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Leading fund manager Wilson Asset Management (WAM) has revealed two ASX shares that it rates as buys within its WAM Research Limited (ASX: WAX) portfolio.

WAM operates a few different listed investment companies (LICs).

One of the LICs is called WAM Research, which looks at the smaller businesses on the ASX where there may be more hidden gems.

WAM describes WAM Research as an LIC that “invests in the most compelling undervalued growth opportunities in the Australian market”.

The WAM Research portfolio has delivered gross returns (that’s before fees, expenses, and taxes) of 15.1% per annum since its investment strategy changed in July 2010. This compares to the All Ordinaries Total Accumulation Index (ASX: XAOA) return of 9.4% per annum.

These are the two undervalued ASX shares that WAM outlined in its most recent monthly update for WAM Research.

GUD Holdings Limited (ASX: GUD)

WAM describes GUD Holdings as a business that owns a portfolio of companies in the automotive aftermarket and water products sectors. The main two countries where it operates are Australia and New Zealand.

The fund manager noted that in a recent trading update, the ASX share said that its revenue had “rebounded strongly” in March as the disruptions caused in January 2022 by the Omicron variant of COVID-19 slowed.

GUD Holdings pointed to the historically high levels of dealer sales backlogs, which are expected to support revenue growth over the short term. Sales of new vehicles are expected to return to pre-COVID levels in the medium-term.

The ASX share said that it expects inflationary pressures in freight, supply, and material costs. GUD reaffirmed its previous guidance for FY22 for underlying earnings before interest, tax, depreciation and amortisation (EBITDA) to be between $155 million to $160 million.

WAM says that its outlook for GUD Holdings remains strong and the fund manager is confident that the company will deliver on its FY22 guidance.

Viva Energy Group Ltd (ASX: VEA)

The fund manager describes Viva Energy as one of Australia’s leading energy companies that supplies approximately 25% of the country’s liquid fuel requirements.

Viva Energy owns and operates the Geelong Refinery in Victoria and operates bulk fuels, aviation, bitumen, marine, chemicals, and lubricants businesses.

In April, Viva Energy gave the market an update for the quarter for the three months to 31 March 2022. This update showed a 9% increase in total group volumes over the prior comparative period, driven by “strong” diesel sales.

WAM also noted that aviation sales volumes also increased 3% year on year, with 16% growth compared to the three months to 31 December 2021. This growth occurred after improved domestic aviation demand from leisure travel.

The fund manager said that as oil demand recovers globally, it continues to see upside for Viva Energy and expects refining margins to grow and beat earnings expectations.

Other investments

These aren’t the only two names in the portfolio. At the end of April 2022, WAM Research also owned names like Lovisa Holdings Ltd (ASX: LOV), Treasury Wine Estates Ltd (ASX: TWE), and Brickworks Limited (ASX: BKW).

The post This top fund manager thinks these 2 ASX shares are buys appeared first on The Motley Fool Australia.

More reading

• 4 great value ASX shares we just bought: expert
• 2 compelling All Ordinaries ASX shares this fund manager likes
• 3 ASX All Ordinaries shares hitting multi-year highs on Monday
• 2 ASX 200 shares clocking multi-year highs on Thursday
• Could these 3 ASX dividend shares still beat the piggybank if rates hit 2.5%?

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 Brickworks. The Motley Fool Australia has positions in and has recommended Brickworks. The Motley Fool Australia has recommended Lovisa Holdings Ltd and Treasury Wine Estates 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 Bubs Australia Ltd (ASX: BUB) share price is rocketing higher on Monday morning.

At the the open, the infant formula company’s shares are up a whopping 77% to a 52-week high of 86 cents.

Why is the Bubs share price rocketing higher?

Investors have been bidding the Bubs share price higher today after the company announced a major deal with the United States.

According to the release, Bubs will ship more than 1.25 million tins of baby formula to help ease a nationwide shortage. This shortage has been caused by a major product recall and the closure of a plant operated by Abbott Nutrition in response to rare bacterial infections.

This looks set to be a major boost to Bubs’ financial performance, which has seen the company report significant cash burn for years. And with US President Joe Biden tweeting his thanks to Bubs, it arguably gives the company the biggest publicity it will ever receive.

I’ve got more good news: 27.5 million bottles of safe infant formula manufactured by Bubs Australia are coming to the United States.

We’re doing everything in our power to get more formula on shelves as soon as possible.

— President Biden (@POTUS) May 27, 2022

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

What now?

The release notes that the shipment of 1.25 million tins is the equivalent of at least 27.5 million bottles and will comprise both cow’s milk and goat’s milk infant formula.

500,000 tins are ready for immediate export, with the remaining 750,000 tins now under production and planned to be completed in the coming months.

Bubs also revealed that it is well-placed to triple its current 10 million tin annual capacity at its FDA registered production facility if demand continues to build once the shortages end.

Importantly, in the meantime, the company has stressed that its supply to existing Australian retailers and export markets will remain unchanged despite its deal with the Biden Administration.

Management commentary

Bubs CEO, Kristy Carr, commented:

Bubs is uniquely positioned with an existing nationwide sales and distribution footprint, enabling us to stock shelves with existing and prospective retail partners quickly.

Bubs already has the necessary customer relationships and processes to support the initiative, including supply and distribution logistics, and the appropriate insurances and Aussie Bubs Advisory Board to assist American families. This foundation is a reflection of our long-term commitment to the USA as a strategic priority for the Company, drawing on our 17 years of experience in infant nutrition to ensure that stringent standards and quality control measures were in place to support the launch.

Bubs’ chairman, Dennis Lin, acknowledged that the company was fortunate to have entered the USA market during a period of shortages.

Bubs had identified USA as a strategic key market two years ago, and our commitment to invest has thankfully coincided with American families’ time of need. This allows us to accelerate our strategic vision as well as provide support that goes to the heart of the Bubs DNA.

Time will tell whether this is a short term boost to sales or the start of something special in the US market.

The post Bubs share price rockets 77% on US deal with Biden Administration appeared first on The Motley Fool Australia.

More reading

• Why is the Bubs share price toddling higher on Monday?
• Why did the Bubs share price jump 16% today?
• Which is the better beaten-up buy, Bubs or A2 Milk shares?
• Bubs share price sinks 29% in a month. Top broker tips 60% upside

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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There are some attractive ASX share options in May 2022. However, one that is catching my attention is Airtasker Ltd (ASX: ART).

For readers who haven’t heard of the business, it provides a platform to bring together people who need work done and individuals or businesses willing to do that work.

There are dozens of categories that people can choose from, including home cleaning, removalists, furniture assembly, handyperson tasks, home and gardening, delivery, accounting, automotive services, swimming lessons, and wedding services. One of the categories that can be chosen is ‘anything’.

I think there is a lot to like about this business. But there are a few key reasons why I like it:

Revenue growth and large addressable market

One of the main things I look for is a business that is growing at a good pace and has plenty more room to grow. It’s the effect of compounding that can enable a business growing quickly to achieve good results over the long term, such as five years or longer.

I think that the quarter for the three months to March 2022 showed off how quickly Airtasker is actually growing. Total revenue rose 21.2% in that quarter to $8.6 million.

UK gross marketplace volume (GMV) went up by 138%. Airtasker’s UK marketplaces continue to scale with both demand (posted tasks) and supply (offers made by active taskers) growing “strongly”.

The US market is also growing very quickly. US ‘posted task’ growth increased 90% quarter on quarter. The ASX share is growing in the targeted cities of Miami, Kansas City, Dallas, and Atlanta. But it’s also building momentum in non-core US cities too. I think this is very promising for the future.

Both the UK and US are much larger markets than Australia.

While inflation (and its flow-on effects) aren’t helping the Airtasker share price and other tech shares, I think that Airtasker can benefit in some ways with growth of the average task value. The FY22 second quarter saw average task value rise by 24% quarter on year to $255.

Gross profit margin

One thing that I really like about Airtasker is that it has a gross profit margin of 93%. This means that 93% of the new revenue (which is growing quickly) is being turned into gross profit.

More gross profit means that the business can invest in business-growing activities such as marketing, product development, salaries, etc.

The gross profit margin should also help its other profit margins, like net profit after tax (NPAT), in time, when the business no longer invests as heavily for growth.

Cashflow

For rapidly-growing ASX shares, it can be tricky to balance spending money on growth and ensuring companies don’t burn through cash. Needing to do capital raising at the wrong time could be very dilutive for shareholders. Look at what happened to ASX travel shares at the start of the COVID-19 pandemic.

Airtasker seems to already have reached the positive cash flow stage of its development.

In the third quarter of FY22, the business generated $1 million of positive operating cash flow. It also had $32.8 million of cash at the bank.

If its gross profit margin stays very high and it keeps growing revenue, then I think the company can comfortably fund its own growth and keep investing in itself.

Airtasker share price

I think the Airtasker share price looks much more attractive after dropping over 50% in 2022 and 65% over the last year.

While some investors may have turned away from Airtasker, I think it has a very promising future if it can keep growing revenue by double-digits in the coming years.

The post My #1 ASX share idea for May 2022 appeared first on The Motley Fool Australia.

More reading

• Could now be a great time to start investing in ASX shares?
• Here’s why the Airtasker share price is leaping 8% on Wednesday
• Where I’d invest $10,000 into ASX shares this week
• Buy these great value 2 ASX growth shares: experts
• Why is the Airtasker share price edging higher today?

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 recommended Airtasker Limited. 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 AGL Energy Limited (ASX: AGL) share price could be in the firing line on Monday morning amid the latest developments in the demerger saga.

Reports by The Australian late yesterday afternoon suggested the country’s largest energy retailer holds doubt on its prospects of receiving approval in the upcoming demerger vote. The energy giant has since confirmed the news ahead of the opening bell.

The development follows last week’s news that Wilson Asset Management boss Geoff Wilson had also grown sceptical of the split.

Cannon-Brookes has it his way

While the Atlassian Corporation (NASDAQ: TEAM) co-founder Mike Cannon-Brookes was not the only opponent of AGL’s intention to cut itself into two, he has certainly been the loudest.

From partnering up with Brookfield in a rejected $8.25 billion takeover bid, to quietly accumulating an 11.28% stake in the energy company — Cannon-Brookes has been unrelenting in challenging the proposal.

Yet, exactly 11 months on from the first mention of the radical AGL restructure, it appears the tech billionaire has prevailed. Shareholders will be watching intently to see how the AGL share price reacts to the news this morning.

According to the latest release, AGL Energy is withdrawing its proposal to break the company into AGL Australia and Accel Energy. Though, the board’s decision appears to have been made begrudgingly. The announcement notes that the board still believes the demerger would have been “the best way forward”.

However, with the strong opposition from the likes of Cannon-Brookes’ Grok Ventures, the board thinks it is unlikely to get over the required 75% approval mark. As such, the energy company is canning the proposal and opting for a strategic review.

AGL share price in focus on board shake-up

ASX-listed AGL will also be seeking a new CEO following the decision for Graeme Hunt to step down from the role. Though, the shake-up of the board doesn’t stop there.

In addition, chair Peter Botten, non-exec director Jacqueline Hey, and Diane Smith-Gander will all resign from the board.

It is believed that Mike Cannon-Brookes will seek to gain representation on the AGL board.

The AGL share price is up 44.46% since the beginning of the year.

The post AGL share price on watch as demerger scrapped appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Monday
• How do ASX shares typically perform following a demerger?
• Australia’s renewable energy output could triple by 2030 under Labor. Will that impact these ASX 200 shares?
• AGL share price lifts despite intensifying demerger opposition
• What might a Labor government mean for ASX energy shares?

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 Atlassian. 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 Galileo Mining Ltd (ASX: GAL) share price has been on a tear during the month of May.

The mineral exploration and development company recently released a couple of positive announcements which has excited investors.

During Friday’s trading session, Galileo Mining shares touched an all-time high of $1.95 before slightly retracing.

At market close on Friday, its shares finished 20.57% higher to $1.70.

This means that Galileo Mining shares are now up by more than an incredible 660% in May.

What’s driving Galileo Mining shares to record highs?

The Galileo Mining share price has caught the attention of investors following the company’s latest drill results.

The rare and precious metal, rhodium was intercepted from a drill hole at the Callisto discovery of the Norseman Project.

Rhodium is an extremely valuable metal that is much pricier than gold or silver, around US$15,600 per ounce.

The silvery-white, hard, corrosion-resistant transition metal is used in catalytic converters designed to clean vehicle emissions. It is also alloyed with platinum for aircraft turbine engines.

The assay results showed rhodium values of up to 0.094 grams per tonne. Average values across the 33-metre interval intersected consisted of 0.05 grams per tonne.

In addition, Galileo Mining announced a major discovery of palladium-platinum-copper-nickel-sulphide earlier in the month.

Management is hopeful that the initial drill hole will translate into a high-quality resource for mining.

A forward work program has been put into action which involves downhole EM surveying of selected drill holes. This will assist with next stage of targeting a 2,000 to 5,000 metre RC drilling campaign.

Galileo Mining share price summary

Over the last 12 months, Galileo Mining shares have travelled on a slow and gradual decline before rocketing this month.

The company’s shares surged 470% since this time last year, but are up 655% in 2022.

Based on valuation grounds, Galileo Mining presides a market capitalisation of roughly $286.30 million.

The post Why has the Galileo Mining share price shot to the stars in May? appeared first on The Motley Fool Australia.

More reading

• 3 ASX mining shares soaring by more than 30% on Friday
• Up 700% in 2022, why the Galileo Mining share price is leaping another 36% today
• 3 ASX mining shares going gangbusters on Thursday
• Galileo Mining share price surges another 25% on ‘very important’ drill results
• The Galileo Mining share price has been on a tear, but now it’s halted. What’s happening?

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 corporate regulator Australian Securities and Investments Commission has started civil legal action against Australia and New Zealand Banking GrpLtd (ASX: ANZ).

ANZ shares will be carefully monitored Monday morning after the corporate regulator alleged the bank misled around 165,750 customers about their available funds and balances on their credit cards.

The bank then allegedly charged fees and interest based on the incorrect information.

For those customers, the false representations allegedly occurred for more than two years — between May 2016 and November 2018.

ASIC deputy chair Sarah Court claimed the practice is still happening.

“This alleged misconduct is the result of system errors within ANZ and a lack of effort to comprehensively fix these issues,” she said.

“We say that ANZ has been aware of the unlawful charging since at least 2018.”

ANZ acknowledged the legal action in a message to the ASX.

“ANZ is considering the matters raised by ASIC in its concise statement,” the bank stated.

“ANZ will not be providing further comment, given the matter is now before the court.”

Some customers ‘charged thousands of dollars in fees’

By allegedly overstating the funds available, customers spent money according to that information then ANZ was able to slug them fees and interest.

“In some cases, single customers were charged thousands of dollars in fees,” she said.

“The average cash advance fees and interest charged per affected account was $47.”

The false balances were allegedly shown on the ANZ website, app, and at ATMs.

Although ANZ has given back more than $10 million to customers affected until 17 November 2018, ASIC alleges current clients continue to be misled.

The corporate watchdog is asking the Federal Court to apply declarations and monetary penalties on the bank.

The court has yet to schedule the date for the first case management hearing.

The ANZ share price is down 8.3% for the year so far. The last month has been especially tough for its investors, as the bank’s stock plummeted almost 6%.

According to The Motley Fool’s Bernd Struben, ANZ shares trade at the lowest price-to-earnings ratio out of the big four banks.

The post The corporate cop is suing ANZ: share price on watch appeared first on The Motley Fool Australia.

More reading

• The ANZ share price is ‘trading at its largest discount to its peers in 15 years’: Is this justified?
• Own ANZ shares? The bank is amping up competition between its big four peers
• ASX shares paid out a record $98b in dividends in the 12 months to March. Which are the star performers?
• ANZ shares backtrack despite the bank bolstering its board
• Has the ANZ dividend been growing?

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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There are a number of quality S&P/ASX 200 Index (ASX: XJO) shares that this writer thinks are worthwhile buys right now, particularly during this volatility.

In my opinion, it’s times of market declines that can end up being the most attractive time to buy because of the lower prices.

Who knows how long these prices will stay where they are? They could go lower, or higher, from here.

But, at the current levels, I think these two ASX 200 shares look like good options.

Goodman Group (ASX: GMG)

Goodman is one of the largest property businesses on the ASX. This ASX 200 share is a major developer, owner, and operator of industrial properties around the world.

The company is benefitting from the high level of demand for logistics and e-commerce properties. That’s why it’s working on such a large pipeline of potential opportunities. As at 31 March 2022, Goodman had $13.4 billion of development work in progress across 89 projects.

The customer demand is also helping the rental profit for the business. In the latest quarter it reported 3.7% like for like net property income (NPI) growth in its managed partnerships. As well as attractive rental income growth, it also has a high occupancy rate of 98.7% across its partnerships.

In a rising interest environment, I think it’s good that Goodman has a low level of debt. At 31 December 2021 its gearing was 7.2%, and it has over $2 billion of liquidity.

The ongoing work on projects and valuation gains of existing properties has helped its total assets under management (AUM) reach $68.7 billion. The company expects this to rise to above $70 billion by 30 June 2022.

The ASX 200 share is expecting to achieve FY22 operating earnings per security (EPS) growth of 23%.

I think the Goodman share price looks attractive after its 26% fall in 2022.

BHP Group Ltd (ASX: BHP)

I think that BHP is one of the highest-quality resource businesses on the ASX.

The diversified nature of BHP’s portfolio of commodities is attractive to me. In the near future, it will divest its petroleum business to Woodside Energy Group Ltd (ASX: WDS). It will be left with the following commodities: iron, metallurgical (steel-making) coal, copper, nickel and potash.

I’m particularly excited by the company’s plans for potash, which is a type of fertiliser. It’s an attractive growth area because it’s seen as “low emission, biosphere friendly and positively leveraged to decarbonisation”.

BHP says that strong fundamentals and a mature existing asset base offer an attractive entry opportunity with its Jansen potash asset in Canada.

The ASX 200 mining share says it will be able to achieve large-scale production at low cost, leading to an attractive profit margin with the commodity.

I think that BHP can continue to benefit from good commodity prices, leading to strong cash flow, which can mean juicy dividends.

As BHP becomes focused on greener commodities, like copper and potash, I think it will become more attractive to ESG-focused investors.

The post Why I’d buy these 2 ASX 200 shares appeared first on The Motley Fool Australia.

More reading

• How to turn $20,000 into $180,000 in 10 years with ASX shares
• Brokers name 3 ASX shares to buy today
• ‘We’re close to the bottom’: Expert flags share market sectors to buy before the rally
• Top broker gives its verdict on the BHP share price post-demerger
• What’s the outlook for ASX 200 dividend shares in the second half of 2022?

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 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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Once a week I like to look at ASIC’s short position report to find out which shares are being targeted by short sellers.

This is because I believe it is well worth keeping a close eye on short interest levels as high levels can sometimes be a sign that something isn’t quite right with a company.

With that in mind, here are the 10 most shorted shares on the ASX this week according to ASIC:

• Flight Centre Travel Group Ltd (ASX: FLT) continues to be the most shorted ASX share with short interest of 17%, which is down slightly week on week. There are concerns that the market may be expecting too much too soon from the travel market recovery.
• Betmakers Technology Group Ltd (ASX: BET) has seen its short interest remain flat at 13.5%. This betting technology company appears to have been targeted due to its lofty valuation.
• Nanosonics Ltd (ASX: NAN) has short interest of 12.5%, which is up slightly week on week. Short sellers have been increasing their interest in this medical device company since it announced a major change to its sales model in the United States. Though, it is worth noting that last week management said the transition was going well.
• Polynovo Ltd (ASX: PNV) has seen its short interest continue to rise to 11.3%. Short sellers have been topping up their positions despite the medical device company’s Chairman aggressively buying shares this month.
• Webjet Limited (ASX: WEB) has short interest of 10.1%, which is up week on week. Despite Webjet expecting a big improvement in its performance in FY 2023, short sellers don’t appear confident this will be the case.
• Appen Ltd (ASX: APX) has seen its short interest rise to 9.9%. Short sellers will be breathing a sigh of relief after a crazy week. This AI services company’s shares rocketed higher after receiving a takeover approach from Telus International. However, it gave back those gains after Telus withdrew its offer just hours after it was revealed. Appen also released a trading update which revealed a very poor performance during the first half.
• Regis Resources Limited (ASX: RRL) has short interest of 9.2%, which is up slightly since last week. This gold miner appears to have been targeted amid concerns over labour shortages, cost pressures, and lower grades.
• EML Payments Ltd (ASX: EML) has seen its short interest reduce to 9%. Short sellers have been going after this payments company since it revealed a deterioration in its performance during the third quarter.
• Kogan.com Ltd (ASX: KGN) has seen its short interest reduce to 9%. Short sellers have been targeting this ecommerce company due to its poor inventory management, weakening margins, and rising competition from Amazon.
• AMA Group Ltd (ASX: AMA) has 9% of its shares held short, which is down slightly week on week. This high level of short interest may be due to the crash repair company’s precarious balance sheet.

The post These are the 10 most shorted ASX shares appeared first on The Motley Fool Australia.

More reading

• Why Appen, Catapult, CSR, and Select Harvests shares are dropping
• The Flight Centre share price is soaring 3% today. Could this be behind its gains?
• After its recent surge, the Polynovo share price is down 8% this week. Is it a buy?
• What’s boosting the Webjet share price 3% higher on Friday?
• ASX 200 midday update: Appen crashes, lithum shares jump

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, Betmakers Technology Group Ltd, EML Payments, Kogan.com ltd, Nanosonics Limited, and POLYNOVO FPO. The Motley Fool Australia has positions in and has recommended EML Payments, Kogan.com ltd, and Nanosonics Limited. The Motley Fool Australia has recommended Betmakers Technology Group Ltd, 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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You’ll find no shortage of ASX shares operating in the resource space.

That’s mostly because Australia has been blessed with an abundance of natural resources.

When it comes to critical minerals like vanadium, however, the number of ASX shares exploring for and producing the element is much narrower.

We’ll look at three of those below.

But first…

What is vanadium?

If you recall your periodic table from your school days, vanadium is atomic number 23.

It’s a ductile metal that’s resistant to corrosion from alkalis, acids and salt water.

Vanadium is primarily used to produce stronger, more heat resistant steel. You’ll also find it in nuclear reactors and modern batteries.

Currently China produces almost 60% of the global vanadium supply.

And with the Western world working to secure supplies of crucial materials outside of China, vanadium has been listed as a critical mineral by the Australian government.

So, which ASX shares are digging up vanadium?

The ASX shares cashing in on vanadium

First off, we have the aptly named Australian Vanadium Ltd (ASX: AVL).

The company’s main focus is its Australian Vanadium Project, located in Western Australia, which has a globally significant vanadium resource.

AVL has seen some big share price swings over the past 12 months on reports of various successes and setbacks. All up, investors have rewarded the company, with shares up 120% since this time last year.

The small-cap ASX share has a market capitalisation of $157 million.

Who else is focused on vanadium?

Another ASX share involved with vanadium is Neometals Ltd (ASX: NMT).

Among its projects, Neometals is the 100% owner of the Barrambie vanadium-titanium project. The company is also working on vanadium recovery in Europe.

Following a 158% share price surge over the past 12 months, Neometals has a current market cap of $705 million.

Looking into the larger companies, there’s also Syrah Resources Ltd (ASX: SYR).

While not the element is its primary focus, Syrah reported its Balama graphite project in Mozambique “contains a significant vanadium by-product resource which presents a potential value-accretive opportunity”.

The company added:

Vanadium, a by-product which is liberated during the graphite production process, could potentially be refined into a saleable product via processing of material currently reporting to tailings at Balama.

The Syrah resources share price is up 79% since this time last year.

That gives the ASX share a market cap of $1.2 billion.

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

More reading

• What’s going on with the Australian Vanadium share price today?
• Why Australian Vanadium, John Lyng, Nufarm, and Unibail-Rodamco-Westfield are dropping
• Why is the Australian Vanadium share price crashing 17% today?
• 2 sold-off ASX shares essential for electric cars
• Neometals share price leaps 11% on Mercedes-Benz deal

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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As hot as they are, ASX lithium shares have not been immune to the selldown the last few weeks.

However, the long-term global demand for the resource cannot be denied, according to resources sector columnist Barry Fitzgerald.

“The thematic is alive and well. And it’s here to stay for decades to come, as governments and companies alike combine forces to rein in global carbon emissions,” he posted on Livewire.

“It means decarbonisation is pushing through the current equity market concerns.”

That doesn’t mean there won’t be some volatility in the short term. But eventually, China will abandon zero-COVID, inflation and rates will settle down, and the war in Ukraine will come to an end.

“None of those recovery factors for the global economy are around the corner,” said Fitzgerald.

“But they will pass, while all the time, the decarbonisation thematic will continue to gather pace, creating huge and decades-long supply challenges for the broad sweep of commodities plugged into the decarbonisation effort.”

Taking advantage of low share prices

Fitzgerald noted that already investors are returning to “take advantage” of low share prices.

He specifically named three lithium producer ASX shares that have massive upside, citing figures from Macquarie Group Ltd (ASX: MQG).

“The firm has a price target on Pilbara Minerals Ltd (ASX: PLS) of $4 compared with its Thursday close of $2.81. Allkem Ltd (ASX: AKE), trading at $13.49, was given a price target of $17.70 and Liontown Resources Limited (ASX: LTR), trading at $1.28, was given a target of $2.50.”

Pilbara shares have lost almost 20% since 4 April. The Liontown share price has plunged 37.5% over the same period. 

Allkem shares plummeted 20% until a fortnight ago but have rallied 30.75% since. 

The sell-off was triggered by market worries about China’s latest COVID lockdowns and their impact on lithium demand.

“While there has been a little bit of weakness, the resultant equities sell-off has clearly been overdone.”

State of the lithium industry

The big reform currently under way in the lithium industry is to switch customers from fixed-price contracts to a more variable agreement.

Macquarie analysts calculated that Pilbara and Allkem were valued as if their “realised lithium carbonate equivalent price” was US$15,000/t.

But the spot price for lithium is currently at a massive US$70,000/t, according to Fitzgerald.

“There is an almighty scramble by the industry to capture a greater share of the bumper spot pricing by shifting their customers to more variable/index-based pricing contracts,” he said.

“Early success in doing just that was why the big US lithium producer Albemarle Corporation (NYSE: ALB) was able to again upgrade profit expectations during the week.”

In addition to contractual changes, Pilbara showed this month with its online auction of spodumene concentrates that investor worries about a Chinese slowdown were “overdone”.

“The cargo of 5,000/t (grading 5.5% lithium oxide) popped off for a record $US5,955/t,” said Fitzgerald.

“On a more standard 6% basis, it equates to $6,586/t, or 5% more than the last auction a month ago.”

All eyes will be on the Resources Rising Stars conference on the Gold Coast to be held next week.

“Pilbara boss Ken Brinsden will be giving investors an up-to-date assessment of the lithium market,” said Fitzgerald.

“Liontown boss Tony Ottaviano will also be updating investors on the group’s Kathleen Valley development.”

The post 3 ASX lithium shares set to roar back: experts appeared first on The Motley Fool Australia.

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Motley Fool contributor Tony Yoo has positions in Macquarie Group 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 recommended Macquarie 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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