The Anteotech Ltd (ASX: ADO) share price gained a whopping 43.18% today, closing the day trading at 32 cents.

AnteoTech is a surface chemistry company with intellectual property in its core technology product groups. These include AnteoCoat, AnteoBind and AnteoRelease. The company’s customers operate in the life sciences, diagnostics, energy and medical devices markets.

With no recent company announcements, let’s take a look at what could be driving the AnteoTech share price.

AnteoTech share price zooms after Ellume secures US contract

Earlier this month, AnteoTech announced that its client, Ellume, had signed a deal with the US Defence Department for emergency use authorisation of its COVID-19 at-home test.

Ellume integrates AnteoBind technology in its proprietary quantum dot diagnostics platform.

The Ellume COVID-19 home test, incorporating AnteoBind, is the first non-prescription over-the-counter self-test authorised by the US Food and Drug Administration (FDA) for emergency use.

AnteoBind is a key element of AnteoTech’s own COVID-19 Antigen Rapid Test currently in development and several other assays marketed globally.

AnteoTech advised that it has worked closely with Ellume over recent months to ensure it could supply the required volumes of AnteoBind.

The company expects that Ellume’s requirement for AnteoBind will increase modestly over coming months as supply to the US markets takes off.

Words from the CEO

Commenting on the Ellume agreement, AnteoTech CEO Derek Thomson said:

We are delighted to be involved with Ellume’s success and we congratulate the company on their announcement.

Ellume was the original seed customer in AnteoTech’s strategy to demonstrate the value that AnteoBind can bring to assay development and it is pleasing to see that strategy now delivering market recogition.

I commend the work of AnteoTech’s Life Science team under the leadership of Charlie Huang for their continued work to make AnteoBind a key element in the development of diagnostic products in global markets.

The AnteoTech share price has exploded more than 648% higher over the previous 12-month period.

More reading

• AnteoTech (ASX:ADO) share price rockets 95% higher on Ellume news
• If only Ellume was an ASX share! Why it’s making big news today

Motley Fool contributor Gretchen Kennedy 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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Advance Nanotek Ltd (ASX: ANO) shares tumbled lower today following the dispersion manufacturing company releasing its interim financial report for the half-year ended 31 December 2020. By the market’s close, the Advance Nanotek share price had fallen 12.37% to $3.40.

In short, the results were a significant downgrade from the prior year. Let’s take a look at how the numbers stacked up and management comments regarding the slip in performance.

What drove the Advance Nanotek share price lower?

The Advance Nanotek share price was heavily weighed down today after the release of the company’s results. Advance Nanotek reported that its revenue for the half-year ended fell 69.63% to $3.433 million. This result also flowed down to the company’s profit, resulting in a 93.32% decrease to $225,000 in profit.

You might ask what could lead to such a significant impact on results. The answer provided in the report is the ongoing travel restrictions and lockdowns caused by COVID-19. Given the company’s aluminium oxide and zinc oxide dispersions are made predominantly for use in sunscreens, demand for the product has fallen off a cliff.

Consequently, earnings per share (EPS) has declined from the previous period’s 38 cents to just 5.71 cents this half.  

In the chair’s letter accompanying the half-year accounts report, there was some good news outlined, despite the poor result. This included the following:

• Remains commercially debt-free.
• Successful installation of a new dispersion line capable of producing the equivalent of 250 million 100-gram tubes annually.
• Successful installation of equipment to increase zinc oxide production to 5,000 tonnes per annum.
• New product development continued.

The new products developed by Advance Nanotek include vegan and/or organic-based offerings, such as an all-natural insect repellent sunscreen. The company is awaiting Therapeutic Goods Administration (TGA) approval before scaling production.

The board’s forward view

Despite the disappointing result, the Advance Nanotek board emphasised that the achievements made during the half-year are likely to produce positive results for many years to come. Meanwhile, the board further advised that the impacts on sunscreen sales due to COVID-19 will hopefully be resolved before 2023.

More reading

• Why Advance NanoTek, Incitec Pivot, Starpharma, & Zoono are tumbling lower
• Why the Advance NanoTek (ASX:ANO) share price is sinking lower again

Mitchell Lawler owns shares of Advance NanoTek Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Advance NanoTek Limited. 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 Novatti Group Ltd (ASX: NOV) share price has rocketed today. Novatti shares closed at 26 cents on Friday and opened at 27 cents a share this morning. But soon after market open, Novatti rocketed as high as 36 cents. At the time of writing, the share price has closed at that high of 36 cents, up 38.46% for the day. That’s a big move to be sure. However, it still doesn’t lift Novatti to the company’s 52-week high of 42 cents a share.

So what’s going on here today?

Novatti is a digital payments/fintech company. You might think that some kind of significant announcement from the company might have precipitated this dramatic jump in Novatti shares today. However, there is no major news out of the company today to speak of.

The company’s last market-sensitive announcement (a quarterly update) came out on 29 January. Before then, on 22 January, Novatti announced that Apple Pay would now support its prepaid Visa cards. But that’s now ancient history by ASX standards.

Something in the BNPL water?

Several companies in the fintech and buy now, pay later (BNPL) spaces have seen similar moves today. Zip Co Ltd (ASX: Z1P) was up a whopping 16.8% today for starters.

And two companies in Douugh Ltd (ASX: DOU) and IOUpay Ltd (ASX: IOU) experienced such sudden and sharp rises that both companies were given ‘speeding ticket’ please explain notices from the ASX. That came after Douugh shares rose 50% at one point, while IOUpay shares were up close to 100%.

Unfortunately for Novatti, it now joins this club as well. Novatti was slapped with a speeding ticket of its own for today’s share price efforts just after lunchtime. Novatti told the ASX in the publically-released letter that it was not aware of any information that could have contributed to today’s share price moves.

The company stated the following on what it thinks might be going on:

Novatti notes that the payments and fintech sectors globally have seen significant growth and re-rating by markets, in particular as a result of COVID-19 and the rapid digital transformation of payments and financial services. Novatti’s business has continued to grow strongly, as announced in the recent quarterly update which highlighted major business and financial progress…

For now, at least, no one has a better explanation.

More reading

• Why the Sezzle (ASX:SZL) share price is charging 7% higher today
• Zip (ASX:Z1P) share price is soaring 13%, smashing another record high
• 98% surge in IOUpay (ASX:IOU) share price triggers speeding ticket
• ASX investigates after Douugh (ASX:DOU) share price spikes 56%
• ASX 200 Weekly Wrap: ASX cools on earnings reality check

Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. 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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As some of you more avid readers of the Fool (or just followers of the ASX share market) might have realised by now, ASX earnings season is in full swing. We have now heard from many of the ASX’s biggest companies like Commonwealth Bank of Australia (ASX: CBA) and Telstra Corporation Ltd (ASX: TLS) as to how they fared over the second half of 2020 (or similar).

Today, reporting has ramped up further still. We’ve heard from JB Hi-Fi Limited (ASX: JBH), Altium Limited (ASX: ALU) and Seven West Media Ltd (ASX: SWM) this morning.

So how have these earnings reports been received so far? Well, according to one broker, very pleasingly.

According to a report in the Australian Financial Review (AFR) today, broker Morgan Stanley has been impressed with what it has seen so far from earnings season. The report states that close to half of the reported ASX shares that Morgan Stanley covers have recorded expected earnings per share (EPS) beats. A ‘beat’ means the metric a company delivered has come in higher than what analysts were expecting. Or what the company has previously guided.

A ‘so far, so good’ for ASX shares from MS

The report states that 48% of Morgan Stanley’s covered shares have beaten on EPS. Another 36% have reported EPS numbers in line with guidance or expectations, with only 16% missing the mark.

The numbers are equally encouraging for dividends per share. Reportedly, 38% of Morgan Stanley’s covered companies have beaten expectations on dividends, with 48% delivering in line. Only 14% of the companies have undershot on this metric.

Turning to revenue metrics and we see a similar pattern again. Morgan Stanley advised that 38% of companies delivered revenue beats, with 50% giving investors in-line numbers and 13% missing the expected targets.

The AFR reports that Morgan Stanley’s equity strategy team stated the following on these numbers:

Result season pace took a step up last week and early signals confirm a greater conviction to guide and generally confirm robust recovery pillars in place… Earnings per share beats are on show at 48 per cent and dividends per share is not far behind at 38 per cent but it seems the combined ratio of recovery profile, distribution conviction and earnings quality is satisfying investor appetite.

Judging by this analysis, ASX investors should be encouraged by the numbers we have seen so far this earnings season. Morgan Stanley’s assessment of the “robust recovery pillars in place” bodes well for economic growth in 2021. Economic growth is, of course, strongly correlated with higher earnings from ASX companies. So hopefully, the good times will continue to roll for ASX investors.

More reading

• 3 reasons the Telstra (ASX:TLS) share price is storming higher
• What does the market look like when things go back to normal?
• How JB HiFi (ASX:JBH) shares became an ASX dividend powerhouse
• Here’s why the Altium (ASX:ALU) share price is down 4%
• How CBA (ASX:CBA)’s CommSec expanded its millennial footprint

Sebastian Bowen owns shares of Telstra Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Altium. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia owns shares of 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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It was a positive day for the Telstra Corporation Ltd (ASX: TLS) share price on Monday.

The telco giant’s shares finished the day over 2% higher at $3.32.

This means the Telstra share price is now up 4.5% since the release of its half year results last week.

Three reasons the Telstra share price is climbing higher

The first reason the Telstra share price is pushing higher is its dividend.

Although there had been a number of hints that the company would maintain its dividend this year, some investors appeared to doubt this. Which is understandable given the downward trajectory its dividend has taken in recent years.

However, last week Telstra maintained its fully franked interim dividend at 8 cents per share and reiterated plans to do the same with its final dividend. This will mean a fully franked 16 cents per share dividend, which equates to a 4.8% yield.

The second reason

A second reason the Telstra share price is ascending is its positive outlook.

After years of earnings declines caused largely by the NBN rollout, the company is now setting itself growth targets once again.

CEO Andy Penn appears confident that the company is positioned to return to growth in FY 2022. He said: “I am confident the many initiatives we have taken under our T22 program, particularly in simplifying the business and the digitisation program, will further improve customer experience.”

“To get the real benefits from all the effort we’ve already made, Telstra needs to be bold. I’ve set an aspiration for mid to high single-digit growth in underlying EBITDA in FY22 and $7.5 to $8.5 billion of underlying EBITDA in FY23. I am confident we can deliver this if we remain focused,” he added.

The third reason

A third reason for the solid performance by the Telstra share price is the positive response to its results by brokers.

For example, analysts at Goldman Sachs retained their buy rating and lifted their price target on Telstra’s shares to $4.00.

Elsewhere, UBS retained its buy rating and $3.70 price target and Credit Suisse held firm with its outperform rating and $3.85 price target.

It is also worth noting that analysts at Macquarie briefly put an outperform rating and $4.00 price target on its shares before suspending coverage due to research restrictions. The broker is helping Telstra with its TowerCo sell-down.

More reading

• Morgan Stanley: ASX earnings season is topping expectations
• ASX 200 Weekly Wrap: ASX cools on earnings reality check
• Top brokers name 3 ASX shares to buy next week
• 2 standout ASX results from last week
• How to generate $50,000 a year from ASX dividends

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra 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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Wow.

It’s not every day that a category-killing retailer that’s been at the top of its game for more than a decade grows half-yearly profits by 80%!

Then again, 2020 wasn’t exactly an ordinary year.

And the profit growth for June–December was actually 86.2% if you don’t mind, off the back of a 23.7% increase in sales.

Online sales grew a phenomenal 162%.

And the share price?

At the time of writing, it was up 0.22%.

No, not 22%

Not 2.2%

Zero. Point. Two. Two. Per Cent.

The reason? Well, JB Hi-Fi Limited (ASX: JBH) had released its sales numbers in mid-January.

And, short of an unexpected splurge in expenses, the market was right to extrapolate that strong sales growth into an even stronger jump in profits.

Still, I was a little surprised JB Hi-Fi shares didn’t move higher, given the company boosted its dividend by 81%.

To be fair, valuations are tough to calculate right now.

Companies are (thankfully) not giving guidance, because of the COVID uncertainty.

They’ll soon start to cycle on the beginnings of the COVID crisis, as we begin to compare February 2021 to February 2020, then March, April and so on.

Who knows what further lockdowns we might face?

How quickly we’re vaccinated, what variants we might face, and how long it takes until the country is effectively fully immunised?

How our consumer behaviours will – and won’t – change?

Moreover, for those retailers selling non-consumable products, how many more televisions, fridges, freezers and sofas can we actually buy?

Which is not to say I’ve turned bearish on those retailers’ businesses.

Yes, many of us will go back to the stores in larger numbers in 2021 than we did in 2020.

But many of us will continue to buy online, impressed with the ease, speed and convenience (and often cheaper prices).

That very uncertainty means there are a wide range of business outcomes for JB Hi-Fi and its ilk over the next 12–18 months.

And with it will likely come meaningful share price volatility as investors try to work out how much to pay for them.

The good news is that they don’t seem to be getting too carried away, today.

But what happens if (when?) these big retailers turn in slow growth or even sales declines in May, June or July?

It’s far from impossible; if your sales grew 20, 50 or 100% (as they did for some online retailers) last year, even if growth was flat this year, that’d be a helluva two-year jump.

And, as I wrote above, if you got your fill of new computers, desks and work-from-home supplies last year, you’re probably not going to be replacing it all in 2021.

Meaning that sales declines are in some cases, likely, and in almost all cases, possible. 

Which, of course, the market should expect, and so it should take any such news in its stride.

Right?

Well, as I said, it should.

That doesn’t mean it will.

The problem is that, right now, we don’t know.

I own shares in some retail companies. I’m not selling any, and don’t have plans to (though, as ever, I reserve the right to, if circumstances change, and only in accordance with our staff trading policy if I do!).

I might even buy more shares in retail if the opportunity arises.

So this isn’t a warning or a suggestion to sell.

But it is a warning that I would be gobsmacked if share prices of COVID-beneficiaries aren’t more volatile than usual in 2021.

Volatility is, as I always like to say, the ‘ticket to the dance’.

It is to be endured because it can’t be avoided, but history suggests it’s worth putting up with for the returns that might just be on offer for share market investors.

As ever, knowing what you own, and why you own it, will stand you in good stead.

As will knowing that volatility will strike, often when you least expect it, and having a plan for how you’ll deal with it.

My tip: get used to the idea now so that, when it comes, you can shrug, curse it, but avoid doing anything silly.

Remember, investing should be long-term in nature. Think not about May, or even 2021.

Think about how your companies will be performing in 2024, 2026 and beyond…

Fool on!

More reading

• How JB HiFi (ASX:JBH) shares became an ASX dividend powerhouse
• JB Hi-Fi (ASX:JBH) share price on watch after bumper profit and dividend growth
• What to expect from the JB Hi-Fi (ASX:JBH) half year result
• ASX retail shares show strong signs of resurgence 
• Here’s a bargain ASX share in a sea of expensive stocks

Motley Fool contributor Scott Phillips 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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JB Hi-Fi Limited (ASX: JBH) shares had a great day today, rising 2.69% by the market’s close to a price of $52.36. That doesn’t quite put the JB share price near its 52-week (and all-time) high of $55.25, but it’s not far off.

JB shares have been rewarding their owners very handsomely over the past few months. The JB Hi-Fi share price is up more than 22% since 8 December, and up 26.5% over the past 12 months.

Today’s share price moves come after the company released its half-year results this morning for the 6 months to 31 December 2020.

It was a pleasing result for the company. As we covered this morning, JB recorded a 23.7% rise in total sales to $4.9 billion. Earnings before interest and tax (EBIT) were up 76% to $462.8 million and net profits after tax were up 86.2% to $317.7 million. Earnings per share (EPS) also increased by 86.2% to $2.77.

But perhaps the biggest piece of news this morning was JB’s dividend. The company’s management announced that JB will pay an interim dividend of $1.80 per share, fully franked, to be paid on 12 March. That’s a whopping 81.8% increase over last year’s interim dividend of 99 cents per share.

According to the earnings report, that represents a net profit payout ratio of 65%. If we annualise this dividend, it would equate to a yield of roughly 6.9% (or 9.8% grossed-up with the full franking) on the current JB share price.

JB shares deliver the dividend goods

This represents incredible growth for JB’s dividends. Five years ago, the company’s interim shareholder payout was just 72 cents per share, meaning it has grown at a compound annual growth rate (CAGR) of 20.11%.

However, keep in mind that JB’s interim dividends usually come in larger than its final dividends, likely reflecting the strength of the Christmas period for the company. Even so, disregarding this new interim payment, JB’s annual dividends grew from $1 per share in 2016 to $1.89 per share in 2020. That’s a CAGR of 17.25% over those four years.

Many believe that paying out dividends weakens a company because it leaves less money available to reinvest back into the business. Thus, for a company to fund a fast-growing dividend as well as continuing to deliver on key growth metrics, its fundamentals usually need to be rock solid. And JB’s arguably are.

The EPS metric of $2.77 per share that JB gave investors this morning is considerably higher than the EPS of $1.16 it reported back in 2017. That represents a CAGR of 18.97%. So the fact that JB has been managing to grow its EPS by such a fat rate is probably why JB shares continue being able to bring home the bacon for their dividend investors.

More reading

• JB Hi-Fi (ASX:JBH) share price on watch after bumper profit and dividend growth
• What to expect from the JB Hi-Fi (ASX:JBH) half year result
• ASX retail shares show strong signs of resurgence 
• Here’s a bargain ASX share in a sea of expensive stocks
• 2 ASX dividend shares with yields above 5%

Motley Fool contributor Sebastian Bowen 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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There are a handful of ASX shares that multiple brokers have a high opinion of and believe could generate good returns.

All analysts may have different thoughts and opinions on different businesses. One broker could think Commonwealth Bank of Australia (ASX: CBA) is the best bank to buy, whilst another broker could think CBA is a sell and that Westpac Banking Corp (ASX: WBC) is the one to buy.

However, if multiple brokers think that the same ASX share is a buy then it could be a good starting point for thinking about a business.

With that in mind, here are two ASX shares from the travel industry that multiple brokers like:

Corporate Travel Management Ltd (ASX: CTD)

This ASX share is liked by at least six brokers.

One of the brokers that likes Corporate Travel at the moment is Credit Suisse. Whilst it’s still expecting 2021 to be a COVID-19-affected year, 2022 may deliver materially better revenue as high levels of demand is satisfied, profitability remains high because of a lower cost base and the company takes market share.

The broker also noted that the Corporate Travel Management share price has fallen since the end of November. There has been a 16% decline since 25 November 2020.

At the end of September 2020, Corporate Travel Management announced the acquisition of Travel & Transport, which is a North American corporate travel business. It had US$2.8 billion of total transaction value (TTV) in the 2019 calendar year. It also generated US$29 million of pro forma earnings before interest, tax, depreciation and amortisation (EBITDA) in 2019. Over 60% of that TTV was made from corporate air travel, with another 30% from hotels.

The US$200.4 million acquisition was funded by the ASX share with a capital raising. Based on a pro-forma 2019 figures, Corporate Travel expects the acquisition to be 10% accretive for earnings per share (EPS) excluding synergies, and 30% accretive including synergies.  

Credit Suisse has a price target of $22 for Corporate Travel Management shares.

Alliance Aviation Services Ltd (ASX: AQZ)

Alliance Aviation Services is liked by at least three brokers.

The company describes itself as Australasia’s leading provider of contract, charter and allied aviation and maintenance services. Its main clients are in the mining, energy, tourism and government sectors. It currently operates a few dozen Fokker aircraft and has also acquired 30 E190 jet aircraft over the last year. Those acquisitions are intended to be progressively added to the fleet throughout 2021 and 2022 to provide the company with growth capacity.

Broker Morgans points to the record interim FY21 result for Alliance Aviation and strong operating cashflow as reasons to be positive on the business. Alliance’s management believe further growth can come and that belief is supported by the Qantas Airways Limited (ASX: QAN) wet lease agreement that was recently signed.

After the result, which saw underlying profit before tax rise 72.3% to $26.7 million and operating cashflow rise 225.3% to $47.5 million, Morgans increased its underlying net profit before tax estimate for FY21 by 10%.

Morgans has a share price target for Alliance Aviation of $5.25.

More reading

• Leading brokers name 3 ASX shares to buy today
• Why ASX travel shares were smashed on Friday
• ASX 200 Weekly Wrap: ASX cools on earnings reality check
• Why the Alliance Aviation (ASX:AQZ) share price is up 67% in 12 months
• Here’s a bargain ASX share in a sea of expensive stocks

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management 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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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 that leading brokers have named as buys this week are listed below. Here’s why they are bullish on them:

Alliance Aviation Services Ltd (ASX: AQZ)

According to a note out of Ord Minnett, its analysts have retained their buy rating and lifted their price target on this aviation services company’s shares to $5.15. The broker was pleased with the company’s half year results and notes that its profit came in a touch higher than expected. Ord Minnett was also impressed with its cash flows. Looking ahead, the broker believes the company is well-placed to benefit from a shift to contract and charter based services in the domestic market. The Alliance Aviation share price is trading at $4.27 today.

Baby Bunting Group Ltd (ASX: BBN)

A note out of Morgans reveals that its analysts have upgraded this baby products retailer’s shares to an add rating with an improved price target of $6.39. According to the note, the broker made the move following the release of its first half result last week. Although its margin expansion, and therefore its profit growth, was a little softer than the broker forecast, it was pleased with many aspects of its update. One of those was its expansion into New Zealand. It feels this gives its already positive growth outlook an added boost. The Baby Bunting share price is fetching $5.76 today.

Mirvac Group (ASX: MGR)

Analysts at Macquarie have retained their outperform rating but cut the price target on this property company’s shares slightly to $2.84. According to the note, Mirvac delivered a stronger than expected first half result and its guidance for the full year was in line with its estimates. Looking further ahead, the broker believes Mirvac can grow its earnings over the coming years thanks to a number of new developments. The Mirvac share price is trading at $2.30 on Monday.

More reading

• ASX 200 falls, Melbourne lockdown bites, Baby Bunting drops
• Why AVITA, Baby Bunting, Kathmandu, & Webjet shares are sinking
• ASX 200 down 0.3%: Crown CEO hasn’t resigned, Mirvac update, Nearmap remains halted
• Mirvac (ASX:MGR) share price slides on half-year results
• Why the Baby Bunting (ASX:BBN) share price is tumbling 10% lower

Motley Fool contributor James Mickleboro 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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You may have heard of the commodity super cycle potentially taking shape on our doorstep.

These types of super cycles don’t occur frequently. In fact, over the past century there have been only 5. The last one ground to an end as global liquidity dried up amid the GFC.

Now, with commodities having largely been in the doldrums for the past decade, analysts are increasingly forecasting that a new commodity super cycle is taking shape. Or may already be underway.

Chris Watling is the chief market strategist and founder of Longview Economics. According to Watling (quoted by the Australian Financial Review):

Commodity super cycles tend to occur after periods of loose central bank policy and run for about a decade. Commodities peaked relative to equities a decade ago and now they are very cheap and below their levels seen in 1969 and 1998 before prior super cycles began.

Will ASX silver shares get swept up in the commodity super cycle?

In case you haven’t noticed, silver prices have been going ballistic lately.

How ballistic?

On 1 February silver was trading at for US$29.15 (A$37.37) per troy ounce. That’s right on 5-year highs. And it’s up an impressive 143% from the US$11.98 per ounce it was worth on 18 March last year.

Yes, the price of silver has retraced a touch since the first of this month, currently at US$27.61 per ounce. But that’s still within touching distance of multi-year highs.

And a large part of that recent price retrace is likely due to a retreat of long positions from the Reddit army. On 1 February rumours were still circulating on Reddit’s WallStreetBets that silver could hit US$1,000 per ounce following the retail hordes efforts at a short squeeze on the precious metal.

While that didn’t eventuate, if the commodity super cycle takes shape in this era of ultra-loose central bank monetary policy, ASX silver shares could be well positioned to benefit.

Two leading ASX silver shares

There are a number of quality silver shares trading on the ASX.

Two of the larger silver miners and producers are Silver Mines Limited (ASX: SVL) and South32 Ltd (ASX: S32).

South32 has a market cap of $12.4 billion and pays a dividend yield of 1.2%, fully franked. Over the past 12 months, the South32 share price is flat. Year-to-date the share price is up 4%.

Silver Mines has a market cap of $286 million and does not pay a dividend at this time. Over the past 12 months, the Silver Mines share price is up 170%. In 2021, its shares are up 4%.

More reading

• Why the Silver Mines (ASX:SVL) share price is sinking today
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Motley Fool contributor Bernd Struben 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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