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An ASX shares investor who used 13 different stock trading accounts has pleaded guilty to market manipulation.

Gabriel Govinda on Monday pleaded guilty to a total of 42 charges relating to manipulation of listed shares and illegal dissemination of information on such manipulation.

The Australian Securities and Investments told the court that Govinda was known on online stock tip forums as Fibonarchery, and publicised increased demand for certain stocks.

He would set this up by putting in many fake bids on shares using his many stockbroking accounts.

Govinda also sold and bought ASX shares between the different accounts that he possessed, in a practice known as “wash trading”.

The investor now faces up to a 10-year prison sentence. In addition, he can also cop a fine of $765,000.

Govinda’s offences occurred over 2014 and 2015. In 2019, the maximum penalty was increased to 15 years’ jail.

Accused posted ‘dummy bids are all part of the fun and games’

The investments watchdog accused Govinda of doing this in an attempt to “pump and dump” — artificially drive up the share price in order to sell them for a profit.

This is the first time in Australian history that a person has been convicted of such charges under s1041D of the Corporations Act.

In one message on a Hotcopper forum, Govinda said “dummy bids are all part of the fun and games and cat and mouse of the stock market!”.

With many retail investors joining the share market since the onset of the COVID-19 pandemic, ASIC had warned many times about illegal “pump and dump” practices.

“ASIC has recently observed blatant attempts to pump share prices, using posts on social media to announce a target stock, a designated time to buy and a target price or percentage gain to be reached before dumping the shares,” stated the commission.

“In some cases, posts on social media forums may mislead subscribers by suggesting the activity is legal.”

Govinda’s case has been adjourned to 29 July for a mention hearing.

The Commonwealth Director of Public Prosecutions is acting as prosecutor after an ASIC investigation and referral.

The post ASX shares investor faces 10 years’ jail: This is what he did appeared first on The Motley Fool Australia.

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• If the future of digital payments is crypto, then this long-time internet darling could soar
• Here’s why the Perenti share price is rocketing 18% today
• Will June be a good month for the Transurban share price?
• Is now the time to buy oil stocks?
• Yancoal share price lifts as potential takeover slammed

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 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.

While many investors may not realize it yet, PayPal Holdings, Inc. (NASDAQ: PYPL) has been steadily laying the groundwork to profit from any future scenario in which cryptocurrencies play a major role in digital payments worldwide. The biggest step, of course, was the company’s decision in October 2020 to enable users to buy, hold and sell a handful of cryptos, including Bitcoin (CRYPTO: BTC), directly via the PayPal platform. At the time, the decision was widely hailed as proof that crypto was going mainstream. 

Despite a pullback in the broader crypto market this year, PayPal seems determined to march ahead with its decision to embrace the crypto future of digital payments. At this year’s World Economic Forum in Switzerland, PayPal was very bullish on the launch of new cryptocurrency and blockchain services. 

Where is PayPal now with crypto?

Right now, there are two key components to PayPal’s crypto strategy. One of these is the consumer-facing side. By making it possible for users to buy and sell Bitcoin, PayPal (which owns Venmo) is arguably the best on-ramp for everyday people to learn about, explore and experiment with crypto. Many people have a long relationship with PayPal dating back to the first internet boom and have been using PayPal for everything from e-commerce transactions to sending out invoices for their small businesses. Moreover, PayPal has simplified crypto to the point where you don’t have to worry about opening new accounts, storing new passwords or creating new digital wallets.  

While this transaction activity from consumers might not contribute significantly to bottom-line earnings now, there is a potential indirect psychological effect that’s worth noting. In late 2020, Mizuho Securities surveyed 400 early crypto adopters on PayPal and found that a majority of them had more engagement overall than regular users, and were more likely to view PayPal as the center of their digital payment world. In other words, crypto could be the “hook” that attracts digitally savvy users and incentivizes them to use PayPal more often.

The other key component of the strategy is the merchant-facing side. If PayPal makes it easy for merchants to accept crypto as a form of payment, that could be a game-changer in terms of transaction volume. Just think about all the high-profile luxury brands (including Gucci, Balenciaga and TAG Heuer)  that have recently announced they are now accepting crypto payments. Adoption in the luxury, high-end of the market will eventually spill over into other industries, such as travel and automotive. After all, thanks to Elon Musk, it’s no longer unthinkable to pay in Bitcoin for a shiny, new $50,000 vehicle.

Is PayPal really committed to crypto?

PayPal appears to be dedicated to the future of digital currencies. In fact, as far back as 2014, PayPal was debating the merits of enabling users to send Bitcoin to each other.  PayPal has also invested in blockchain companies, filed blockchain-related patents and partnered with companies like Coinbase Global, Inc. (NASDAQ: COIN). And, in 2019, PayPal was one of the first companies to join the Libra Association, which pledged to create a new global digital currency built on blockchain technology. 

And that’s where things get really interesting, because rumors have been floating around for nearly six months that PayPal is on the cusp of introducing a new stablecoin based on the U.S. dollar called PayPal Coin. In layperson’s terms, a stablecoin is a cryptocurrency that is pegged 1:1 to another currency or commodity. This reduces significantly the risk of price volatility for online transactions. Consider a hypothetical case where you have saved $10,000 in crypto for an amazing summer vacation. If you have your money in Bitcoin, you never really know how much your Bitcoin is going to be worth 1 day, 1 week or 1 month from now. But with a stablecoin, you know that your $10,000 in crypto is going to be worth $10,000.  Of course, the big caveat here is that the recent meltdown of Terra (CRYPTO: LUNA) has cast a dark pall over the idea of stablecoins in general.

A new investment thesis for PayPal

If you take a big picture view, the investment thesis for PayPal becomes very exciting. If cryptocurrencies really are the future of online payments and transactions, then PayPal is well-positioned for future growth on a massive, worldwide scale. 

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

The post If the future of digital payments is crypto, then this long-time internet darling could soar appeared first on The Motley Fool Australia.

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Fool contributor Dominic Basulto owns Bitcoin. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Bitcoin, Coinbase Global, Inc., and PayPal Holdings. The Motley Fool Australia has recommended PayPal Holdings. The Motley Fool Australia owns and has recommended Bitcoin and Terra. 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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The Perenti Global Ltd (ASX: PRN) share price is rocketing higher today, up 18% in late morning trade.

Shares of the Western Australia-based global mining services group closed yesterday at 70 cents and are currently trading for 82 cents, having hit a high of 86 cents earlier in the day.

Here’s what’s driving ASX investor interest today.

What did the mining services company report?

The Perenti share price is off to the races after the company announced it had been awarded a contract for all of the underground development and production works for Evolution Mining Ltd’s (ASX: EVN) Cowal Underground project, located in New South Wales.

Perenti’s Barminco underground mining business will carry out the work. The division is already conducting diamond drilling services at Cowal alongside other works, with the new contract reported to “significantly expand” its scope at the project.

Commenting on the contract award from ASX 200 gold miner Evolution Mining, Perenti CEO Mark Norwell said:

The Cowal contract represents one of the largest underground mining projects in Barminco’s history, generating revenue of nearly $520 million with an initial term of four years, from a contract commencement date in early July 2022.

This contract award represents not only a significant expansion and continuation of our first underground contract in New South Wales but is also a fantastic opportunity for Perenti to build on our strong working relationship with Evolution, one of Australia’s premier gold mining companies.

Judging by the soaring Perenti share price, investors appear to agree.

Norwell said Perenti would begin investing capital in the project shortly with the company seeing increased revenues and earnings in the 2023 financial year (FY23). He still expects leverage for FY22 to be in line with the company’s previous forecasts.

“The project represents a significant improvement to our Australian underground earnings base and will generate strong project cash flows and returns in support of our capital allocation and investment,” Norwell added.

Perenti share price snapshot

With today’s big intraday gains factored in, the Perenti share price is up 23% over the past 12 months. That compares to a full-year loss of 2% posted by the All Ordinaries Index (ASX: XAO).

The post Here’s why the Perenti share price is rocketing 18% today appeared first on The Motley Fool Australia.

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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 Transurban Group (ASX: TCL) share price is falling today, currently down 1.93% at $14.23. However, it remains 0.57% in the green over the last month of trade.

There’s been somewhat of a tug-of-war at both ends of the Transurban investment debate in recent weeks, with brokers on each side of the fence chiming in with their outlook.

Meanwhile, in broad market news, the S&P/ASX 200 Industrials Index (ASX: XNJ) has glided down 1% from the open today, extending losses this year to date to 3%.

So what’s next for the toll road operator’s shares? Let’s see what the brokers are saying.

Consensus split on Transurban outlook

While market sentiment has pushed to bullish regarding Transurban, analysts remain split on its next moves.

Investors have rallied the Transurban share price from a low of $12.12 in February to its current levels, closing as high as $14.77 in that time.

However, analysts are split at 40% each for buy and hold calls on the stock, with the remaining 20% urging clients to sell, according to Bloomberg data.

Meantime, the Credit Suisse team recently downgraded its rating on the company to neutral from outperform.

Despite Transurban’s relatively stable and predictable cash flows, the broker reckons it lacks pricing power amid the latest inflation outlook.

That, and the company’s cost on its debt is an average floating 4%, meaning it is likely to rise as interest rates on corporate debt rise.

Rates sensitivity is likely to remain an issue for Transurban, Credit Suisse says, amid these higher rates. Estimates on debt refinancing increase “debt cost[s] by around 4%, around 10%, and 15% in FY23, FY24, and FY25 respectively”.

Meanwhile, analysts at JP Morgan remain constructive on the Transurban share price, gaining “increased comfort” from the company’s March 2022 traffic update.

“Although this rebound is in part due to economies reopening and mobility returning, some structural factors (including heavy/commercial vehicle resilience, private vehicles over public transport) are at play and likely to drive continued growth, in our opinion,” the broker said.

Unlike its counterpart at Credit Suisse, the JP Morgan team sees a high correlation in Transurban’s link to inflation, a bullish catalyst in the short-term:

We highlight TCL’s favourable concession profile (both tenure and terms) with escalators often rising at the higher of inflation or 4%. With inflation anticipated to breach circa. 5% for three quarters in CY22 with approximately two-thirds of TCL’s network raising tolls quarterly, we believe this is an incremental source of upside near term.

The consensus price target for Transurban is $14.19 per share, per Bloomberg data. At its current levels, the upside appears to be limited.

Transurban share price snapshot

In the last 12 months, the Transurban share price has flatlined and is the same as it was a year ago.

It is up by 2.15% this year to date and by 3% over the past six months.

The post Will June be a good month for the Transurban share price? appeared first on The Motley Fool Australia.

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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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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.

There’s no question the $4 trillion energy sector has been home to the best-performing stocks on the market recently.

Over the past year, energy stocks have gained 72% on average while the next closest sector, utilities, rose less than 15%. In comparison, the broad market S&P 500 Index (SP: .INX) index lost 1%, and that started long before Russia invaded Ukraine.

It hasn’t been much different in 2022 either, with the oil and gas stocks, in particular, leading the way. Energy is again on top with a 58% gain as utilities again ranked second with a less than 5% increase in value.

Yet over longer periods, the high cost of exploration and resource exploitation has made the energy sector a lagging sector for investors.

Technology stocks were the market darlings only until recently and over the past decade energy stocks ranked dead last with simple double-digit increases when virtually every other sector was sporting triple-digit gains. 

Oil and gas stocks are the stars these days, but is now the time to buy them?

Beating up on big oil

President Joe Biden recently said he hoped Americans could come out of the current energy crisis less dependent on fossil fuels. Alternative energy sources are already a rising component of the world’s energy consumption, about 30% of the total, and that number is continuously growing.

Where the energy sector accounted for 29% of the stocks weighted in the S&P 500 in 1980, today they represent just 3.7%. Back then, seven of the top 10 stocks in the popular index were oil and gas stocks, led by ExxonMobil (NYSE: XOM); today there are none. 

And in a sign of how the world is further changing, Exxon was booted out of the Dow Jones Industrial Average in 2020 — a spot it has held for nearly 100 years — leaving only Chevron (NYSE: CVX) to represent the industry. Oil and gas stock investing isn’t what it used to be.

Oil, oil everywhere

Yet that doesn’t mean you shouldn’t invest in the energy sector. It is simply too ingrained in the global economy to disappear.

For example, the U.S. Energy Information Association forecasts global “conventional” light-duty vehicles will nearly double from 1.31 billion in 2020 to 2.21 billion at their peak in 2038, but that will still far outstrip electric vehicle usage.

General Motors (NYSE: GM) has said it wants to produce only electric vehicles (EVs) by 2035 while Ford Motor Company (NYSE: F) is shooting for 40% of its fleet.

Tesla (NASDAQ: TSLA), in contrast, says it wants to sell 20 million EVs by 2027. However, the EIA predicts EV usage will grow from just 0.7% of the global LDV fleet to 31% in 2050, or just 672 million vehicles. Not an insignificant number, but still trailing gas-powered vehicles.

Petroleum products account for about 90% of all energy usage in the U.S. transportation sector, with gasoline accounting for 56% of the total.

Distillates, primarily diesel fuels, accounts for another 24%, and jet fuel, 9%. And jet fuel usage is growing rapidly with the EIA expecting consumption to increase at a faster rate than any other liquid transportation fuel through 2050.

And fossil fuels are in almost every product consumers use today, with petroleum appearing in everything from cosmetics and personal care products, to everyday items such as smartphones, computers, TVs, shoes, sporting goods, flooring, furniture, and medical supplies.

Grand View Research estimates the global petrochemicals market size was valued at $556.1 billion in 2021 will grow at a 6.2% compound annual rate through 2030, driven primarily by construction, pharmaceuticals, and automotive needs, as well as our industrial economy.

And though petroleum itself is not as important of a component for plastics manufacturing, natural gas and natural gas processing is. 

Still a gusher of an opportunity

The chances that alternative energy replaces fossil fuels for the foreseeable future are incredibly low. That’s why I think the energy sector generally, and oil stocks in particular, are great buys, even today at their elevated levels.

Fossil fuels will be around for a long, long time meaning investors are to look very closely at some of the best energy stocks in the space as a long-term growth investment.

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

The post Is now the time to buy oil stocks? appeared first on The Motley Fool Australia.

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Rich Duprey has positions in Chevron and ExxonMobil. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Tesla. 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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The Yancoal Australia Ltd (ASX: YAL) share price is in the green after the company condemned a potential takeover bid.

Chinese state-owned entity Yankuang Energy Group – Yancoal’s parent company and controlling shareholder – recently flagged its intention to put forward a bid for the ASX-listed company.

It’s expected to offer $5.07 apiece for all Yancoal shares it doesn’t already control.  

At the time of writing, the Yancoal share price is $5.56, 2.39% higher than its previous close.

Let’s take a closer look at the latest on the potential takeover talks.

Yancoal share price on the rise

The Yancoal share price is gaining this morning after an independent board committee deemed Yankuang’s potential acquisition offer wouldn’t be in the best interest of the company’s minority shareholders.

Thus, the company won’t be supporting a $5.07 per share bid or recommending it to shareholders.

However, Yankuang has a large holding in Yancoal – its stake makes up more than 62% of the company.

That means it might only need the support of a few other major shareholders to get a takeover bid across the line.

It’s also worth noting Yancoal hasn’t yet received an official takeover offer or proposal from its major shareholder.

The potential offer was previously expected to be made up of convertible bonds issued by Yankuang Energy. Yancoal noted, that if successful, the offer could see the company de-listed from the ASX and the Hong Kong Stock Exchange.

The independent board committee behind today’s news was appointed by the ASX-listed coal producer. Its advisors included Gilbert + Tobin, advising on Australian legal matters; Freshfields Bruckhaus Deringer, advising on Hong Kong legal matters; and Deloitte Corporate Finance, advising on strategic and commercial matters.

News of a potential takeover bid comes amid a particularly good period for Yancoal and its share price.

Strong energy prices saw the coal company recording record revenue in 2021. On top of that, demand for the black rock has surged in 2022.

The Yancoal share price is currently 99% higher than it was at the start of this year. It has also gained 168% since this time last year.

The post Yancoal share price lifts as potential takeover slammed appeared first on The Motley Fool Australia.

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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 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 lithium industry has been under pressure in recent weeks amid concerns over the supply-demand balance.

In recent times, demand has been outstripping supply, supporting sky high prices for the white metal.

However, a growing number of analysts now believe that supply will soon catchup and potentially even lead to a lithium surplus in the next couple of years. This would put significant pressure on lithium prices.

Whether or not this materialises is difficult to say. Lithium supply has a habit of disappointing. But, nevertheless, it is perhaps best to consider investing on the assumption that prices will start to fade.

But which lithium shares would be good options in this scenario? Two that have been rated as buys this morning are listed below. Here’s what analysts are saying about them:

Allkem Ltd (ASX: AKE)

According to a note out of Morgans, its analysts have retained their add rating but trimmed their price target on this lithium miner’s shares to $16.38.

The broker notes that Allkem has just reported higher than expected lithium carbonate prices for the June quarter. And while this has been offset somewhat by softer production at Mt Cattlin, it remains bullish.

Morgans recently commented: “We don’t think spot prices are likely to remain at current levels forever but we think there is still plenty of scope for contract prices to increase further before settling down into a long term average.”

Liontown Resources Limited (ASX: LTR)

Analysts at Macquarie remains bullish on this lithium developer. It notes that the company has just signed a binding offtake agreement with electric vehicle giant Tesla. This complements its existing agreement with LG Energy Solution.

And with management in talks with other parties regarding a third and final offtake agreement, Macquarie feels this could be a boost to the Liontown share price if/when announced.

And with Macquarie putting an outperform rating and $2.50 price target on the company’s shares, there certainly is a lot of room for them to climb.

The post Analysts have just named these 2 ASX lithium stocks as buys appeared first on The Motley Fool Australia.

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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 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.

Back in March, e-commerce giant Amazon (NASDAQ: AMZN) announced that it would conduct a 20-for-1 stock split, and in May, shareholders voted to approve it. The split has now officially taken effect, but what has actually changed?

For every Amazon share that previously existed, 20 have taken its place. In turn, the price of each Amazon share has shrunk in proportion. One share of Amazon traded at $2,447 last Friday prior to the split, so dividing that number by 20 means the new share price is $122.35. But the market valuation of Amazon has remained the same, at $1.2 trillion, which makes the stock split entirely cosmetic.

Companies like Amazon do this because it makes their stock more accessible to smaller investors, and the hope is that their shareholder base broadens with some of these new buyers. But fundamentally, the case for buying shares in Amazon stays exactly the same, and here’s what it is.

Finding success in diverse businesses

Amazon was founded in 1994 by Jeff Bezos, who set out to leverage a concept called e-commerce to sell books online. His idea was met with plenty of skepticism, but by 1997 the company had over 1 million customers and opted to list publicly on the tech-focused Nasdaq. It is now the largest online seller in the world.

But Amazon owes its success to its aggressive expansion into new markets, which is a strategy it still maintains today. It has driven lightning-fast growth to the point where even the world’s most famous investor, Warren Buffett, regrets not buying Amazon stock in the early days. Beyond e-commerce, the company now leads the entire cloud services industry through its Amazon Web Services (AWS) division, which has become the company’s profit engine.

It also boasts an advertising business that trumped the world’s largest video platform, Alphabet‘s YouTube, for revenue in 2021 with $31 billion. The company has a great opportunity to grow its ad segment thanks to its exciting assets like Amazon Music and the Amazon Prime streaming platform, which now holds the exclusive rights to the NFL’s Thursday Night Football. That’s not to disregard the contribution from Amazon’s flagship website, which still generates over 2 billion hits per month.

But Amazon continues to look forward. In 2019, it purchased a stake in up-and-coming electric vehicle maker Rivian Automotive, grabbing a piece of what could be a multi-trillion-dollar industry in the coming decades. The Rivian investment has been a double-edged sword so far, though, dealing volatile results to Amazon’s bottom line. 

A financial powerhouse

Amazon’s operational success has certainly flowed through to its sales and its bottom line. The company has generated over $477 billion in total revenue in the last 12 months across all of its business units, and it was also soundly profitable for the period, with $41.43 in earnings per share. 

Though with the stock split now in effect, investors should divide the earnings-per-share number by 20 to equal $2.07, bringing it in line with the higher number of shares outstanding. 

One segment, AWS, is punching above its weight as a contributor to Amazon’s profits. The cloud platform offers its customers hundreds of online services from data storage to artificial intelligence, and despite accounting for just 14% of Amazon’s total revenue in the past year, it’s responsible for all of its operating income. In fact, without AWS, Amazon would’ve incurred an operating loss for the period.

Since AWS revenue jumped by 36.5% year over year in the recent first quarter of 2022, it’s outgrowing the company’s total revenue, which increased by just 7.3%. It means AWS continues to become a larger piece of Amazon, indicating the company could become more profitable overall as time goes on.

The stock split might be a net positive

If Amazon’s shrunken share price results in a cohort of smaller investors flocking to buy the stock, it could help to lift the company’s valuation. That would be especially helpful in the current market environment where the Nasdaq-100 index trades in a bear market, having declined 25% from its all-time high.

Amazon stock is faring even worse with a 35% loss over a similar period. Investors are currently reconsidering their growth expectations across most technology stocks because of rising interest rates and geopolitical tensions, which could hurt consumer spending. 

But regardless, any effect from the stock split will be short-term in nature. Investors who jump into Amazon should do so with the intention of holding for a five- to 10-year period. After all, investors who have held onto the stock since the company went public in 1997 have earned 1,630 times their money. 

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

The post Amazon’s stock split has taken effect. Now what? appeared first on The Motley Fool Australia.

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• Amazon shareholders approve 20-for-1 stock split. Here’s what investors should know
• Amazon stock rallied today — here’s why now might be the time to buy
• 3 reasons to buy Amazon and 1 reason to hesitate
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Anthony Di Pizio has no position in any of the stocks mentioned. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet (A shares), Alphabet (C shares), and Amazon. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), and Amazon. 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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The Sky Network Television Limited (ASX: SKT) share price is tumbling in morning trade, down 6.3%.

Sky Network shares closed yesterday trading for $2.38 apiece and are currently at $2.23.

The early morning selling comes after the dual-listed, New Zealand-based satellite TV provider confirmed media speculations over a potential acquisition.

What acquisition is in the pipeline?

The Sky Network share price has come under pressure after the company confirmed recent speculation that it is in exclusive negotiations to acquire MediaWorks Holdings Limited’s radio and out-of-home advertising business.

Rumours began to circulate when Sky Network last month said it would hold off releasing any additional capital allocation and strategy updates until reporting its full-year financial results in August with an eye on “investment opportunities”.

MediaWorks radio networks include Today FM, Mai-FM, The Rock, and The Edge. The company is privately owned by Oaktree Capital Management and Quadrant Private Capital.

Sky Network stated: “The likelihood of a transaction proceeding is still highly uncertain with discussions and due diligence ongoing and incomplete.”

The company said that should the acquisition of Mediaworks proceed, it would not need to raise additional equity. However, the deal would need to be approved by an ordinary resolution by shareholders at an extraordinary shareholder meeting.

When it reported its half-year results on 24 February, Sky said it was “assessing opportunities to invest capital to accelerate the growth of the business, generate new revenue streams, and deliver improved returns for shareholders”.

Today the company’s board said it believes acquiring MediaWorks is in line with that strategy.

Sky Network share price snapshot

Following some difficult years, the Sky Network share price has rebounded over the past 12 months, up 44% despite this morning’s retrace. That compares to a 1% full-year loss posted by the All Ordinaries Index (ASX: XAO).

The company has a market cap of $403 million.

The post Sky Network share price tumbles 6% on acquisition news appeared first on The Motley Fool Australia.

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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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One thing is certain right now: uncertainty.

No one knows how long high inflation will last, when interest rates will stop rising, when the war in Ukraine will end — or if Australia, the US or the world will end up in recession.

Wilsons head of investment strategy David Cassidy said in a recent memo that the chaos will clear in the medium term. But in the meantime it might be an idea to bunker down.

“While we do not think the global economy will go into recession or inflation will remain elevated, we believe having an above-average allocation to quality defensives during this period is sensible until we get more clarity on the global economy.”

Ideally such “quality defensive” ASX shares shouldn’t just be about minimising downside risk.

“Quality defensives should also outperform in a slow-growth environment — not just in recessions — have pricing power in inflationary environments, and outperform over the long-term.”

So what sort of attributes does the Wilsons team look for in their definition of “quality defensive”?

Cassidy mentioned four characteristics that they target:

• Ability to compound earnings over time
• Low beta to the market (less volatility)
• Monopolistic position in the market or a clear market leader
• High return on equity

Two ASX shares in particular are excellent examples right now, which Wilsons currently lists on its Australian Equity Focus target list:

A giant in a recession-proof industry

Health and biotechnology giant CSL Limited (ASX: CSL) is the prototype of a stock that investors should hold right now, according to Cassidy.

“CSL is the definition of a quality defensive — with resilient earnings, high ROE and the ability to positively surprise the market.”

The idea is that consumers always need healthcare, regardless of what the economy is doing or how much they’re weighed down by their mortgages.

“Recessions rarely disrupt the need for medical care or medications,” said Cassidy.

“Many of these companies also have a competitive advantage through R&D capabilities or patents for their products/services.”

The CSL share price is down more than 8% for the year-to-date and in excess of 19% from its pre-COVID highs.

Poor performer ready to turn it around

According to Cassidy, another industry that doesn’t suffer from waning demand is insurance. 

“Households and businesses need insurance, whatever the economic conditions.”

And his pick in that sector is Insurance Australia Group Ltd (ASX: IAG).

Cassidy admits the company has had its issues in recent times.

“IAG has traditionally been a high-quality insurer, although this has been tested over the past 2 years with COVID, bushfires and perils.” 

In fact, in recent years IAG shares have turned out to be a poor investment even over the long term. The stock had dived 33.6% over the past five years.

But Cassidy is convinced its worst days are behind it.

“We think IAG’s turnaround is on track, and this should lead to strong earnings growth over the next 12 months.”

Many analysts agree with Cassidy. Six out of twelve analysts surveyed on CMC Markets currently rate IAG shares as a strong buy, with one other recommending it as a moderate buy.

The post 2 ‘quality defensive’ ASX shares to see out rising interest rates: Wilsons appeared first on The Motley Fool Australia.

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Motley Fool contributor Tony Yoo has positions in CSL Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL Ltd. The Motley Fool Australia has positions in and has recommended Insurance Australia 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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