Tag: Motley Fool

The CSL Limited (ASX: CSL) share price has fallen around 20% since the recent high in November 2021. One fund manager thinks that the healthcare business is an opportunity.

CSL is one of the biggest healthcare businesses in Australia, specialising in developing biotherapies and influenza vaccines.

Ben Clark from TMS Capital was talking with Livewire about the market volatility we’ve seen recently.

Clark suggests it’s a good time to be looking at higher-quality names that have been sold off.

Businesses with “pricing power, strong balance sheets and can grow despite what the economy will do” are the ones to focus on. Clark said to Livewire:

A lot of high-quality growth stocks are down at least 50% since 1 January. They’re, arguably, where you want to be in this uncertain environment, in companies that can grow between 10% and 30% regardless of what the economy does.

Focus on the long term

Clark has a portfolio of names, including CSL, that are viewed as high quality. They include ResMed (ASX: RMD), REA Group Limited (ASX: REA), SEEK Limited (ASX: SEK), Macquarie Group Ltd (ASX: MQG), and Wesfarmers Ltd (ASX: WES).

His advice for nervous investors is to invest for the longer term and not worry about what’s happening each week with the ASX share market.

If you’re in high-quality growth businesses, you can take a long-term view. If you’re in speculative stocks you do need to be worried, because there are a lot of businesses that might never come back.

But try not to react on a day-to-day basis, think truly five years ahead and stick to your plan.

Lower share prices hurt… but they could be opportunities

Understandably, some investors are finding this period a bit stressful. But for Clark, owning businesses like CSL makes it a bit easier to get through this period.

In his opinion, the CSL share price (and others) could recover nicely and grow from here.

Clark said, according to Livewire:

I’m not losing any sleep owning those businesses through this cycle – it’s not fun seeing the share prices lower than where they should be, but those companies will be significantly bigger from this point.

CSL expectations

While the company can’t make any commitments regarding the CSL share price, it has provided guidance about its expected FY22 net profit after tax (NPAT). The guidance is for NPAT of between US$2.15 billion to US$2.25 billion at constant currency. That includes $90 million to $110 million in transaction costs related to the agreement to acquire Vifor Pharma.

In mid-February, the ASX healthcare share noted that following initiatives it had implemented in its plasma collections network, collections had been improving and were expected to underpin “stronger sales” in its core plasma therapies. Strong influenza vaccine demand was helping Seqirus (which comes under the CSL group).

The acquisition of Vifor Pharma has been delayed. Vifor Pharma is a global specialty pharmaceutical company with “leadership in renal disease and iron deficiency”.

CSL share price valuation

According to CommSec, the CSL share price is valued at 36x FY22’s estimated earnings.

The post CSL share price ‘will be significantly bigger from this point’: fundie appeared first on The Motley Fool Australia.

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More reading

• Top brokers name 3 ASX shares to buy next week
• Why I would invest $10,000 in these 3 ASX shares
• Brokers name 3 ASX shares to buy today
• Down 5% so far this week, is the CSL share price a buying opportunity?
• Should you buy these top blue chip ASX 200 shares after the market selloff?

Motley Fool contributor Tristan Harrison 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 CSL Ltd. and ResMed Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended ResMed. The Motley Fool Australia has positions in and has recommended ResMed Inc. and Wesfarmers Limited. The Motley Fool Australia has recommended Macquarie Group Limited, REA Group Limited, and SEEK 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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I’m always on the hunt for ASX tech shares that look good for the long-term.

I think technology businesses in particular have advantages. For example, the intangible nature of what they offer can come with strong margins. It’s also easier for tech companies to expand because of how easy it is to replicate more software as opposed to what it takes to make and deliver a new car or table.

When ASX tech shares are a good value proposition, I think they are worthwhile pursuing.

With that in mind, I decided to invest in a parcel of shares of a tech business last week.

Bailador Technology Investments Ltd (ASX: BTI)

This is a listed company that invests in technology businesses — and it’s the one I invested in.

Bailador has a portfolio of around 10 names. The names in the portfolio can change over time as it divests some positions and invests in new positions.

It typically invests $5 million or more in businesses that are seeking growth state investment.

There are a few different areas it focuses on including software as a service (SaaS) and other subscription-based internet businesses, online marketplaces, software, e-commerce, high-value data, online education, telecommunication applications, and services.

What businesses is Bailador currently invested in?

These are the current names in the ASX tech share’s holdings: Siteminder Ltd (ASX: SDR), InstantScripts, Rezdy, Access Telehealth, Nosto, Straker Translations Ltd (ASX: STG), Mosh and Brosa.

Let’s take a quick look at what those businesses do.

Siteminder is described as a world leader in hotel management and distribution solutions for online accommodation bookings.

InstantScripts is a digital platform that enables “convenient” access to high-quality doctor care and routine prescription and medication.

Rezdy is described as a fast-growing online channel manager and booking software platform for tours and activities.

Access Telehealth is a specialist telehealth platform connecting Australian communities to high-quality healthcare.

Nosto is described as an AI-powered e-commerce personalisation platform.

Straker Translations is a digital language translation services provider.

Mosh is described as a digital healthcare brand making men’s health and wellness easily accessible through subscription treatment plans.

Finally, Brosa is a vertically integrated furniture brand and online retailer.

Investment strategy

There are a few different things that Bailador looks for.

Typically, the ASX tech share picks companies that:

• Are run by the founders
• Have been operating for two to six years
• Have “proven” business models with attractive unit economics
• Are demonstrating international revenue generation
• Have a huge market opportunity
• Have the ability to generate repeat revenue

When combining those factors, the businesses in question would seem very compelling.

Why I invested in Bailador

One of the key reasons that I decided to go for Bailador is the lower Bailador share price. It’s down materially despite the fact that the underlying businesses are growing nicely.

In 2021, the Bailador portfolio companies produced an average 43% revenue growth yet, since the start of November 2021, Bailador shares have declined 27%. However, the company is up slightly over the last month.

Another reason for the investment was the current valuation. The current Bailador share price is at a 22% discount to the post-tax net tangible assets (NTA) per share. I think that’s an attractive valuation, giving investors like me a margin of safety with the investment.

Also, the underlying value of Bailador’s NTA is not just in unlisted tech shares which could now be worth less after the volatility on share markets.

Bailador can point to a majority asset backing from cash (predominately after selling its stake in Instaclustr) and the listed shares of Siteminder and Straker. The value of those ASX shares and the cash is very easy to see and compare that value to the Bailador share price.

Finally, Bailador’s new dividend policy of 4% of the company’s pre-tax NTA, as well as a FY22 special dividend worth 2% of pre-tax NTA, is attractive to me as it unlocks the value of its assets for shareholders, providing cash returns.

The post This ASX tech share has been quietly gaining over the past month. Here’s why I just bought in appeared first on The Motley Fool Australia.

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More reading

• Why Bailador, Fortescue, Nufarm, and Telstra shares are rising
• 2 ASX shares I think are great long-term buys

Motley Fool contributor Tristan Harrison has positions in Bailador Technology Investments Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Bailador Technology Investments Limited and SiteMinder Limited. The Motley Fool Australia has recommended Bailador Technology Investments Limited and Straker Translations. 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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Shares in BHP Group Ltd (ASX: BHP) have tumbled this month followed by sharp volatility across the ASX.

At Friday’s market close, the BHP share price dipped 3.39% to $42.52 apiece. This means its shares are now down 8% in the past week.

BHP decides to keep thermal coal asset

Senior management’s decision to retain BHP’s New South Wales Energy Coal (NSWEC) business could provide a short-term EBITDA boost.

Thermal coal prices have accelerated since the Russian war in Ukraine which is providing a fruitful cash injection.

As reported by the Australian Financial Review, Macquarie analysts sent a note out to its clients with a positive outlook.

As such, the broker believes that favourable commodity prices could spruce up another US$1.3 billion ($A1.85 billion) in EBITDA for BHP.

From August 2018 to August 2020, there was continued downward pressure on thermal coal prices, with consecutive falls month-on-month. This led NSWEC’s Mt Arthur coal mine in Hunter Valley to record an EBITDA loss during FY19 and FY20.

A perfect storm of port delays and increasing costs also weighed down the mine’s operating performance.

However, things have begun to turn around for BHP’s thermal coal asset as prices have reached record highs this year.

Last week, the company announced it will take the NSWEC Mt Arthur coal mine off the market. The decision was made after an unsuccessful 2-year search for a buyer as well as a change in trading conditions.

Macquarie assumes that NSWEC might contribute up to 6% of BHP’s estimated group EBITDA in FY23. And this could reach 8% if spot prices for thermal coal continue to accelerate.

Touching on the projections for BHP’s NSWEC, Macquarie analysts commented:

The material valuation change reflects our conservative long-term energy coal-price assumptions. At a flat thermal-coal price of US$100/t, the asset would have a NPV that is close to zero.

BHP noted that it will pursue obtaining mining permits to carry on its operations at Mt Arthur until 2030.

BHP share price summary

A choppy 12 months has caused the BHP share price to register nil gains for the period.

However, year-to-date, the company’s shares are up 15% on the back of the commodity boom.

BHP commands a market capitalisation of approximately $215.25 billion.

The post Own BHP shares? Here’s why the miner could be set for a $1.85 billion boost appeared first on The Motley Fool Australia.

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More reading

• BHP share price ends Friday’s session 8% lower for the week
• Brokers name 3 ASX shares to buy today
• ‘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: BHP’s NSW coal update, Link takeover on the rocks
• Why I think the BHP share price is a good buy for the long term

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 Aussie Broadband Ltd (ASX: ABB) share price has been losing signal with market sentiment in the last couple of months.

Since mid-April, the Aussie Broadband share price has declined by almost 50%. In other words, the telco’s share price has halved.

However, some experts are viewing this as an opportunity to buy shares of the fast-growing telecommunications company.

How fast is the company growing?

The latest that investors have heard from the company was its FY22 third-quarter update.

At 31 March 2022, Aussie Broadband said that it had 548,911 active total broadband services. This was an increase of 11% quarter on quarter and a 47% increase year on year.

That total broadband number included 446,814 residential active services. This was a 6% rise quarter on quarter and a 32% rise year on year.

But the business has more services than just broadband. Another area is a small but growing mobile segment. Aussie Broadband had around 35,000 mobile services as at 31 March 2022. That was a 9% increase year on year and a 62% rise year on year.

The company reported that its total number of all active services was 697,083, up 10% quarter on quarter and up 42% year on year. Growth can have an important influence on the Aussie Broadband share price.

Over The Wire acquisition

Aussie Broadband acquired the diversified telecommunications business Over The Wire earlier this year. The business is a tier one voice provider, and offers a “range of tailored cloud, connect and collaborate solutions to business, government and enterprise customers”.

The ASX share is targeting annual cost synergies of between $8 million to $12 million within three years, ongoing replacement capital expenditure savings, and significant strategic benefits.

It has already achieved early synergy wins such as moving a significant portion of voice traffic onto the Over The Wire tier one voice network. This has resulted in around $3 million of annualised earnings before interest, tax, depreciation and amortisation (EBITDA) synergies already being actioned.

For the three and a half months that Aussie Broadband will have owned Over The Wire in FY22, it’s expected to generate around $11 million of EBITDA. Including that figure, Aussie Broadband is expecting to make full-year EBITDA (before transaction costs) of between $38 million to $39 million.

Broker ratings on the Aussie Broadband share price

Ord Minnett currently rates the business as a buy, with a price target of $5.10. That implies a possible upside of more than 60%. The broker notes that the ASX telco share continues to capture market share.

Credit Suisse is another broker that rates the business as a buy, with a price target of $5, suggesting a possible upside of around 60%. It thinks the decline of the Aussie Broadband share price has been too hard.

The post Down 47% in 2 months, is the Aussie Broadband share price an opportunity calling? appeared first on The Motley Fool Australia.

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More reading

• Aussie Broadband share price dips despite telco named ‘Australia’s most trusted’
• Down 20% in 2022, is the Aussie Broadband share price a no-brainer buy?
• Leading brokers name 3 ASX shares to buy today

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Tristan Harrison 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 Aussie Broadband Limited. The Motley Fool Australia has recommended Aussie Broadband 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 Allkem Ltd (ASX: AKE) share price has been having a tough time of late.

Due to the market volatility, this lithium producer’s shares have lost 25% of their value since this time last month.

In light of this, some investors may be wondering if the Allkem share price weakness has created a buying opportunity.

Is the Allkem share price good value now?

According to a note out of Bell Potter this morning, its analysts have reiterated their buy rating with a trimmed price target of $17.53.

Based on the current Allkem share price of $9.85, this implies potential upside of 78% for investors over the next 12 months.

Why is the broker bullish?

Bell Potter is bullish on Allkem due to its equally bullish view on lithium prices.

Unlike some analysts, the team at Bell Potter is expecting lithium prices to remain strong for the foreseeable future thanks to market deficits caused by increasing demand for the battery making material.

Combined with its growing production, the broker expects this to boost Allkem’s cash generation and profits materially in the coming years.

Bell Potter explained:

We expect AKE’s near term cash generation to lift substantially into 2023 as strength in lithium commodity indices flows through to lagged realised prices. AKE is aiming to maintain 10% share of supply in a global lithium market experiencing unprecedented growth; it has a portfolio of growth projects, balance sheet strength and cash flow from existing projects to achieve this. On our estimates, lithium demand will lift from current levels of around 500ktpa to over 1.1Mtpa in 2025 and more than 3.2Mtpa by 2030, driving market deficits and strong lithium pricing.

As for its profits, the broker is forecasting a reported net profit of US$309 million in FY 2022. After which, it expects Allkem’s net profit to lift to US$680 million in FY 2023 and US$912 million in FY 2024.

All in all, this could make Allkem a share to consider if you’re looking for lithium exposure.

The post Top broker tips Allkem share price to jump 80% appeared first on The Motley Fool Australia.

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More reading

• Mineral Monday: What you need to know about lithium and which ASX shares are cashing in on it
• 5 things to watch on the ASX 200 on Monday
• The lithium and iron ore ASX shares that I like right now: expert
• 3 ASX All Ordinaries shares that leapt more than 10% on Thursday
• Why’s the Allkem share price flaring higher today?

Motley Fool contributor James Mickleboro has positions in Allkem Limited. 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 Betashares Global Cybersecurity ETF (ASX: HACK) has fallen in value by more than 20% over the last couple of months. It has been a difficult time for the HACK exchange-traded fund (ETF), as it has for many businesses.

When companies fall in value, it is worth considering whether an investment is more attractive or not. The situation with inflation and interest rates is capturing many headlines.

Only time will tell when will inflation slow and how high interest rates have to go to help cool the economy.

The cybersecurity industry is seeing long-term growth as businesses, governments, and households look to protect themselves. In 2018, the global cybersecurity market was worth around US$152 billion. By 2023, it’s expected (according to Statista) to reach US$248.3 billion.

With that underlying growth in mind, is the HACK ETF now an attractive opportunity?

The HACK ETF was rated as a buy

In mid-April 2022, one expert said that the Betashares Global Cybersecurity ETF is worth a spot in every investor’s portfolio.

Felicity Thomas from Shaw and Partners said in a Livewire interview that the HACK ETF was her pick:

The reason I’ve chosen this is because cybercrime is meant to cost the world $10.5 trillion by 2025, which is huge. It also has amazing names in it like CrowdStrike. In a connected world where everyone is attached to their devices, it’s becoming the biggest problem that we’re all facing.

The HACK ETF has dropped around 20% since the date of that positive commentary from Thomas.

What’s in the portfolio?

Thomas alluded to some “amazing names” in the portfolio, so let’s look at the biggest positions in the portfolio.

On 16 June 2022, these were the biggest holdings and their weightings:

• Crowdstrike (6.5%)
• Palo Alto Networks (6.4%)
• Cisco Systems (6.3%)
• Zscaler (4.6%)
• Booz Allen Hamilton (4%)
• VMware (4%)
• Leidos (3.8%)
• Sailpoint Technologies (3.6%)
• Juniper Networks (3.3%)
• Check Point Software (3.3%)

There are a total of 40 positions in the ETF.

How has it performed?

Past performance is certainly no guarantee of future performance. However, when including the annual management fee of 0.67%, investors can see that it returned an average of 15.9% per annum in the five years to 31 May 2022.

However, the six months to 31 May 2022 showed a drop of 18.3% for the Betashares Global Cybersecurity ETF. HACK ETF shares are currently valued at $8.19.

The post Down 23% since mid-April, is the HACK ETF a golden opportunity? appeared first on The Motley Fool Australia.

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More reading

• 2 popular ETFs for ASX investors to buy next week
• 3 popular ETFs for ASX investors to buy now
• How has the HACK ETF averaged annual returns of 19%?
• 2 great ETFs I’d buy in June 2022
• Why I’d buy these 2 excellent ASX shares exposed to megatrends

Motley Fool contributor Tristan Harrison 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 BETA CYBER ETF UNITS, Cisco Systems, and CrowdStrike Holdings, Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended VMware. The Motley Fool Australia has positions in and has recommended BETA CYBER ETF UNITS. The Motley Fool Australia has recommended CrowdStrike Holdings, Inc. 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 are several dozen ASX shares that are on the hunt for lithium. A handful of others are in the pre-production stages.

But only three ASX shares are currently actually producing the metal.

We take a look at those below.

But first…

What is lithium?

Lithium is a lightweight, malleable alkali metal, silvery in colour.

Historically it’s been used to increase the heat resistance of glass and ceramics. Lithium salts are also used as antidepressants.

But it’s lithium’s high level of heat and electricity conductivity that has seen demand boom alongside the fast-growing lithium-ion battery market. Batteries that power most every electric vehicle (EV) on the road.

Lithium’s crucial role in the transition to renewables has seen the Australian government list the metal as a critical mineral.

The metal is primarily mined from ore and brines, with Australia, Chile, China and Argentina holding the largest deposits.

The government reports that Australia has high geological potential for lithium, with a 2020 Economic Demonstrated Resource of 6.17 million tonnes. In 2020, Australia produced 40,000 tonnes of lithium out of total global production of 82,000 tonnes.

So, which three ASX shares are producing lithium?

Three ASX shares cashing in on lithium

Taking them in alphabetical order, we start with Allkem Ltd (ASX: AKE), former known as Orocobre.

Allkem has a market cap of just under $6.6 billion. Based in Brisbane, its projects are primarily located in Argentina. The company supplies lithium carbonate to a variety of industrial and technical sectors, supplying roughly 10% of the global lithium market.

Allkem claims to be among the lowest-cost lithium producers in the world. The company intends to ramp up production by three times its current levels by 2026.

The Allkem share price is up 72% over the past 12 months.

The second ASX share already producing lithium is Mineral Resources Limited (ASX: MIN), with a market cap of $10.1 billion.

Though you may think of Mineral Resources as a mining services company, which it is, the company also has a large footprint in the lithium space. Its operations in Western Australia are Mt Marion, located in the Goldfields; and Wodgina, in the Pilbara region.

The company mines and produces both direct shipping ore lithium and spodumene concentrate.

The Mineral Resources share price is up 8% since this time last year.

Moving on to our third ASX share in the production stage for lithium, we have Pilbara Minerals Ltd (ASX: PLS), which has a market cap of $6.3 billion.

Pilbara’s flagship Pilgangoora Lithium-Tantalum Project is also located in the Pilbara region of WA.

Pilgangoora project counts amongst the largest hard-rock lithium-tantalum deposits in the world. Pilbara Minerals has big expansion plans for the project. It forecasts spodumene concentrate capacity at Pilgangoora to increase to 560,000 to 580,000 dry metric tonnes (dmt) this year.

The Pilbara share price is up 57% over the past 12 months.

The post Mineral Monday: What you need to know about lithium and which ASX shares are cashing in on it appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Monday
• The lithium and iron ore ASX shares that I like right now: expert
• Here are the 3 most heavily traded ASX 200 shares on Friday
• Why I think the Pilbara Minerals share price is currently undervalued
• 3 ASX All Ordinaries shares that leapt more than 10% on Thursday

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 outlook for the international economy is looking significantly darker than it was even 10 days ago.

After last week’s massive 75 basis point interest rate hike in the US, a global recession is in serious contention.

One phenomenon often seen in such troubled times is that the value of the US dollar is reinforced.

This is because the currency is seen as a stable safe haven while volatility is seen in other assets.

T Rowe Price Group Inc (NASDAQ: TROW) head of Australian equities Randal Jenneke reckons it won’t be any different this time. And he believes two ASX shares in particular stand to benefit.

“As we expect the US dollar to remain firm in 2022, we are positive toward the prospects for the [US] dollar earners in our portfolio, companies such as ResMed CDI (ASX: RMD) and Aristocrat Leisure Limited (ASX: ALL).”

The sleeping giant among ASX shares

Even though the company has its origins in Australia, ResMed has been headquartered at San Diego in the US for decades now.

The business exists on the ASX as a CHESS depositary interest (CDI), which allows Australian shares to be issued as a representative of ResMed Inc (NYSE: RMD) stocks.

And Jenneke is quite right in that the sleep apnea treatment device maker does most of its business in US dollars.

Firstly, the ASX 200 share reports its financials in that currency. 

Secondly, its latest quarterly result showed North and Latin America revenue of US$576.6 million far exceeded sales from the rest of the world, which generated US$287.9 million.

ResMed shares have fallen around 21% since the start of the year.

‘A high-quality growth business’

Unlike ResMed, gaming provider Aristocrat still has its head office in northern Sydney.

But its casino machines and mobile games are sold all over the world.

Aristocrat’s latest investor presentation showed 81% of its casino machine revenue came from the Americas region, while Australia and New Zealand reaped just 17%.

The mobile games, like most apps, are sold on borderless markets.

Morgans advisor Jabin Hallihan last week agreed with Jenneke that Aristocrat has tremendous prospects while other ASX shares are flopping.

“The slot machine maker remains a high-quality growth business with long-term opportunities,” he told The Bull. 

“We’re forecasting 16% growth in earnings before interest, taxes, and amortisation in the coming year.”

Morgans has a price target of $43 on this ASX 200 share, which compares to $32.76 at the close of Friday trading.

The post 2 ASX shares to benefit from strong US dollar: expert appeared first on The Motley Fool Australia.

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Motley Fool contributor Tony Yoo has positions in ResMed Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended ResMed Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended ResMed. The Motley Fool Australia has positions in and has recommended ResMed Inc. 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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After a month of super-sized interest rate hikes in Australia and the United States, T Rowe Price Group Inc (NASDAQ: TROW) Australian equities head Randal Jenneke is nervous.

Nervous about the prospect that the shock of the rate rises will plunge the globe into a recession.

“Given our view that global monetary tightening will result in a cyclical recession in profits due to slowing activity, we retain the cautious stance in our portfolio first adopted over six months ago.”

Fortunately, Jenneke reckons ASX shares still look cheap compared to their international peers, and this means there are investments worth getting into.

“We believe Australian stocks look set for further relative outperformance in the second half of the year,” he said.

“Australia has created less excess local liquidity to distort domestic equity valuations, driving them to levels that were historically rich relative to fundamentals.”

Considering the outlook, Jenneke’s team is investing in a couple of different types of ASX shares:

Defensive growth with pricing power

The first type that the T Rowe Price team likes at the moment is “defensive growth”.

“We seek quality stocks that have good pricing power in the more defensive growth segments, such as Computershare Limited (ASX: CPU), a provider of stock registration and transfer services that has delivered good exposure to rising interest rates.”

Computershare’s share registry business benefits from higher interest rates because it holds a pool of dividends and distributions that are yet to be transferred to the investor.

That capital is invested and reaps better returns for the business when rates rise.

“Besides share registry, Computershare is a global provider of services for employee equity plans, corporate trusts, stakeholder communications, and corporate governance.”

Computershare shares have risen 35% over the past 12 months and the company hands out a tidy dividend yield of 2%.

Buying oversold growth shares for a later revival

The other category that Jenneke’s analysts are bullish on is “oversold” growth shares.

“Recently, we have taken the opportunity to add to growth companies that we believe [have] become oversold based on near-term inflation fears and higher projected interest rates,” said Jenneke. 

“In this category of oversold growth names, we include Carsales.com Ltd (ASX: CAR), the dominant automotive online classifieds business which in our view possesses a durable business model and good pricing power.”

Carsales shares have shed more than 30% of their value since 9 December.

After months of plunging valuations, Jenneke reckons that “quality growth” ASX shares would come roaring back later this year as rates stabilise.

This is why, despite selling out of many growth stocks last year, the T Rowe Price team is turning back to them now.

“In our view, this could help the portfolio to strive to perform well as markets move beyond their current inflation and interest rate fears to refocus on the issue of slowing growth.”

The post 2 ASX shares to buy to win the rest of 2022: expert appeared first on The Motley Fool Australia.

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More reading

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Motley Fool contributor Tony Yoo 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 carsales.com 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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On Friday, the S&P/ASX 200 Index (ASX: XJO) finished a difficult week deep in the red. The benchmark index fell 1.75% to 6,474.8 points.

Will the market be able to bounce back from this on Monday? Here are five things to watch:

ASX 200 expected to fall

The Australian share market looks set to start the week in the red following a mixed night on Wall Street on Friday. According to the latest SPI futures, the ASX 200 is expected to open the day 19 points or 0.3% lower this morning. On Wall Street, the Dow Jones was down 0.1%, the S&P 500 was up 0.2%, and the Nasdaq jumped 1.4%.

Oil prices sink

Energy producers Santos Ltd (ASX: STO) and Woodside Energy Group Ltd (ASX: WDS) could have a very difficult start to the week after oil prices sank on Friday. According to Bloomberg, the WTI crude oil price dropped 6.8% to US$109.56 a barrel and the Brent crude oil price fell 5.6% to US$113.12 a barrel. This was driven by concerns that a potential global recession could weigh on demand.

ASX 200 rebalance takes effect

S&P Dow Jones Indices’ recently announced rebalance of the ASX 200 index will take effect today. Among the notable changes are Appen Ltd (ASX: APX) and PolyNovo Ltd (ASX: PNV) being kicked out of the index. Brainchip Holdings Ltd (ASX: BRN) and Core Lithium Ltd (ASX: CXO) are two of the new entrants to the benchmark index.

Gold price falls

Gold miners Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) could have a soft start to the week after the gold price dropped on Friday night. According to CNBC, the spot gold price is down 0.5% to US$1,840.6 an ounce. A stronger US dollar put pressure on the precious metal.

Allkem shares rated as a buy

The Allkem Ltd (ASX: AKE) share price could be great value after recent weakness according to Bell Potter. This morning the broker has retained its buy rating but trimmed its price target on the lithium producer’s shares to $17.53. This implies almost 80% upside for investors over the next 12 months. The broker said: “We expect AKE’s near term cash generation to lift substantially into 2023 as strength in lithium commodity indices flows through to lagged realised prices.”

The post 5 things to watch on the ASX 200 on Monday appeared first on The Motley Fool Australia.

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More reading

• Can Woodside shares deliver an attractive dividend yield AND 16% upside in 2022?
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Motley Fool contributor James Mickleboro has positions in Allkem Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Appen Ltd and POLYNOVO FPO. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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