The Telstra Corporation Ltd (ASX: TLS) share price chalked up its third day of gains as brokers pass judgement on its headline grabbing restructuring plans.

The Telstra share price jumped 2.5% to a seven-month high of $3.33 on Tuesday. In contrast, the S&P/ASX 200 Index (Index:^AXJO) dipped 0.1%.

Australia’s largest telco excited the market when it announced it was splitting itself four ways.

Unlocking value in Telstra’s share price

The radical restructure is meant to position Telstra to buy the NBN down the track and to unlock value for shareholders.

While acquiring the NBN is politically sensitive and far from certain, most brokers seem to be optimistic about the restructure.

Goldman Sachs is one that is taking a positive view on the Telstra share price following the restructuring announcement.

Asset split highlights attractive valuations

“This update outlines the next steps of the corporate restructure and potential asset monetization, and gives us confidence that its infrastructure value will ultimately be realized by shareholders,” said Goldman.

“TLS shares currently trade on just 4.1-4.7x ServeCo FY23E EBITDA or 5.7-6.3X at our unchanged A$4.00 12m TP, vs. SPK.NZ at 8.3x.

“We reiterate our ‘Buy’ on TLS, our preferred ANZ Telco, ahead of its FY21 results and Nov-21 ID, both of which we view as positive catalysts.”

Telstra share price looks like an attractive buy

Meanwhile, Credit Suisse also repeated its “outperform” recommendation on the Telstra share price.

The separation of Telstra’s businesses has highlighted how attractively priced some of its key assets are.

“Our analysis of the valuation for InfraCo implies the remainder of Telstra (including ServeCo and Telstra International) is currently valued by the market at 5.8x FY21 EBITDA,” said the broker.

“Given this multiple is applied to cyclically-depressed earnings (given the COVID-19 impact on roaming revenues) and with the Australian mobile market at an inflection point (with TLS guidance for postpaid ARPU to see growth from 2H21 onwards), we are of the view a higher value for ServeCo can be justified.”

Credit Suisse’s 12-month price target on the Telstra share price is $3.85 a share.

Telstra’s shareholders will need to approve the restructure. The company’s plan is to split its assets into InfraCo Fixed, InfraCo Towers, ServeCo and Telstra International.

More reading

• ASX 200 dips, travel shares drop, Pushpay soars
• Why the Xero (ASX:XRO) share price is outperforming today
• Why is the Telstra (ASX:TLS) share price having such a good week?
• How to counter the ASX 200’s Achilles heel
• ASX 200 up 0.4%: Bank shares lower, Xero shares upgraded

Motley Fool contributor Brendon Lau owns shares of Telstra Limited. 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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The S&P/ASX 200 Index (ASX: XJO) fell by 0.1% today to 6,745 points.

Here are some of the highlights from the ASX, with an IPO stealing some of the headlines:

Pushpay Holdings Ltd (ASX: PPH)

The Pushpay share price jumped more than 10% today after it was announced that the investor Sixth Street is going to become the largest shareholder of the company with a 17.8% holding.

This increased holding by Sixth Street is due to the investment vehicle related to Peter Huljich and Christopher Huljich selling of its shares of Pushpay to Sixth Street.

Sixth Street is a global investment business with over US$50 billion of assets under management (AUM) and committed capital. It has previously invested in other growth companies like Airbnb, AirTrunk, Paycor and Spotify.

The Chair of Pushpay, Graham Shaw, said:

We are delighted to welcome Sixth Street as a cornerstone investor in Pushpay. As a highly experienced technology and growth investor with a core thematic focus on the convergence of software and payments, Sixth Street’s global scale and partnership-orientated investing approach brings considerable strength to Pushpay’s shareholder register.

Kathmandu Holdings Ltd (ASX: KMD)

The Kathmandu share price went up over 9% in reaction to the company’s half-year result today.

The company reported a 12.9% increase in sales to $410.7 million, underlying earnings before interest, tax, depreciation and amortisation (EBITDA) rose 19% to $48.2 million and underlying net profit grew 32.8% to $23.1 million. Statutory net profit after tax came in at $22.3 million.

The Kathmandu division suffered a significant fall of sales and profit due to COVID-19 related travel restrictions and store closures.

However, the acquired Rip Curl business achieved strong sales and profit growth – sales went up 86.1% to $251.1 million and EBITDA grew 164.3% to $48.7 million.

The board resolved to continue dividend payments again, with an interim dividend of NZ 2 cents per share.

The company said Kathmandu is entering the strong winter season, whilst Rip Curl continues to trade in line with the strong first half results.

Travel sector suffers

The ASX travel sector had many of the ASX 200’s worst performers today.

One of the worst performers in the ASX 200 was the Flight Centre Travel Group Ltd (ASX: FLT) share price which fell more than 4%. The Webjet Limited (ASX: WEB) share price fell over 3%, the Corporate Travel Management Ltd (ASX: CTD) share price fell around 4%, the Helloworld Travel Ltd (ASX: HLO) share price dropped around 4% and the Qantas Airways Limited (ASX: QAN) share price dropped over 2%.

Airtasker Ltd (ASX: ART)

The Airtasker share price rose around 60% today on a strong first day on the ASX.

Airtasker gave a short update as part of an announcement to say that all metrics across the business continue to perform strongly and management expect to meet or exceed its prospectus forecast.

It also said that, as part of the initial public offering (IPO), it received higher than expected demand from both its staff and taskers, with over $2.5 million subscribed from these stakeholders.

Airtasker CEO Tim Fung said:

We have an incredible foundation to build from and we’re excited to be taking our new shareholders on the exciting journey to fulfill Airtasker’s mission: to empower people to realise the full value of their skills.

More reading

• What experts are saying about Telstra’s (ASX:TLS) big restructuring plans
• Airtasker (ASX:ART) share price cools after explosive IPO
• Why the Xero (ASX:XRO) share price is outperforming today
• Why BrainChip, Crown, Qantas, & Quickstep shares are tumbling lower
• Qantas (ASX:QAN) share price dips after dismissed legal defection case

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Helloworld Limited and PUSHPAY FPO NZX. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited and Webjet Ltd. The Motley Fool Australia has recommended Flight Centre Travel Group Limited, Helloworld Limited, and PUSHPAY FPO NZX. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post ASX 200 dips, travel shares drop, Pushpay soars appeared first on The Motley Fool Australia.

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The Airtasker Ltd (ASX: ART) share price has cooled off significantly during the trading day. However, shares remain well above their initial listing price. Airtasker officially IPOed this morning after a false start this week and months of anticipation. The company had a listing price of just 65 cents, but opened this morning at $1.01 a share, meaning company insiders and investors were treated with a 55% win right off the bat.

At the time of writing, the Airtasker share price is currently sitting at $1.05, up 0.48%. 

Airtasker share price rockets

However, it wasn’t all smooth sailing for investors looking to get into this IPO after trading commences (which is almost all retail ASX investors).  Airtasker’s share price then went as high as $1.16 a share. This was prior to falling as low as 88 cents soon after market open. This company had a more volatile start to life than a giraffe!

At the time of writing, Airtasker shares are back to $1.02 a share, almost where they started the day.

IPOs can be ART-fully dangerous for new investors

Of course, Airtasker’s listing is nothing the ASX hasn’t seen before. Last year saw a smorgasbord of new companies hitting the ASX boards. These included Doctor Care Anywhere Group (ASX: DOC), Booktopia Group Ltd (AS:X BKG), Plenti Group Ltd (ASX: PLT), Nuix Ltd (ASX: NXL), Payright Ltd (ASX: PYR) and Laybuy Holding Ltd (ASX: LBY).

With the exception of Doctor Care, all of these companies are today trading below the price they IPOed at. And even Doctor Care was down 17% at one point from its IPO price before recovering. Laybuy has been a clanger, currently more than 47% below its IPO price.

We have seen a similar trend play out in the United States. Companies like Uber Technologies Inc (NYSE: UBER), Lyft Inc (NASDAQ: LYFT), and Snowflake Inc (NYSE: SNOW) have all IPOed in the last couple of years, and have been highly volatile in the months and/or years since.

IPOs can be dangerous things for retail investors to get involved in at the starting gate, despite all of the hype and buzz they generate. Remember, its often the motivation of those pushing the IPO to offload their shares for the highest price possible. So for any investor thinking about jumping on the Airtasker train, it might be prudent to keep all of this in mind!

More reading

• Airtasker (ASX:ART) share price rockets 78% after IPO
• Here’s why the Payright (ASX:PYR) share price is soaring 9% today
• 3 exciting small cap ASX shares to watch
• 4 reasons ARK recently increased its Tesla share price target to US$3,000
• Airtasker’s ASX debut happens tomorrow, after 24-hour delay

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 and recommends Snowflake Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Booktopia Group Limited, Doctor Care Anywhere Group PLC, Nuix Pty Ltd, and Uber Technologies. The Motley Fool Australia has recommended Doctor Care Anywhere Group PLC and Nuix Pty 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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There are both devastating and amazing stories resulting from the once-a-century floods across NSW at the moment. For investors, the leading ASX insurance share prices are all on watch, as more than 3,000 insurance claims have been made across the country.

That number is expected to rise dramatically over the coming days.

In wake of the disaster, the ASX’s major insurance companies have reacted differently. Note that German insurer Allianz, which has 8% of the Australian general insurance market, is not listed on the domestic exchange.

Leading ASX insurance share prices

Overall, the financial services sector has been performing very strongly this year, which makes it an especially timely occasion to look at the performance of Australia’s three largest insurance companies: Insurance Australia Group Ltd (ASX: IAG), Suncorp Group Ltd (ASX: SUN), and QBE Insurance Group Ltd (ASX: QBE). 

All three insurance companies have had positive 2021 share price performances year-to-date as the ASX has entered a bullish streak. The QBE share price is the overall winner in 2021 so far, up more than 12% at the time of writing. 

IAG 

With 29% of the overall insurance market, IAG has fielded more than 2,100 claims as of Sunday. The company has a maximum event retention of $169 million, which reduces to $135 million for a second event under its catastrophe reinsurance program. IAG says it’s still too early to predict the net cost of the disaster to its bottom line.

The IAG share price has risen steadily so far throughout the natural disaster, with the market leader adding 2.15% this week to counteract its 10% decline over the past 12 months.

At the time of writing, IAG shares are in the green, up by 0.84%.

What IAG CEO Nick Hawkins said:

 We know this is a very stressful time for those affected by the severe weather we are experiencing. Our immediate focus is on the safety of all the communities impacted by this heavy rain and flooding and we urge everyone to follow the directions of the emergency authorities.

We now have additional resources in place to help our customers get back on their feet and we encourage customers to contact us to lodge their claim as soon as possible so we can organise immediate assistance.

As soon as it’s safe to access the impacted areas, we’ll have our teams on the ground to begin the assessment and repair process, but our customers can access immediate help, including emergency accommodation, as soon as they contact us.

Suncorp

With 27% of the overall market, industry runner-up Suncorp has been the major loser so far this week, down 7.21%. This flies in the face of Suncorp’s yearly share price performance, which is a healthy 25% gain. However, that still hasn’t been enough to beat the sector, with the Suncorp share price down 39% against the broader competition. 

As of 10am Monday 22 March, Suncorp had only fielded 1,300 claims, 800 less than IAG had three days earlier. Suncorp’s first-event catastrophe reinsurance program allows for a much greater overall payout, with $250 million in holdings. The insurance group also have an aggregate excess of loss (AXL) protection, which provides $400 million of cover in excess of a retention of $650 million, with an event deductible of $5 million.

However, before the floods, $370 million of the AXL deductible had already been eroded. The group’s natural hazard allowance in FY21 is $950 million.

What Suncorp Group CEO Steve Johnston said: 

Our thoughts are with communities contending with this weather and the emergency services personnel and volunteers who are putting themselves in harm’s way.

Our Customer Support Teams will be deployed to the most impacted regions when waters recede, and our affected bank customers can access our emergency relief package. Our customers can be assured that we’re committed to their recovery and we will be with them every step of the way.

QBE

The QBE share price has lost 3.64% this week despite positive news for investors yesterday, with QBE revealing it had no exposure to insolvent UK financial services company Greensill. QBE is, so far, the only of the big three not to make a public ASX announcement throughout the disaster. It’s also up 1% today.

With 10% of the overall insurance market, QBE has been on a rollercoaster on the ASX over the past 12 months. The QBE share price has gone from a low of $7.32 per share on 23 March 2020, rocketing up to $10.98 by 14 August that year, and now to $9.59 today. 

The Motley Fool reported in February that QBE’s strong recent performance has led to multiple brokers increasing their ratings on the insurance company.

More reading

• Why the Suncorp (ASX:SUN) share price is tumbling lower today
• Why Fortescue, Freedom Foods, QBE, & Singular Health are sinking
• QBE (ASX:QBE) share price falls on Greensill update
• Brokers name 3 ASX shares to buy right now
• Why AGL, Clover, QBE, & Volpara shares are pushing higher today

Motley Fool contributor Lucas Radbourne-Pugh 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.

The post How are ASX insurance share prices performing during NSW’s floods? appeared first on The Motley Fool Australia.

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The Caravel Minerals Ltd (ASX: CVV) share price has been a proverbial gold mine for investors. Over the last 12 months, shareholders have seen an amazing 1,466.67% return on investment (ROI) in the company.

Just today, shares in the company were up 23.68% before being placed in a trading halt. Before the suspension, shares in the company were trading for 23.5 cents each. The S&P/ASX All Ordinaries Index (ASX: XAO), by comparison, ended the day down 0.12%.

Let’s take a closer look at the incredible rise of the Caravel Minerals share price. 

What’s going on with the Caravel Minerals share price?

The Caravel share price has been going gangbusters over the last year.

Caravel, being a copper-based company, unsurprisingly sees its fortunes rise and fall with that of copper. Well at the moment, copper is rising.

Over the past 12 months, the twenty-ninth element’s price has increased by 85.87%, according to Trading Economics. Just from the beginning of this year, the metal is up 16.57%. It currently sells on the commodity market for US$4.103 per pound.

Only one week ago, Caravel announced “significant” copper deposits had been found at its Bindi deposit in Western Australia.

A week prior to that announcement, the company declared it was exploring an area in south-west WA with high chances of “massive sulphide-hosted nickel-copper-platinum group elements…”

Copper’s price is seen by many analysts as indicative of the general mood of the economy. As the COVID-19 pandemic subsides and confidence rebounds, the economy is tipped to do well in the near-term.

Another factor influencing the copper price is supply and demand. Many Latin American countries are seeing ongoing supply issues because of the pandemic. As well, there is a bill in the Chilean Congress to increase royalties on copper miners. South America is one of the largest copper producers on the globe.

As well, copper (along with lithium and some other metals) is essential in the production of climate-friendly technologies. Demand for zero-emissions tech, such as electric cars and solar panels, is soaring as governments and industry alike look to combat man-made climate change. As supply contracts and demand increases, this inevitably leads to a price rise. In economics, this is known as the law of supply and demand.

More reading

• How are ASX insurance share prices performing during NSW’s floods?
• Risk posed to Graincorp (ASX:GNC) share price following ACCC verdict
• Fund managers have been buying Blackmores (ASX:BKL) and this ASX share
• 3 under-appreciated income stocks yielding 4-9%: Motley Fool CIO Scott Phillips, on ausbiz
• Why ASX 200 energy shares should outshine as inflation picks up

Motley Fool contributor Marc Sidarous 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.

The post Caravel Minerals (ASX:CVV) share price surges 1400% in a year. Here’s why appeared first on The Motley Fool Australia.

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The GrainCorp Ltd (ASX: GNC) share price is likely under the watchful eyes of shareholders today. This is due to the conclusion of the warehousing agreement investigation.

At the time of writing, the GrainCorp share price has dipped 0.3% to $4.71 per share.

A fairer deal for farmers

An investigation was conducted by the Australian Competition and Consumer Commission (ACCC) yesterday. Consequently, it was found that  19 terms in the company’s Grain Warehousing Agreement were unfair under Australian Consumer Law.

GrainCorp acts as an intermediatory between grain growers and grain buyers. Therefore, the company uses an agreement to protect all parties. However, the ACCC determined facets of this agreement to favour GrainCorp over its farming suppliers in protections.

In particular, a concerning term in the agreement capped the company’s liability to grain growers at $100,000. This was applicable even if the loss was a consequence of GrainCorp’s negligence or omissions.

ACCC Deputy Chair Mick Keogh made the following comment regarding the limiting term:

We believe the term which limited GrainCorp’s liability created a significant imbalance between the rights and obligations of growers and GrainCorp, and had the potential to cause significant financial detriment to growers without being reasonably necessary to protect GrainCorp’s legitimate interests.

GrainCorp has committed to amending these 19 various terms in the 2021/2022 warehousing agreement. This includes removing limited liability on losses attributable to gross negligence, fraud, criminal conduct, or wilful misconduct by GrainCorp. Additionally, all other instances of liability for losses will be increased to $200,000.

Risky business for GrainCorp and its share price

Although the amendments are likely to the delight of many Australian farmers, fundamentally it puts the risk back on GrainCorp.

Along with the change in limited liability terms, the following changes will be included:

• Providing growers with sufficient time to make necessary arrangements should they not want to continue the arrangement into the new season.
• Addressing concerns about GrainCorp having the unilateral right to renew or amend the terms of the agreement.
• Removing limitations on GrainCorp’s obligations to perform certain services GrainCorp was contracted to provide under the Grain Warehousing Agreement.
• Removing terms that allowed GrainCorp to deny reasonable requests by growers to inspect grain stored with GrainCorp
• Eliminating terms that provided GrainCorp with a broad discretion to vary the goods or services it provided to growers.

The changes increase the risk to GrainCorp’s bottom line in the event of negligence. In essence, the amendment could result in a double whammy to the company. If an incident were to occur, GrainCorp would lose out on revenue. Additionally, GrainCorp would be required to cover the saleable value to farmers.

Rains outweighing risks

Despite the added risk for GrainCorp, the share price has fared the revelations reasonably well. Potentially shareholders are more bullish on the company due to the continued above-average rainfall.

While Major #Flooding is occurring in #Sydney‘s west it’s also important to be aware this is a large & widespread event. Western #NSW will see increased #rain from Monday & many areas will see more rain on Tuesday. Check regularly for updates https://t.co/sNdzpEYEQ1 @NSWSES pic.twitter.com/uEQpjjSlAc

— Bureau of Meteorology, New South Wales (@BOM_NSW) March 21, 2021

https://platform.twitter.com/widgets.js

The La Niña weather event being experienced in Australia is providing optimal conditions for Australian farmers while hampering it in the Northern Hemisphere. As a consequence, prices for commodities such as grain remain elevated. This explains the over 42% gain in the GrainCorp share price in the past 12 months.

More reading

• Will Aussie agricultural commodity prices see another record-breaking year?

Motley Fool contributor Mitchell Lawler 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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I like to keep an eye on substantial shareholder notices. This is because these notices give you an idea of which shares large investors, asset managers, and investment funds are buying or selling.

Two notices that have caught my eye are summarised below. Here’s what these fund managers have been buying:

Blackmores Limited (ASX: BKL)

A notice of change of interests of substantial holder reveals that Australian Super has been buying more of this health supplements company’s shares. According to the notice, the super fund has lifted its stake by approximately 250,000 shares to 1,223,878 shares. This represents a 6.33% stake in the company.

Australian Super was buying shares as recently as Friday. That day the super fund picked up 117,659 shares at an average price of $85.80. So with the Blackmores share price now trading at $82.63, investors are able to pick up shares at lower price to what the super fund paid. Though, it is worth noting that analysts at Citi have just reiterated their sell rating and $59.20 price target. on its shares

IRESS Ltd (ASX: IRE)

According to a notice of initial substantial holder, banking giant Commonwealth Bank of Australia (ASX: CBA) has been increasing its stake in this financial technology company. The notice reveals that the bank has been building a position since October and has now accrued a total of 9,667,623 shares. This represents 5% stake in the company.

One broker that would approve of this purchase is Credit Suisse. Earlier this month the broker upgraded the company’s shares to an outperform rating with an $11.00 price target. This compares to the current IRESS share price of just $9.27. The broker believes its shares are trading at a very attractive level following a sizeable pullback from its highs. It appears as though Commonwealth Bank agrees.

More reading

• A2 Milk (ASX:A2M) shares and one other slapped with sell ratings
• Leading brokers name 3 ASX shares to sell today
• How to counter the ASX 200’s Achilles heel
• ASX 200 up 0.35%: Crowns surges, ANZ & CBA settle class actions
• Will mounting competition break the Afterpay (ASX:APT) share price?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Blackmores Limited. The Motley Fool Australia has recommended IRESS 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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Scott Phillips joined the ausbiz team to discuss three ASX companies that are offering impressive grossed-up dividend yields.

No, they’re not the usual suspects — not a bank or telco in sight — but three companies you should have on your investment radar if you’re trying to beat the market and like your dividends, too!

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You can find the original video at www.ausbiz.com.au or by clicking here.

More reading

• 2 ASX retail shares delivering strong growth
• This ASX company has increased or maintained dividends for 44 years
• 2 quality ASX dividend shares to buy today
• Got money to invest for dividends? Here are 2 ASX shares
• ASX quarterly rebalance: HUB24 joins ASX 200, Brainchip into ASX 300

Scott Phillips owns shares of ADAIRS FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends ADAIRS FPO. The Motley Fool Australia owns shares of and has recommended Brickworks. The Motley Fool Australia has recommended Accent Group and ADAIRS FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post 3 under-appreciated income stocks yielding 4-9%: Motley Fool CIO Scott Phillips, on ausbiz appeared first on The Motley Fool Australia.

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The great inflation debate continues.

And the question many S&P/ASX 200 Index (ASX: XJO) investors are asking is, which shares in my portfolio will suffer if inflation picks up and which ASX 200 shares will perform best.

Now, there’s no consensus yet on when inflation will truly pick up the pace.

The Reserve Bank of Australia has echoed other leading central banks like the US Federal Reserve and European Central Bank in saying it’s not overly concerned with inflation in the next few years. That could mean interest rates indeed remain at rock bottom levels until 2024. But global bond markets have been indicating a potentially different outcome. The US 10-year Treasury yield currently stands at 1.69%. While that’s low by historic standards, it’s well above the 1.04% yield as recently as 27 January.

So what should ASX 200 investors concerned about rising inflation do?

Risk of inflation above 3% increasing

Christian Mueller-Glissmann is the managing director for portfolio strategy and asset allocation at Goldman Sachs Group Inc.

As Bloomberg reports, Mueller-Glissmann says that “A scenario of sustained inflation above 3% and rising is not our base case, but that risk has definitely increased compared with the previous cycle.”

So how does Goldman Sachs recommend investors position themselves if indeed we’re in for a run of high inflation?

If you’re thinking of the old fallback, gold, you may want to think again.

According to Mueller-Glissmann:

We found that during a high inflation backdrop, commodities, especially oil, are the best hedge. They have the best track record in the past 100 years to protect you from unanticipated inflation – one that’s driven by scarcity of goods and services, and even wage inflation like that in the late 60s. Equities have a mixed tracked record. We like value stocks as they are short duration.

The biggest surprise is gold. People often see gold as the most obvious inflation hedge. But it all depends on the Fed’s reaction function to inflation. If the central bank doesn’t anchor back-end yields, then gold is probably not a good choice as real yields might rise. We see index-linked bonds as in the same camp as gold.

There are a number of ASX oil shares that could help protect you from unanticipated inflation.

Indeed, though Donald Horne may have intended it ironically when he labelled Australia the Lucky Country in his 1964 novel of the same name, Australia has a vast trove of oil and gas reserves, along with numerous other valuable resources.

Two leading ASX 200 oil shares

For the purposes of this article, we’ll stick with 2 of the dominant ASX 200 oil shares.

First up is Santos Ltd (ASX:STO).

The Santos share price is slipping today, down 2%, but Santos shares remain up 12% for the year. Over the past 12 months, the Santos share price has soared 146%, compared to a 48% gain on the ASX 200. At the current price of $17.18 per share, Santos has a market cap of $15.0 billion. Santos pays a dividend yield of 1.3%, fully franked. Morgan Stanley has a buy rating on Santos shares.

Next, we turn to Oil Search Ltd (ASX:OSH).

Oil Search shares are also sliding today, down just over. Year-to-date the Oil Search share price is up 13% with shares up 132% over the past 12 months. At the current $4.25 per share, Oil Search has a market cap of $8.9 billion. Oil Search pays an annual dividend yield of 1.7%, unfranked.

More reading

• Top broker issues buy alert on Santos (ASX:STO) and these ASX energy shares
• 5 things to watch on the ASX 200 on Monday
• End of oil price rally fires warning shot for the ASX COVID recovery trade
• Woodside (ASX:WPL) share price falls during investor-led climate change charge
• Beach, Santos, & Woodside shares on watch after oil prices crash

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.

The post Why ASX 200 energy shares should outshine as inflation picks up appeared first on The Motley Fool Australia.

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The Xero Limited (ASX: XRO) is outperforming its peers and the broader market after the stock was upgraded by a leading broker today.

The Xero share price is leading the WAAAX cohort of ASX tech darlings when it jumped 1.6% to $121.49 in the last hour of trade.

In contrast, the Appen Ltd (ASX: APX) share price gained 1.1% to $18.21, while the Altium Limited (ASX: ALU) share price, Afterpay Ltd (ASX: APT) share price and WiseTech Global Ltd (ASX: WTC) share price slumped between 1% and 2% each.

Xero share price defying the tech gloom

ASX technology shares have been on the nose lately as rising bond yields reduced appetite for high growth shares trading on expensive multiples.

But this could be the right time to be buying the Xero share price after Credit Suisse upgraded the cloud accounting software company to “outperform” from “neutral”.

“Following a share price rally in late CY20 that we believe disconnected from fundamentals, the XRO share price is now slightly below where it was at its mid-November result,” said the broker.

“Yet over that time, it has made an attractive acquisition, we have received further positive industry   datapoints and we believe has continued another four months of ~20% revenue growth.”

Acquisition not a Xero-sum game

The attractive acquisition that Credit Suisse was referring to is workforce management platform, Planday. Xero paid €183.5 million for the business earlier this month.

“The acquisition provides a complementary offering across staff scheduling, time tracking, vacation management, payroll and reporting, and expands the TAM, which we estimate at >NZ$2.5bn across XRO’s existing markets,” added Credit Suisse.

This highlights an interesting question. Will other ASX tech darlings use their still high-flying share price to make acquisitions in order to justify their current valuations?

It’s a trend worth keeping a close eye on as most takeovers destroy value for the bidder.

Operating conditions may be better than expected

But the acquisition isn’t the only reason for Credit Suisse’s bullish view on the shares.

Industry trends, business closures and incorporations in key markets and upbeat commentary from key competitor Quickbooks are leading the broker to believe that Xero’s operating conditions are better than what some are expecting.

Investors won’t have to wait long to find out if Credit Suisse is right. The company will release its earnings results on 13 May and that could be a catalyst for the Xero share price.

How much is the Xero share price worth?

“We forecast group sales growth roughly in-line with the first half, which we believe is enough to support the share price at current levels,” said the broker.

“Looking forward, we believe a global rollout of Planday (likely in order of existing user base size) will be viewed positively although note localisation poses complexity and will require time, and competition is increasing in the space.”

Credit Suisse lifted its 12-month price target on the Xero share price to $136 from $119 a share.

More reading

• Afterpay and Zip were among the most traded ASX shares last week
• How to counter the ASX 200’s Achilles heel
• ASX 200 up 0.4%: Bank shares lower, Xero shares upgraded
• ASX 200 crash anniversary: The most important lesson we’ve learned
• ASX 200 crash anniversary: 5 of the best performing shares of the last 12 months

Brendon Lau has no position in any of the stocks mentioned. Connect with me on Twitter @brenlau.

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Appen Ltd and WiseTech Global. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Altium. The Motley Fool Australia owns shares of AFTERPAY T FPO, Altium, and Xero. 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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