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It’s was another strong day for the Vulcan Energy Resources Ltd (ASX: VUL) share price, continuing to rebound from its recent lows.

Shareholders will be pleased that the clean lithium developer’s shares moved further away from its 52-week low of $4.76 reached in late June.

At market close on Tuesday, Vulcan Energy shares finished up 5.23% to $8.85 apiece – still some way off its year-to-date high of $11.18 on 4 January.

Let’s take a look at what is driving these recent gains.

Vulcan Energy shares stage a mini comeback. But can it last?

Investors are bidding up the Vulcan Energy share price as the sector recovers from the fallout induced by Goldman Sachs in June.

It appears that the market has shrugged off the bearish news and is focused ahead on Wall Street’s earnings season.

Interestingly, the major averages have rallied this month on the back of better-than-expected results.

This has driven the Dow Jones higher along with the ASX following closely behind.

For context, the S&P/ASX 200 Materials (ASX: XMJ) sector touched a daily high of 16,184 points, up 1% before slowly retracing today.

With Vulcan Energy shares accelerating, it’s worth pointing out that its relative strength index (RSI) is currently around 72.

The RSI is a momentum oscillator that is used to assess the strength or weakness of a share price. Normal levels range between 30 and 70, as anything outside reveals if the share price is attractive to buy, or expensive.

In this case, Vulcan Energy shares are showing signs of being overbought and a pullback may happen sometime soon.

Vulcan Energy hare price snapshot

Bearish sentiment mixed with volatility has led the Vulcan Energy share price to fall 35% over the last 12 months.

The company’s shares reached an all-time high of $16.65 in September 2021, before moving on a downward channel.

Whether it can regain these highs largely depends on the price of lithium as well as Vulcan Energy’s progression on its Zero Carbon Lithium Project.

Based on today’s price, the company commands a market capitalisation of around $1.27 billion.

The post Why did the Vulcan Energy share price fire 5% higher today? appeared first on The Motley Fool Australia.

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More reading

• Lithium alert: Broker says Vulcan share price could rise by 170%
• Charging up: Vulcan share price lifts 3% as cash balance surges
• Why Myer, South32, Vulcan, and Zip shares are racing higher
• Why is the Vulcan share price charging higher today?
• Why is the Vulcan Energy share price leaping 7% on Thursday?

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

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The share prices of major energy companies inside the S&P/ASX 200 Index (ASX: XJO) were various shares of green and red on Tuesday. This followed the posting of a bearish outlook for the price of oil from one broker.

What happened?

According to Bloomberg, the indexes for WTI crude oil and Brent crude are down 0.65% and 0.61%, respectively. WTI crude sells for US$90.17 per barrel, and Brent crude sells for US$96.06 per barrel.

Today, The Australian reported on the analysis provided by Citi for the reduced demand for oil. Citi stated that the United States’ demand for oil is heading towards 20-year lows. This is amidst a lack of a US ‘driving season’ due to higher petrol prices, with more people choosing to stay home.

Furthermore, analysts at Citi said that a recession could lead to a further decline in the demand for commodities.

Let’s examine how Australia’s main energy companies reacted to this bearish outlook.

How did ASX 200 energy players hold up today?

Firstly, let’s take a look at the ASX 200 energy shares that managed to finish in the green. Substantial gains across the oil-exposed sector were sparse, with Viva Energy Group Ltd (ASX: VEA) being one of few to post a positive return of more than 3%.

Meanwhile, Woodside Energy Group Ltd (ASX: WDS) was one other big oil and gas name that conjured up a green day. The energy giant finished 0.47% higher, trading near the top end of its 52-week range. Shares in the company are now sitting at $31.90 apiece.

On the flip side, the valuation of Santos Ltd (ASX: STO) took a small hit with the share price contracting 0.28%.

The biggest loser today out of the three was Ampol Ltd (ASX: ALD), recording a loss of 0.96%.
Overall, the S&P/ASX 200 Energy index finished up in the green with a slight gain of 0.13%.

The post ASX 200 energy shares mixed amid bearish oil price outlook appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Tuesday
• 2 little-to-no-debt ASX 200 shares to buy in a downturn: fundie
• Leading brokers name 3 ASX shares to buy today
• Why is the Woodside share price having such a strong start to the week?
• 5 things to watch on the ASX 200 on Monday

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

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The Charter Hall Long WALE REIT (ASX: CLW) share price climbed just one cent higher today despite the company releasing a sound set of financial results for FY22.

Shares in the real estate investment trust (REIT) closed at $4.39 apiece on Tuesday, 0.69% higher.

The Charter Hall Long WALE REIT invests in Australasian real estate assets predominantly leased to corporate and government tenants on long-term leases. 

Let’s take a look at the company’s latest results.

What did the company report? 

Here is a quick snapshot of the key financial highlights: 

• Operating earnings lifted by 4.5% on FY21, to $207 million
• Statutory profit of $911 million
• The portfolio of real estate assets grew from $5.6 billion to $7.1 billion
• A net $670 million appreciation in the value of assets (minus capital expenditure and amortised incentives)
• Balance sheet gearing at 29.9%, in line with the target range of 25% to 35%

Operating cash flows improved from $162 million to $187 million.

I believe operating cash flow is one of the key metrics in assessing the health or performance of the Charter Hall REIT. 

The statutory profit figure seems impressive but investors should be mindful it includes unrealised gains in the value of the underlying properties. 

The primary sources of revenue include rental income and proceeds from the sale of property assets. So, the performance of the Charter Hall REIT comes down to the quality of its property assets. 

As outlined in the latest financial report, the Charter Hall REIT is leased by the following top five major tenants. 

• Federal and State government (18%)
• Endeavour Group Limited (ASX: EDV) (18%)
• Telstra Corporation Limited (ASX: TLS) (13%)
• BHP Group Limited (ASX: BHP) (10%)
• Inghams Group Limited (ASX: ING) (5%)

Portfolio expansion 

The Charter Hall REIT ship added $1.5 billion of assets. Half of this was from its 50% stake in the ALE Property Group. 

This 50% interest was valued at $814 million, invested in partnership with Hostplus. The ALE Property Group portfolio comprises 78 pub properties, including 74 bottle shops in metropolitan locations and along the New South Wales east coast.

The pubs and bottle shops are leased to Endeavour Group. 

The other major acquisition was an industrial facility constructed in 2018. It’s located in Sydney’s industrial area of Wetherill Park. 

This facility is leased to Cleanaway and ResourceCo, which are distribution centres. 

Management likes what they see

Charter Hall REIT fund manager Avi Anger said: 

FY22 has seen CLW continue to grow in a measured way, enhancing portfolio quality and improving asset and tenant diversification. During the year we successfully completed the acquisition of the ALE Property Group in partnership with Hostplus. We also completed three high-quality Industrial & Logistics acquisitions, two of which were secured off-market.

In such uncertain and challenging macroeconomic conditions, building a resilient and diversified investment portfolio is important. 

Further, Anger advised, “Looking forward, 49% of CLW’s leases are inflation-linked, providing a significant opportunity for strong rental growth in the year ahead.” This provides an inflation hedge. 

Future outlook

The company is guiding operating earnings per share (EPS) of 28 cents and a distribution per security of 28 cents. 

On the basis of today’s closing share price, this equates to a 6.9% distribution yield. 

Charter Hall Long WALE REIT share price snapshot

The Charter Hall Long WALE REIT share price has fallen 14% across the last 12 months. In the same period, the S&P/ASX 200 Index (ASX: XJO) fell by 7%. 

The company has a current market capitalisation of $3.17 billion. 

Landlords faced a torrid time during the pandemic but the outlook is much better now. People are travelling again and, importantly for this business, going out to pubs. 

Such a shift in behaviour bodes well for the pubs and liquor stores the company acquired this financial year. 

Industrial property assets continue to prosper on the back of the rise in e-commerce. However, commercial offices could face structural headwinds due to the rise in demand for remote work arrangements. 

Overall, I think the Charter Hall REIT provides a diversified portfolio of real estate estates that could surprise over the long term. 

The post <strong>Why the Charter Hall Long WALE REIT share price isn’t rocking the boat</strong> appeared first on The Motley Fool Australia.

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More reading

• Top ASX shares to buy in August 2022
• Here are 2 ASX dividend shares to buy right now according to experts
• Top ASX dividend shares to buy in July 2022
• 2 ASX dividend shares I’d buy with $2,000 right now

Motley Fool contributor Raymond Jang has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Newcrest Mining Ltd (ASX: NCM) share price was rangebound today and finished trading less than 1% in the green at $19.68.

Newcrest shares have curled up from 52-week lows on 27 July. They have begun to set new high points since, as seen in the chart below.

Is Newcrest a buy right now?

Those investors doing some bottom fishing in the market would have no doubt stumbled across Newcrest in their searches.

It has been punished in 2022 whilst other commodity giants – particularly in energy – have roared to multi-year highs.

However, Newcrest is a gold story, make no mistake about it. And with gold’s pressures of late, the ASX miner’s share price has followed suit.

If we extend the chart analysis out a bit further to August 2020, we can see the relationship between both on full display, with some variance in the distribution at various points.

Hence, to understand Newcrest’s share price we must therefore have an understanding of the gold price as well.

Gold prices spiked to a 1-month high on Monday, following a pullback in the US dollar and US Treasury yields. The yellow metal now trades at US$1,786 per troy ounce.

Investors are looking to upcoming US inflation data as a signal of where to position in the gold markets, Reuters reports.

“Any surprise softening in the U.S. inflation number could well be the catalyst for a tremendous surge in the gold price,” said Clifford Bennett of ACY Securities, cited by Reuters.

On last check, using the federal funds futures market, investors have priced an approximate 65% chance of another 75 basis point rate hike at the US Federal Reserve’s September meeting.

Hence, the question becomes if Newcrest presents compelling value, or if we’d be left “catching the falling knife” as the saying goes.

Meanwhile, brokers don’t appear to think there’s any knife in free fall in the first place. In fact, since July, there’s even been 1 broker rotate from a sell to a strong buy on Newcrest.

Now 8 out of 17 analysts covering the share reckon it’s a buy right now, up from 7 a month ago, according to Refinitiv Eikon data. The remaining coverage says Newcrest is a hold.

The consensus price target from this list is $25.58, suggesting around 30% return potential if the brokers have it correct.

Newcrest shares are down 22% in the red these past 12 months.

The post Down 20% so far in 2022, is the Newcrest share price a bargain buy or a falling knife? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Monday
• 5 things to watch on the ASX 200 on Friday
• Why Appen, ASX, Credit Corp, and Newcrest shares are dropping today
• How are ASX 200 gold shares reacting to the RBA rate hike?
• The Newcrest share price tumbled 8% in July. What went wrong?

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

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Allkem Ltd (ASX: AKE) shares marched higher today. Allkem shares closed the session on Tuesday at $12.05, up 0.42%.

The S&P/ASX 200 Index (ASX: XJO) lithium share is among the biggest and lowest-cost lithium producers in the world. As such, it’s been a big beneficiary of soaring lithium prices.

Prices for the lightweight conductive metal remain up by more than 400% since this time last year amid strong growth in demand for critical battery materials as global electric vehicle (EV) production continues to surge.

Which brings us to the latest development out of the United States that could fuel even stronger demand for EVs, and offer another tailwind for Allkem shares.

United States spending bill could energise ASX lithium shares

Yesterday (overnight Aussie time) the US Senate passed a US$437 billion bill focused on healthcare and climate change.

Around US$347 billion is earmarked for climate and energy spending.

Of most relevance to Allkem shares, the bill ends the per-manufacturer limits on the US$7,500 tax credit for the purchase of new EVs that was previously in place.

Once it passes the House and is signed off by President Joe Biden, as is widely expected, the bill will take effect in January and run for a decade.

As Electrek reported, the EV credit previously had a cap of 200,000 cars per manufacturer. Tesla Inc, General Motors Company and Toyota had already exceeded the cap, with other EV manufacturers soon to follow.

Allkem shareholders may be interested in the part of the bill that requires “critical minerals” for EV batteries to either be sourced within the US or from a nation with a free trade agreement with the US.

That excludes China, which has long been the world’s major supplier of critical battery elements. And it could open the door for more lithium and other mineral imports from Australian miners.

How have Allkem shares been performing?

Allkem shares are up 29% over the past full year. This compares to a 12-month loss of 7% posted by the ASX 200.

Longer-term, the Allkem share price has leapt 294% over the past five years.

The post Could this new development boost Allkem shares heading into 2023? appeared first on The Motley Fool Australia.

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More reading

• Could this development further energise ASX lithium shares in FY23?
• 2 excellent ASX growth shares to buy – experts
• Here are the top 10 ASX 200 shares today
• Why is the Allkem share price leaping 5% on Monday?
• Broker says Allkem share price can rise 60% from here

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

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The Electro Optic Systems Holdings Limited (ASX: EOS) share price has surged so far this trading week.

Shares in the defence and space technology company closed today’s session at $1.105 each, a gain of 10.5% on the day. Yesterday, Electro Optic shares gained 5.26%.

Let’s look into why investors are buying the stock this week.

What happened?

Electro Optic System’s subsidiary Spacelink announced that it had entered a cooperative research and development agreement with the US Army Space and Missile Defense Command Technical Centre on Monday.

The terms of the agreement include cooperation in developing alternative space communications pathways for Spacelink’s satellite relay system. 

This agreement will allow SpaceLink to gain a deeper insight into the US Army’s concept of operations and give the army the data it needs to support its interagency requirements.

Spacelink CEO Dave Bittinger said:

We are honored to work with USASMDC-TC to assure that our development efforts meet the Army’s needs. Sharing facilities, intellectual property, and expertise will elevate solutions for both the warfighter and industry, ultimately enhancing national security and U.S. dominance in space.

Electro Optic Systems share price snapshot

Even with this week’s rise, Electro Optic Systems shares are down almost 54% year to date and 74% over the past 12 months.

The company’s market capitalisation is currently $177 million.

The post Why has the Electro Optic Systems share price soared 16% in 2 days? appeared first on The Motley Fool Australia.

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More reading

• Top ASX shares to buy in August 2022
• Electro Optic Systems share price dips amid shock CEO resignation

Motley Fool contributor Matthew Farley has positions in Electro Optic Systems Holdings Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Electro Optic Systems Holdings Limited. The Motley Fool Australia has recommended Electro Optic Systems Holdings Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The All Ordinaries Index (ASX: XAO) ended up having a pretty decent day of trading on Tuesday.

By the market close, the All Ords had added a robust 0.30% to reach just over 7,278 points. But one ASX share fared far better. That was the Pure Hydrogen Corporation (ASX: PH2) share price.

Pure hydrogen shares had a cracking day today. The clean energy company ended up closing at 34.5 cents a share, up a rather extraordinary 21% from the 28 cents the company closed at yesterday.

Not only that, but Pure Hydrogen rose as high as 39 cents in intraday trading – a rise worth almost 40%.

So what might have caused this stellar share price performance?

Well, the answer is sadly unclear. There hasn’t been any news or announcements at all out of this company today. Or indeed this week.

But a few other things happened on the markets today which could have spilled over into the Pure Hydrogen share price.

Why did the Pure Hydrogen share price rocket 21% today?

The first is the news out of AGL Energy Ltd (ASX: AGL) and Fortescue Metals Group Limited (ASX: FMG). As my Fool colleague Tristan covered earlier today, these two ASX companies have joined forces in building a hydrogen plant in New South Wales.

Today we got the news that “two of Japan’s largest energy companies, Inpex Corporation and Osaka Gas have joined an expanded feasibility study that is looking at creating a green hydrogen and ammonia hub at AGL’s Hunter Energy Hub”.

This interest in Australian hydrogen is hardly bad news for Pure Hydrogen.

Another factor to consider is the renewed interest in lithium stocks on the ASX this week. Lithium stocks have had a breathtaking run over the past few trading days, despite any real catalysts to speak of.

Take the Lake Resources N.L. (ASX: LKE) share price. It’s gone from 93 cents last Friday to $1.24 as of today’s close – a gain worth almost 33% in just two days.

We’ve seen similar (if not quite as dramatic) moves from other lithium shares like Core Lithium Ltd (ASX: CXO) and Liontown Resources Limited (ASX: LTR). Hydrogen and lithium don’t have too much in common apart from a potential role in a cleaner energy future.

But it’s very possible that positive sentiment from the lithium sector has spilled over into the Pure hydrogen share price today regardless.

Whatever the reasons for Pure Hydrogen’s stellar day, it will no doubt be welcomed by investors.

The post Why did the Pure Hydrogen share price pop 21% today? appeared first on The Motley Fool Australia.

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More reading

• Could this development further energise ASX lithium shares in FY23?
• Why is the Sayona Mining share price surging 15% on Monday?
• These 3 ASX tech shares had a cracking day on the ASX today
• The Openpay share price has cratered 40% in 3 days. What’s going on?
• Guess which ASX All Ordinaries share has rocketed 40% in 2 days?

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

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The Australian Foundation Investment Co Ltd (ASX: AFI) share price, or AFIC for short, didn’t have the best day today. AFIC shares finished at market close trading down by 0.24% at $8.15. That’s in stark contrast to the S&P/ASX 200 Index (ASX: XJO), which finished in the green at 0.13%.

AFIC is a listed investment company (LIC) and one of the oldest LICs on the ASX at that. It first started trading way back in 1928.

Like all LICs, AFIC is not a typical company that sells goods or services. It instead functions more like a managed fund, investing its capital into other shares and assets on behalf of its investors.

LICs were around before anyone had ever heard of an exchange-traded fund (ETF). Today, LICs like AFIC compete with ETFs for the dollars of the ‘passive investor’. Both vehicles can offer a hands off investing approach to retail investors.

ETFs, especially index funds, have surged in popularity over the past decade or two. Investors love the low fees that ETFs can offer, as well as the ‘if you can’t beat it, join it’ approach an index fund offers investors.

An index fund like the iShares Core S&P/ASX 200 ETF (ASX: IOZ) will always deliver the returns of the S&P/ASX 200 Index (ASX: XJO). As such, investors who choose this ETF never have to worry about ‘underperforming the market’ since this investment is, for all intents and purposes, the market.

AFIC doesn’t have this luxury. Since it doesn’t just blindly track the ASX 200 index, it will always be put up against the returns of indexes like the ASX 200.

Why I would choose AFIC over an ASX 200 ETF today

But I think AFIC is still a superior choice to an ASX 200 ETF today. It’s not because of fees though. Yes, AFIC ‘s current management fee of 0.16% per annum is slightly higher than many ASX index funds, For example, IOZ charges a fee of 0.09% per annum.

No, it comes down to sheer performance.

As of 31 July, IOZ units have returned an average of 7.89% per annum over the past five years, and 9.19% per annum over the past ten. Those metrics include dividend distribution returns.

In contrast, AFIC shares have returned an average of 13% per annum over the past five years (to 30 June 2022), and 13.1% per annum over the past ten. If we take the LIC’s net assets per share growth, rather than share price returns, these figures are 8.4% per annum and 10.5% per annum respectively. These returns also reflect dividends.

So as you can see, in both cases, AFIC’s returns come in comfortably above those of an ASX 200 index fund like IOZ.

As such, I think AFIC is a superior investment choice for a passive investor, and I would prefer to use AFIC rather than an index ETF for this purpose today.

The post Why I prefer AFIC shares to an ASX 200 index fund today appeared first on The Motley Fool Australia.

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More reading

• Keen to bag the next AFIC dividend? Read this
• Is the VAS ETF providing a bigger dividend yield than other ASX 200 index funds?
• Why did the AFIC share price have such a top run in July?
• Why is the AFIC share price outperforming on Monday?

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

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The S&P/ASX 200 Index (ASX: XJO) dipped in and out of the red over the course of Tuesday before ultimately closing higher, helped along by tech shares. The index was 0.13% higher at 7,029.8 points at the market close.

The S&P/ASX 200 Information Technology Index (ASX: XIJ) was among the top performing sectors today, lifting 1.7%. It was led by the Megaport Ltd (ASX: MP1) share price after the company released its full-year earnings this morning.

S&P/ASX 200 Materials shares also closed in the green after major metals rose overnight. While base metals put out a mixed performance, both gold and iron ore rose.

Gold futures lifted 0.8% to US$1,805.20 an ounce while iron ore futures increased 1.7% to US$110.95 a tonne.

But it was a worse day for the S&P/ASX 200 Financials Index (ASX: XFJ). It plunged 0.8% on Tuesday, with the National Australia Bank Ltd (ASX: NAB) share price coming in as its worst performer. The bank released its quarterly earnings earlier today.

All in all, eight of the ASX 200’s 11 sectors were in the green when the market closed today.

But which share outperformed all others to take out today’s top spot? Let’s take a look.

Top 10 ASX 200 shares countdown

And today’s top-performing ASX 200 share was none other than lithium favourite Lake Resources NL (ASX: LKE). Find out what the company’s been up to lately here.

Today’s biggest gains were made by these ASX shares:

ASX-listed company	Share price	Price change
Lake Resources NL (ASX: LKE)	$1.24	15.35%
Megaport Ltd (ASX: MP1)	$9.00	10.02%
Domain Holdings Australia Ltd (ASX: DHG)	$4.01	8.97%
REA Group Ltd (ASX: REA)	$132.33	6.69%
Nickel Industries Ltd (ASX: NIC)	$1.145	6.02%
News Corporation (ASX: NWS)	$25.70	5.89%
Coronado Global Resources Ltd (ASX: CRN)	$1.60	5.61%
Liontown Resources Limited (ASX: LTR)	$1.695	5.28%
Breville Group Ltd (ASX: BRG)	$23.04	4.21%
Xero Limited (ASX: XRO)	$97.47	3.69%

Our top 10 ASX 200 shares countdown is a recurring end-of-day summary to let you know which companies were making big moves on the day. Check in at Fool.com.au after the weekday market closes to see which stocks make the countdown.

The post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.

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More reading

• Why Coronado Global, Lake, Megaport, and REA shares are storming higher
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• In this most volatile of years, the ASX 200 is within shouting distance of turning positive
• Could this development further energise ASX lithium shares in FY23?
• Here are 2 reasons why I like the Endeavour share price today

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended MEGAPORT FPO and Xero. The Motley Fool Australia has positions in and has recommended Xero. The Motley Fool Australia has recommended MEGAPORT FPO and REA Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Much of the ASX water cooler talk so far this week has been dominated by copper.

Yesterday, we learned that the mining giant BHP Group Ltd (ASX: BHP) had put in a takeover bid for OZ Minerals Limited (ASX: OZL).

BHP put forward an offer of $25 per share in cash for the company. This was swiftly rejected on valuation grounds.

OZ Minerals is one of the largest copper miners listed on the ASX. It also produces other metals from its mines, including gold and silver.

The fact that BHP is eyeing it off is an interesting insight into the red metal’s appeal and why companies like BHP are desperate to increase their exposure to it.

What is copper?

Copper is an elemental metal. It’s extremely useful for its electrical and heat conductivity and is relatively abundant. A number of metals efficiently conduct electricity, including gold and silver. But copper is in the sweet spot in terms of cost.

It is a lot cheaper to make electrical wiring out of copper than say, gold or silver. And copper is a far better conductor of electricity than other cheaper base metals like steel or aluminium. As such, almost every electronic device in the world uses this metal in some shape or form. 

According to reporting in the Australian Financial Review (AFR), the global investment bank Goldman Sachs is bullish on copper.

Goldman is predicting that just like oil has been in the past, “copper will be at the centre of global competition between Western countries and the emerging autocratic bloc”, as global demand doubles by 2050.

The new oil?

Traditional cars and other road vehicles use very little copper compared to other materials like steel and aluminium.

But for next-generation vehicles that are powered by electric motors driven by rechargeable batteries, rather than burning petrol or diesel, copper is far more applicable. According to the AFR, electric vehicles require four to six times the amount of copper found in traditional internal combustion vehicles.

Not only that, but copper is also a vital ingredient in renewable energy infrastructure like wind farms and solar plants. So this is a metal that is going to play a massive role in the transition to a carbon-free world. That might be why Goldman Sachs is calling copper the “new oil”.

Goldman is predicting a global supply shortage in copper in the years ahead, which will boost the prices that the metal can command.

So it’s perhaps no wonder that BHP is trying to shore up its own operations by buying out OZ Minerals. But perhaps investors should get used to hearing about this red metal. It will certainly be hard to escape if copper does indeed become the new oil.

The post What’s so good about copper anyway? appeared first on The Motley Fool Australia.

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More reading

• How are ASX copper shares performing after Monday’s surge?
• What could another acquisition mean for BHP shares?
• OZ Minerals ‘completely in play’: Broker on BHP takeover bid
• 5 things to watch on the ASX 200 on Tuesday
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs. 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 Scott Phillips.

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