Tag: Motley Fool

The APA Group (ASX: APA) share price may be sliding on Monday, but hopes are likely lifting among ASX hydrogen fans.

The S&P/ASX 200 Index (ASX: XJO) energy infrastructure company has agreed to develop a major pipeline. And it’s making sure the infrastructure can be used to blend hydrogen.

But news of the project — and the announcement of the sale of the company’s Orbost Gas Processing Plant — hasn’t been enough to bolster the company’s stock today.

At the time of writing, the APA share price is $11.22, 0.36% lower than its previous close.

Let’s take a closer look at the latest from the increasingly hydrogen-focused company.

APA share price slumps despite $264m project

The APA share price is lower on Monday amid the company releasing significant news to the market.

APA announced an agreement with Snowy Hydro that will see it develop a 20-kilometre hydrogen-blend ready gas pipeline and 70 terajoule gas storage facility.

The pipeline – named Kurri Kurri Lateral – will run between the Sydney to Newcastle Pipeline and the Hunter Power Project. The gas storage facility will service the Hunter Power Project.

The project’s construction cost is estimated to be around $264 million. It’s expected to be finished by late 2023.

It’s not the first time the company has looked towards blending and transporting hydrogen in its gas pipelines.

APA has previously found sections of existing gas pipelines in Western Australia can be used to transport hydrogen. It has also proposed to test if Victoria’s high-pressure gas transmission system can be used to blend the low-emissions energy commodity.

The company also announced it’s agreed to sell its Orbost Gas Processing Plant to Cooper Energy Ltd (ASX: COE) this afternoon.

The sale will bring in between $270 million and $330 million. The buyer will pay in four instalments within 36 months of completion – expected to be in late July.

According to APA, the book value of the plant is $236 million. The sale’s proceeds will likely exceed both the book value and the plant’s remaining forecast capital expenditure.

Proceeds will be put towards APA’s organic growth pipeline and, potentially, towards repaying debt.

The post Is APA evolving into an ASX-listed hydrogen share on this $260m news? appeared first on The Motley Fool Australia.

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More reading

• 2 ASX 200 infrastructure shares ‘ripe for takeout’: expert
• Why is the APA share price lifting on Wednesday?

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 no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended APA Group. 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 Rio Tinto Limited (ASX: RIO) share price has started the week deep in the red.

In afternoon trade, the mining giant’s shares are down 4.5% to $102.13.

Why is the Rio Tinto share price falling?

Investors have been selling down the Rio Tinto share price on Monday following a pullback in commodity prices.

For example, according to Bloomberg, a host of base metals dropped on Friday night. This includes an almost 7% decline for the iron ore price and a 2.5% decline for the copper price.

These declines appear to have been sparked by fears that rising rates could lead to a global recession and reduce demand for base metals.

This news isn’t just impacting Rio Tinto. Fellow miners BHP Group Ltd (ASX: BHP) and Fortescue Metals Group Limited (ASX: FMG) have also taken a tumble today. They are down 5% and 7%, respectively, at the time of writing.

All in all, this has led to the S&P/ASX 200 Resources index losing a disappointing 4.6% of its value today. This compares unfavourably to a 0.4% decline by the benchmark ASX 200 index.

All eyes will be on iron ore and other base metals when the London Metal Exchange opens later today.

The post Rio Tinto share price sinks on iron ore weakness appeared first on The Motley Fool Australia.

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More reading

• Why are ASX 200 iron ore shares getting hammered on Monday?
• The lithium and iron ore ASX shares that I like right now: expert
• Why is the Rio Tinto share price diving 5% on Friday?
• ‘Force them to give us a discount’: ASX 200 mining shares lift despite China’s latest move to curb iron ore prices
• ASX 200 midday update: ResMed’s US$1bn acquisition, tech shares continue to sink

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

When the stock market is soaring, it’s easy to get into the buying mood. That’s because we actually see investments bearing fruit right away. Even if some share prices are high, the sheer momentum of the whole market offers us confidence that those prices could climb even higher.

But when the stock market stumbles, our eagerness to get in on the action may disappear — and quickly. All at once we ask ourselves how long the downturn will last. We even might doubt the recovery of certain stocks that, in better market conditions, seemed like sure winners.

This scenario is probably playing out for a lot of us right now. The S&P 500 Index slipped into a bear market this week, inflation has been galloping higher, and interest rates are on the rise around the world. Now the question is: Should you really buy stocks right now? Or is it best to wait a while longer? Let’s find out.

The advantages of buying now

First, let’s talk about the advantages of buying stocks now. A huge one is valuation. Many solid stocks have dropped to incredibly low levels. I’m talking bargain basement.

For example, high-growth electric-vehicle maker Tesla (NASDAQ: TSLA) is trading at 56 times forward earnings estimates — down from more than 160 just six months ago. That’s as measures like return on invested capital and free cash flow are climbing.

TSLA PE Ratio (Forward) data by YCharts.

Another example is coronavirus vaccine giant Moderna (NASDAQ: MRNA). The company continues to bring in billions in revenue and profit, and today it’s trading at only 4.6 times forward earnings estimates. That’s down from more than 16 a year ago.

There are plenty of other examples across industries. Today, those stocks that were trading at much higher valuations a short time ago now are available at very reasonable prices.

Another reason to buy now is you avoid the risk of missing out on the eventual rebound. History tells us markets always bounce back. It’s just a question of time. So your favorite players could rise at any moment.

Now let’s talk about the one big disadvantage of buying stocks today — and that’s the risk that the market may fall even more. You might be able to get that stock you’re interested in for an even lower valuation.

And what if stocks remain at this undervalued level for a while? Then you’ll really have to wait to benefit from your investment. This is the reason some investors are hesitating to buy stocks right now.

The importance of long-term investing

Considering these points, what should you do? First, it’s important to note that you only should buy stocks right now if you plan on investing for the long term. By this, I mean at least five years.

This doesn’t mean the downturn will last this long. This is the time horizon I always favor. That’s because it gives a company time to recover — if it happens to go through challenging times such as a period of high inflation. And it gives a company time to grow — no matter what the economic situation.

As always, it’s important to invest what you can afford to invest. That means you should also set aside funds for use in an emergency — so you don’t have to dip into your investments.

As for buying stocks, here’s what I say: When you feel that a company’s business is strong, future prospects are bright, and the price is fair, it’s probably time to get in on that story. So right now could be the perfect time to buy certain stocks.

As mentioned above, share prices could decline further. It’s nearly impossible to grab a stock at its lowest price. But if you invest for the long term, that won’t really matter. You’ll still benefit from your favorite stock’s recovery — and growth in the years to come.

All of this means we shouldn’t fear bear markets. And any day can be the right moment to invest.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Should you really buy stocks now or wait a while longer? appeared first on The Motley Fool Australia.

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More reading

• Down 45%, here’s 1 reason to buy Tesla’s dip and 2 reasons to stay away
• Why Tesla stock sold off 7% today
• Why Tesla stock jumped 5% today
• Why Tesla shares were rising today
• Tesla Looks to Reinforce Its Battery Supply Chain: Why That Matters

Adria Cimino has positions in Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Moderna Inc. 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.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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It’s been a pretty bleak day for ASX shares so far this Monday. As it currently stands, the S&P/ASX 200 Index (ASX: XJO) has lost 0.54% of its value and is trading around the 6,450 point mark. But no one seems to have told the Temple & Webster Group Ltd (ASX: TPW) share price.

Temple & Webster shares are having an absolute cracker today. The online furniture retailer has exploded in value, rising a pleasing 11.25% to $3.56 a share at the time of writing.

Saying that, this move doesn’t exactly erase the awful share price performance Temple & Webster has endured in recent weeks and months. Even after this dramatic move higher, the company remains down by 1.11% over the past five trading days and a nasty 20% over the past month.

Temple & Webster is also down a depressing 67.1% in 2022 thus far and a nasty 76.4% from the all-time high of $15 a share that we saw back in September last year.

But we digress. So what is behind this company’s explosive performance this Monday?

Why are Temple & Webster shares shooting the moon on Monday?

Well, we can’t be sure. There haven’t been any news or announcements out from Temple & Webster today. Or indeed, in June thus far.

But, as my Fool colleague Brooke noted this morning, ASX online retail shares seem to be collectively having a very positive day. Alongside Temple & Webster shares rising by 11%, we also see Kogan.com Ltd (ASX: KGN) shares gain an impressive 6% or so. City Chic Collective Ltd (ASX: CCX) shares have gained around 5%, while Accent Group Ltd (ASX: AX1) shares are up 3.35%.

So perhaps this is a reaction to the savage sell-off we saw last week. These kinds of companies saw some of the worst of the ASX’s falls last week, with Temple & Webster even hitting a new 52-week low of $3.17 on Friday.

Perhaps value investors have decided in hindsight that these falls were too extreme and have decided to jump back in today.

Whatever the cause of today’s market-bucking moves for online retail shares like Temple & Webster, it will no doubt be welcomed by investors.

At the current Temple & Webster share price, this ASX retailer has a market capitalisation of $429 million.

The post Why is the Temple & Webster share price surging 11% on Monday? appeared first on The Motley Fool Australia.

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More reading

• Why are ASX 200 travel shares lifting off on Monday?
• Why did the BrainChip share price spike 7% this morning?
• What’s with the Core Lithium share price on Monday?
• ASX 200 midday update: PointsBet jumps, energy shares sink, Vicinity’s upgrade
• Transurban share price jumps as dividends hit pre-pandemic highs

Motley Fool contributor Sebastian Bowen has positions in Kogan.com ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Kogan.com ltd and Temple & Webster Group Ltd. The Motley Fool Australia has positions in and has recommended Kogan.com ltd. The Motley Fool Australia has recommended Accent Group and Temple & Webster Group Ltd. 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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When shares are released from escrow it’s usually accompanied by a fall in the share price. In a way, the event is similar to other forms of dilutive action. That’s why one S&P/ASX 200 Index (ASX: XJO) constituent is gaining attention in the anticipation of a $7 billion release day.

After being pent up for more than two years, 1.186 billion shares in TPG Telecom Ltd (ASX: TPG) will be open for trade again on 13 July 2022.

The telecommunications giant has received an underwhelming reception, to say the least, since merging with Vodafone Hutchison. Since re-listing as the merged entity, the TPG share price has tumbled 33%.

Now, investors are nervously awaiting what another $7 billion worth of shares in this ASX 200 company might mean.

Two sides of the same coin

For some background, as part of the Implementation of Scheme of Arrangement, TPG and Vodafone Hutchison agreed upon a voluntary share escrow. This meant major shareholders, such as TPG founder David Teoh, would not be able to sell down their holdings for more than two years.

Typically, voluntary escrow gives the market some reassurance that major shareholders won’t cash out immediately after the finalisation of a deal. However, this restriction often only prolongs the inevitable selling that takes place.

Adding to the worry, investors have already seen firsthand how this ASX 200 share reacts when Teoh decides to sell. On 3 December 2021, the former TPG chair liquidated 20% of his ownership in the company, which equated to ~54.19 million shares. In response, the TPG share price plunged 6% as investors scrambled.

While 34 times the number of shares sold by Teoh in December will be readily available for sale in July, not all onlookers are focused on the downside. For instance, Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) managing director Todd Barlow has said:

There is currently an issue with the perceived overhang of shares that could come to the market. The conundrum is that the very fact these shares are coming out of escrow is depressing the share price, and because it’s depressing the shares, they won’t actually come to the market because the price isn’t right to sell.

Furthermore, Barlow highlighted that the increased free float would make TPG eligible for inclusion in indices such as the S&P/ASX 100 Index (ASX: XTO).

What does this ASX 200 company’s register look like?

When discussing the potential for share sales, it is important to understand the composition of shareholders. Out of the approximately 1.9 billion shares on issue, the top 25 shareholders own ~60%.

Notably, Vodafone Hutchison and David Teoh are the two largest shareholders — holding 27.8% and 17.2% respectively. Both of these parties will be able to sell a substantial portion of their holdings after 13 July, however, that doesn’t mean they will.

The only other significant shareholder on the register is the Australian investment house, Washington Soul Patts.

The post Guess which ASX 200 company is about to see $7 billion of shares released from escrow appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX shares today
• 3 ASX 200 shares smashing the market today
• Why is the Telstra share price dialling higher today?
• 4 great value ASX shares we just bought: expert

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended TPG Telecom 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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Travel shares on the S&P/ASX 200 Index (ASX: XJO) are ascending today amid strong travel demand.

Flight Centre Travel Group Ltd (ASX: FLT), Webjet Limited (ASX: WEB), and Qantas Airways Limited (ASX: QAN) shares are all in the green today.

Let’s take a look at what is happening to ASX 200 travel shares on Monday.

Travel shares lift off

At the time of writing, Webjet shares are up 2.82%, Qantas shares are 2.06% higher while Flight Centre shares have climbed 2.24% today.

New data from National Australia Bank released today shows overseas travel spending is now higher than prior to the COVID-19 pandemic.

The insights showed NAB customers spent 600% more on overseas travel between 1 January and 1 May this year compared to the same period last year. In May 2022 alone, NAB customers spent $46 million on international flights, up from $43 million in 2019.

Commenting on the trend, Everyday banking executive Paul Riley said:

We’ve seen more and more holiday goals created as travel opens up. About 25% of all goals were holiday-related in May 2022, compared with about 15% the same month last year.

We expect to see spending on overseas travel continue with the school holidays starting later this week and the European summer now underway.

Meanwhile, a UBS survey of 1000 people between 18 May and 1 June has revealed international travel intentions “rose strongly”, The Australian reported.

And the United States is seeing a similar trend, with 75% of Americans planning holidays in 2022, the Daily Mail reported. American Airlines Group Inc (NASDAQ: AAL) shares soared 6.41% on Friday. Delta Air Lines Inc (NYSE: DAL) shares jumped 2.3% while United Airlines Holdings Inc (NASDAQ: UAL) shares ascended 4.31%.

Qantas signs deal

In news overnight, Qantas and Airbus will invest US$200 million to drive the sustainable aviation fuel industry in Australia.

Qantas CEO Alan Joyce and Airbus CEO Guillaume Faury signed an agreement in Doha on Sunday. Qantas plans to use sustainable aviation fuel for 10% of its fuel needs by 2030.

Commenting on the news, CEO Alan Joyce said:

This investment will help kickstart a local biofuels industry in Australia and hopefully encourage additional investment from governments and other business and build more momentum for the industry as a whole

The post Why are ASX 200 travel shares lifting off on Monday? appeared first on The Motley Fool Australia.

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More reading

• Why is the Temple & Webster share price surging 11% on Monday?
• Why did the BrainChip share price spike 7% this morning?
• What’s with the Core Lithium share price on Monday?
• ASX 200 midday update: PointsBet jumps, energy shares sink, Vicinity’s upgrade
• Transurban share price jumps as dividends hit pre-pandemic highs

Motley Fool contributor Monica O’Shea has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Delta Air Lines. The Motley Fool Australia has recommended Flight Centre Travel Group Limited and Webjet Ltd. 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 Bitcoin (CRYPTO: BTC) price is in the spotlight as investors try to determine if the world’s biggest cryptocurrency by market cap could have reached the bottom.

It’s been a tough year for most all cryptos, with the Bitcoin price setting the tone, down 58% year-to-date and down 71% since its 10 November record high.

However, the past two days have seen an uptick.

Bitcoin price rebounds from fall below critical level

Things took a turn for the better over the weekend, with the token gaining 16% on Sunday. Though it should be noted that the outsized gain came after the price fell to US$17,709 early on Sunday.

That’s the lowest level since December 2020. And for the first time in its trading history, that saw the Bitcoin price fall below the peak of US$19,511 it achieved in the previous cycle. Analysts have been predicting that a fall below previous cycle highs could see the token slide much further.

So far, that hasn’t eventuated. But the Bitcoin price remains within a whisker of that figure, currently trading for US$19,993.

Commenting on why the world’s original crypto saw a rebound over the weekend, Paul Veradittakit, a partner at hedge fund Pantera Capital, was quoted by Bloomberg as saying: “I think we started to hit levels near the bottom where institutional investors see a buying opportunity.”

Institutional buyers may have been hitting the buy button. But many analysts remain cautious on the short to medium-term outlook for cryptos.

Dip buyers beware

Katie Stockton, managing partner at Fairlead Strategies, said “momentum is strongly negative” in the crypto space, and she cautioned investors against buying the dip.

According to Noelle Acheson, head of market insights at Genesis (courtesy of Bloomberg):

What we’re seeing is more liquidations driving prices and sentiment lower, which triggers more liquidations and negative sentiment – some flushing-out needed still, but this will at some stage exhaust itself.

That stage, however, may not be here yet, as the Bitcoin price could need some more flushing out.

Alkesh Shah is the head of crypto strategy at Bank of America. According to Shah:

Investors are continuing to position defensively following last year’s liquidity-driven digital asset bull market. Although painful, removing the sector’s froth is likely healthy as investors shift focus to projects with clear road maps to cash flow and profitability versus purely revenue growth.

Atop the new environment of rising interest rates, the Bitcoin price, and cryptos more broadly, have been hit by a number of industry setbacks.

Last month, there was the sector-shaking collapse of Terra’s UST stable coin and its supporting token, Luna. More recently, crypto lender Celsius, which offered outsized yields, is stirring investor angst by halting withdrawals.

And other players in the sector are now looking shaky, which could further erode confidence in digital assets and drag on the Bitcoin price.

Teong Hng, CEO of Satori Research, said, “After Celsius, the focus last few days has been Three Arrow Capital and Babel Finance. Su Zhu, the founder of 3AC seems to be missing in action after purportedly suffering huge losses due to massive drop in crypto this round.”

The post Bitcoin price rockets 14% but experts say cryptos aren’t out of the woods yet appeared first on The Motley Fool Australia.

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More reading

• Why US$19,500 is a line in the sand for the Bitcoin price
• Why tech billionaire Bill Gates is ‘not involved’ in crypto or NFTs
• Why Bitcoin, Ethereum, and Dogecoin dropped and popped in the last 24 hours
• What is the realised Bitcoin price and why does it matter?
• 3 reasons Bitcoin, Ethereum and Solana just hit their lowest levels this year

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 positions in and has recommended Bitcoin. The Motley Fool Australia has positions in and has recommended Bitcoin. 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 Bubs Australia Ltd (ASX: BUB) share price is having a tough start to the week.

In afternoon trade, the infant formula company’s shares are down almost 7% to 61.5 cents.

Why is the Bubs share price sinking?

The weakness in the Bubs share price may have been driven by a lukewarm response to the company’s guidance upgrade from a leading broker.

According to a note out of Bell Potter, its analysts have retained their speculative hold rating and 75 cents price target on the company’s shares.

While this still implies decent upside for the Bubs share price from the current level, it hasn’t been enough to get investors excited. Particularly given some of the comments made by its analysts.

What did the broker say?

Bell Potter notes that Bubs has upgraded its guidance for FY 2022 revenue to over $100 million and its underlying EBITDA to be at least double what it recorded during the first half. The latter would mean EBITDA of ~$2.4 million.

Its analysts were a touch underwhelmed with the company’s earnings guidance. Though, it acknowledges that management could have been conservative. The broker explained:

We had previously upgraded FY22e EBITDA forecasts to reflect the benefit of an additional ~$12m of revenue linked to US sales agreements. On face value FY22e EBITDA guidance appears softer than our previous forecast of $4.5m and likely encapsulates a degree of conservatism. We note the implied delta on 1H22- 2H22e gross revenue is ~9% (ex-provision reversals), which compares to the estimated IMF gross contribution margin ~20% (GM less marketing and distribution).

Looking ahead, the broker remains positive on the potential of the company if things go to plan, but appears to waiting for proof before going all in. It concluded:

Our Hold, Speculative risk rating remains unchanged. We continue to see BUB as a high ceiling early stage FMCG entity with the scope to become a ~$50m EBITDA business if the upper bound of sales targets within the Alpha Group distribution agreement are achieved and if permanent US market access is achieved at comparable gross contribution margins to the IMF business today. To a degree an element of success is already reflected to the current market value.

The post Why is the Bubs share price sinking 7% today? appeared first on The Motley Fool Australia.

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More reading

• Why A2 Milk, Bubs, Evolution, and Zip shares are rising despite the selloff
• Bubs share price avoids market selloff thanks to guidance upgrade
• What Adore Beauty, Bubs, Eagers Automotive, and Renascor shares are storming higher
• Bubs share price jumps 10% on Walmart agreement
• Is there still money to be made from Bubs shares?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended BUBS AUST FPO. 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 Appen Ltd (ASX: APX) share price has been a very strong performer on Monday.

In afternoon trade, the artificial intelligence data services company’s shares are up 10% to $5.80.

This is despite the company’s shares being kicked out of the ASX 200 this morning.

What’s going on with the Appen share price?

The catalyst for the rise in the Appen share price today appears partly to have been a positive night of trade on Wall Street’s Nasdaq index.

The tech-focused index rose 1.4% on Friday night, whereas the Dow Jones was down 0.1%.

However, it is worth noting that the Appen share price is outperforming materially today, so this only explains a small part of the rise.

Another potential catalyst could be delayed buying. With its shares out of the ASX 200 index from this morning, it is possible that some investors have been holding off buying shares until the rebalance was complete.

This strategy makes sense when you consider that some fund managers and index funds will have been forced to sell shares over the last couple of weeks ahead of Appen’s exit from the benchmark index. This is to ensure that their portfolios meet strict investment mandates or that index funds reflect the changes.

With the selling pressure over, now would appear to be a good time to buy if you were planning to.

Anything else?

But wait, there’s more. Also potentially giving the Appen share price a lift today was a report in the AFR that vaguely claimed that an “investor who did not want to be named [..] had been approached by private equity firms running the numbers on the company.”

This may have sparked hopes that another takeover proposal is coming following the collapse of the Telus approach last month.

Time will tell if that is the case. But with the Appen share price down 48% since the start of the year, it isn’t unthinkable that someone could be considering a move.

The post Appen share price jumps 10% despite ASX 200 exit: What’s going on? appeared first on The Motley Fool Australia.

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More reading

• These are the 10 most shorted ASX shares
• 5 things to watch on the ASX 200 on Monday
• Appen share price rebounds 12%, topping ASX 200 gainers
• ASX 200 midday update: BHP’s NSW coal update, Link takeover on the rocks
• These are the 10 most shorted ASX shares

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Appen Ltd. 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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There has been elevated volatility on the ASX share market since the start of 2022. There is a lot of market focus on the high rate of inflation and how central banks are responding with interest rates to bring it under control.

Higher interest rates are theoretically meant to pull down on asset prices. Why? Let’s look at some wisdom that Warren Buffett once shared with the world at an annual general meeting:

The value of every business, the value of a farm, the value of an apartment house, the value of any economic asset, is 100% sensitive to interest rates because all you are doing in investing is transferring some money to somebody now in exchange for what you expect the stream of money to be, to come in over a period of time, and the higher interest rates are the less that present value is going to be. So every business by its nature… its intrinsic valuation is 100% sensitive to interest rates.

With interest rates rapidly climbing in both the United States and Australia, perhaps it’s not surprising that markets are seeing volatility as asset valuations are disrupted.

Time to buy ASX shares?

Every expert may have an opinion on that question.

A share market is made up of individual businesses. And each business may or may not be at a good price.

However, some experts have made some comments about whether they think the share market is worth looking at yet. While the comments are focused on the US share market, investors may find them applicable to the ASX as well.

Mark Newton from Fundstrat Global thinks the worst of the falls could be nearing. The Australian Financial Review (AFR) quoted him:

Evidence of bearishness turning to capitulation has been growing, and I’m confident that markets are nearing a bottoming process which should be in place by the end of June.

However, Newton pointed out that downward earnings revisions are starting to “just begin to ramp up”.

Warren Pies from 3Fourteen Research thinks that it could be time to start dipping a toe into the investing water:

Based on a model of forward price/earnings (P/E) ratios and interest rates, the stock market is undervalued by about 10% at present. Historically, bear market bottoms occur when this discount moves to between 15% and 20%.

During a big sell-off, we find ourselves – like most investors – a bit paralysed. Pulling the trigger is difficult. It’s always darkest before the dawn, and every 20 per cent sell-off feels like it could go another 20 per cent.

In hindsight, it’s easy to see the signs of a low – cheap valuations, washed out sentiment and policy support define most bottoms. Yet, trading bear markets is easy in theory but difficult in practice.

Which ASX shares to target?

There are plenty of quality ASX shares that have been sold down that I personally think could now be opportunities.

The shares I would be targeting are Washington H. Soul Pattinson and Co Ltd (ASX: SOL), Brickworks Limited (ASX: BKW), Australian Ethical Investment Limited (ASX: AEF), Betashares Nasdaq 100 ETF (ASX: NDQ) and Xero Limited (ASX: XRO).

The post Is it time to go bargain hunting for ASX shares? appeared first on The Motley Fool Australia.

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More reading

• 2 ASX tech shares brokers rate as buys this month
• ASX 200 midday update: GUD crashes, tech shares tumble
• What is the current dividend yield on Brickworks shares?
• 3 high quality ETFs for ASX investors to buy now
• Why I think the Xero share price is now too compelling to ignore

Motley Fool contributor Tristan Harrison has positions in Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Australian Ethical Investment Ltd., BETANASDAQ ETF UNITS, Brickworks, Washington H. Soul Pattinson and Company Limited, and Xero. The Motley Fool Australia has positions in and has recommended BETANASDAQ ETF UNITS, Brickworks, Washington H. Soul Pattinson and Company Limited, and Xero. The Motley Fool Australia has recommended Australian Ethical Investment Ltd. 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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