence, the LIC gets whacked whilst the assets it owns bounce quickly and so buying the LIC at a discount is like being able to go back in time to before the rally and buy those stocks.”

In fact, this is what famous investor Geoff Wilson is attempting to do with his new WAM Strategic Value Limited (ASX: WAR), which opened its initial public offering (IPO) this week.

This will be, if you can believe it, a $225 million LIC that will buy up shares of other LICs that are heavily discounted from NTA.

“Essentially, we are focused on identifying and investing in $1 of assets for 80c,” Wilson said in the prospectus.

“Our experience and expertise in managing closed-end vehicles provides us with a unique methodology to identify and benefit from LIC and LIT market mispricing opportunities.”

WAM Strategic Value Limited shares will start trading on the ASX on 25 June.

More reading

• Why earnings growth is a rubbish way to judge a stock: report
• Here are the shares that Warren Buffett has been buying (and selling) lately
• ASX tech shares are in a world of pain. There might be more to come…
• Here’s How Warren Buffett Explained Berkshire Hathaway’s Bank Selloff
• Invest like Warren Buffett with this ASX ETF

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There are some high-quality S&P/ASX 200 Index (ASX: XJO) blue chip shares that could be best ideas to be thinking about at the moment.

A few ASX 200 shares are well-liked by several brokers which indicates that they might be interesting to look at:

Corporate Travel Management Ltd (ASX: CTD)

Corporate Travel describes itself as a global leader in business travel management services. Its aim is to find savings, efficiency and safety for businesses and their travellers all around the world.

It’s currently rated as a buy by six brokers. Morgans is one of the brokers that likes Corporate Travel Management shares and it’s the broker’s pick of the sector.

In a recent trading update, Corporate Travel Management said that it’s returning to profit. It broke-even in March and expects positive underlying earnings before interest, tax, depreciation and amortisation (EBITDA) in the fourth quarter of FY21.

The ASX 200 share is seeing strong domestic demand in the Australia and New Zealand region with total client activity climbing to 85% of FY19 booking levels as of mid-April.

New Zealand continues to be a standout and, as of mid-April, was trading at above 160% of FY19 booking levels.

The US is experiencing positive signs of activity recovery. Despite lockdowns in the UK and Europe, significant essential travel client wins in this region continue to contribute profitability to the group.

Management believe the company is best leveraged to a domestic recovery. Around 70% of pre-forma FY19 revenue is generated from the US and the UK. These regions have the most advanced vaccination rollouts. Corporate Travel Management said that the speed of the rollouts supports expectations of a rapid return to corporate domestic travel and meaningful levels of pan-European and trans-Atlantic travel after the northern hemisphere vacation period.

Idp Education Ltd (ASX: IEL)

Idp Education says that it’s a global leader in international education services. It helps international students study in English speaking countries.

The company says that its success is from connecting students with the right course in the right institution and the right country.

IDP is also a co-owner of IELTS, the world’s most popular high-stakes English language test. It also operates 11 English language teaching campuses across South East Asia.

It’s currently rated as a buy by at least five brokers. Morgans is one of the brokers that believes the ASX 200 share is a buy, with a price target of $28.48 over the next 12 months. Whilst the broker is positive about the business, the COVID-19 surge in India is a headwind with 40% of IELTS’ testing revenue being derived from there.

The ASX 200 blue chip share’s management say that it has a resilient business model. Its diverse business model and strategy is holding the organisation in good stead through crisis.

The recovery is ongoing. Demand remains, with growing IELTS capacity through new computer-delivered centres. It’s also increasing counsellor capacity to support students into FY22 and FY23.

IDP Education is investing in its digital technology and capabilities. It has also accelerated its innovation strategy. According to Morgans, the IDP Education share price is priced at 56x FY22’s estimated earnings.

More reading

• Why Corp Travel, Domino’s, Kogan, & Zip shares are storming higher
• Leading brokers name 3 ASX shares to buy today
• ASX 200 up 0.1%: Aristocrat results, Zip’s global expansion continues
• ASX 200 Weekly Wrap: ASX whipsaws in volatile week
• Why Zip (ASX:Z1P) and these ASX growth shares are highly rated

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Thankfully, in this low interest rate environment, the Australian share market is home to a range of shares that are expected to provide attractive yields to investors in 2021. 

If you’re interested in adding a few to your portfolio, then you may want to look at the ones listed below. Here’s why they could be dividend shares to buy:

Australia and New Zealand Banking GrpLtd (ASX: ANZ)

Although the ANZ share price has been a very strong performer in 2021, it doesn’t appear to be too late for investors to snap up shares. According to a recent note out of Morgans, its analysts have retained their add rating and lifted their price target on its shares to $33.50. This compares to the latest ANZ share price of $28.16.

But even better, is that despite rising 22% since the start of the year, its shares are still expected to provide income investors with generous yields in the near term.

For example, Morgans is forecasting fully franked dividends of $1.45 and $1.63 per share over the next two years. Based on the current ANZ share price, this will mean yields of 5.15% and 5.8%, respectively.

Wesfarmers Ltd (ASX: WES)

Another option to consider is Wesfarmers. It is the conglomerate behind a number of quality businesses such as Bunnings, Catch, Kmart, and Officeworks.

Wesfarmers has been performing very positively in FY 2021, delivering solid sales and profit growth during the first half. This has been driven by growth across the majority of its businesses but particularly from the Bunnings business. The hardware giant has been benefiting from home improvement-related government stimulus and the booming housing market.

One broker that is a fan is Goldman Sachs. It currently has a buy rating and $59.70 price target on its shares. This compares to the latest Wesfarmers share price of $54.73.

The broker is also forecasting fully franked dividends of $1.88 per share in FY 2021 and $1.94 per share in FY 2022. This represents attractive yields of 3.5% and 3.6%, respectively.

More reading

• ASX 200 Weekly Wrap: ASX whipsaws in volatile week
• Retail sales rose 1.1% in April, but some ASX retail shares are selling off in May
• The ANZ (ASX:ANZ) share price leads the ASX 200 banks this week
• 2 highly rated ASX dividend shares for income investors
• ASX bank shares primed for dividend bonanza

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On Monday the S&P/ASX 200 Index (ASX: XJO) started the week with a small gain. The benchmark index rose 0.2% to 7,045.9 points.

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

ASX 200 expected to rise

The Australian share market looks set to push higher on Tuesday following a solid start to the week on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 18 points or 0.25% higher this morning. On Wall Street, the Dow Jones rose 0.55%, the S&P 500 jumped 1%, and the Nasdaq stormed 1.4% higher.

Oil prices jump again

Energy producers such as Beach Energy Ltd (ASX: BPT) and Woodside Petroleum Limited (ASX: WPL) could be on the rise today after oil prices jumped. According to Bloomberg, the WTI crude oil price is up 3.75% to US$65.96 a barrel and the Brent crude oil price has risen 3% to US$68.45 a barrel. Oil prices climbed amid speculation that sanctions on Iran may not be lifted.

TechnologyOne results

The TechnologyOne Ltd (ASX: TNE) share price will be one to watch on Tuesday when it releases its half year results. All eyes will be on the performance of its key Global SaaS ERP solution, which has been the main driver of growth in recent years. Management has advised that it expects strong growth in SaaS ARR and profit and to double in size over the next five years. However, it has warned that it expects the first half of 2021 will not be indicative of the full year results.

Gold price rises

Gold miners Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) could have a solid day after the gold price pushed higher overnight. According to CNBC, the spot gold price is up 0.4% to US$1,883 an ounce. Weakness in the US dollar and bond yields drove the gold price higher.

Iron ore price sinks again

It could be another difficult day for iron ore producers BHP Group Ltd (ASX: BHP), Fortescue Metals Group Limited (ASX: FMG), and Rio Tinto Limited (ASX: RIO) after the iron ore price continued to sink. According to Metal Bulletin, the spot iron ore price is down a further 4.1% to US$192.42 a tonne.

More reading

• ASX 200 up, Zip rises, Aristocrat Leisure reports
• Are ASX 200 iron ore shares in for a rough ride?
• Why is the AMP (ASX:AMP) share price falling again today?
• How to tell if an ASX 200 share is risky
• Why AnteoTech, Fortescue, Synlait, & TPG shares are tumbling lower

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The Infinity Lithium Corp Ltd (ASX: INF) share price was one of the best performers on the ASX today.

This follows a number of highlights that the lithium explorer provided in a market release this morning.

At the end of market trade, Infinity Lithium shares finished the day at 9.3 cents apiece, up 38.8%.

What’s driving the Infinity Lithium share price higher?

Investors fought to get hold of Infinity Lithium shares after the company announced a series of meetings between key figures.

According to its release, Infinity Lithium advised that its managing director and CEO Ryan Parkin met with Vice-President of the European Commission, Maros Sefcovic last Wednesday. The two discussed the current status of the San José Lithium Project and reinforced the timely completion in line with the strategic objectives of the European Battery Alliance (EBA). Mr Sefcovic underlined the importance of lithium’s raw materials in helping the European automotive industry transition to electric vehicles. In the first quarter of 2021 alone, electric vehicles represented 15% of all automotive sales.

San José is a high-grade lithium project being developed in the Extremadura region of Spain. Focused on the production of battery grade lithium chemicals, it represents the second largest hard rock lithium deposit in Europe. Infinity Lithium currently holds a 75% interest in the project.

Mr Sefcovic touched on the Spanish consortium that comprise of the five industrial projects of the entire battery value chain, saying:

There are the critical raw materials, there is the anecdotal evidence of how far we have moved I would highlight the piece of information that just two years ago we dd not have lithium on the list of critical raw materials for Europe. Now we know that by 2030 we will need 18 times more, by 2050 we will need 60 times more, and when I talk to the industry, they still tell me this is a very conservative estimate. On top of this we still do not have one single refinery for lithium in Europe.

I am so pleased that from the start we have been working on making sure that we are covering the whole value chain.

What else happened?

The following day on 20 May, Mr Sefcovic and the President of Spain, Mr Pedro Sánchez unveiled the first step of the Espana 2050 project. Aimed to serve as a blueprint for other European countries, the long-term national study called on to achieve greater efficiency is using lithium to replace its dependence on traditional fossil fuels.

Mr Sánchez noted that his government recognises the geostrategic importance of the San Jose project and the country’s long-term roadmap for the transformation. The availability of lithium raw materials is significant for Spain, in order for it to become a sustainable country and emit a low carbon footprint.

Infinity Lithium advised that it is continuing to engage with major project stakeholders following the cancellation of the Investigation Permit Valdeflorez.

The Infinity Lithium share price has accelerated to more than 120% over the past year.

More reading

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The post Why the Infinity Lithium (ASX:INF) share price is rocketed 38% higher appeared first on The Motley Fool Australia.

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