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The Santos Ltd (ASX: STO) share price is edging lower in mid-morning trade on Wednesday.

This comes despite the company releasing an announcement regarding a new capital management framework including an initial on-market share buyback.

At the time of writing, the energy giant’s shares are swapping hands for $8.27 each, down 0.6%.

Santos shakes up its capital management framework

In today’s statement, Santos outlined its new capital management framework and the on-market share buy-back of up to US$250 million (A$330 million).

Management noted that the company strategy involves maintaining a disciplined, low-cost operating model that can deliver strong cash flows.

As such, the new capital management framework looks to support the business in enabling a balanced allocation of capital. This includes investments in the company, strategic growth and clean energy projects, and sustainable returns to shareholders at higher commodity prices.

The new capital management framework is outlined below:

• A dividend policy of 10% to 30% payout of free cash flow (excluding major growth) generated per annum at an average Brent oil price up to US$65 per barrel.

• Additional shareholder returns of at least 40% of the incremental free cash flow (excluding major growth) in the form of additional dividends and/or share buybacks at the board’s discretion at Brent oil price outcomes above US$65 per barrel.

• A target gearing range of 15% to 25%.

In addition, given the strong free cash flow being generated at current oil prices, Santos intends to conduct an on-market share buyback.

This is expected to commence next month and run throughout the remainder of 2022.

However, the exact timing and number of shares purchased under the buyback will depend on a number of things. This revolves around prevailing market conditions, the share price, and other relevant factors.

Santos managing director and CEO Kevin Gallagher briefly commented:

We are now in a position to target higher shareholder returns through our new capital management framework and are pleased to announce an initial on-market share buyback of up to US$250 million because we believe the current share price undervalues the company.

Santos share price snapshot

It’s been a solid 2022 for Santos shares, registering gains of 31% following a surge in oil and gas prices.

When looking at the same time last year, the company’s share price is up almost 20%.

Santos commands a market capitalisation of about $28 billion as one of the premier energy companies on the ASX.

The post Santos share price dips amid $330m share buyback appeared first on The Motley Fool Australia.

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• 5 things to watch on the ASX 200 on Wednesday

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 Bruce Jackson.

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The Whitehaven Coal Ltd (ASX: WHC) share price is soaring this morning, opening at $4.94 — a new multi-year high — following the release of the coal producer’s March 2022 quarterly production report.

The opening price represented a 6% jump for Whitehaven shares on yesterday’s closing price of $4.66. They haven’t traded at this level since 2018. However, the share price made a quick retreat in the first hour of trading to $4.72 at the time of writing — up 1.29%.

Record average coal price lifts Whitehaven share price

Whitehaven revealed a record average coal price for the quarter at $315 per tonne, up from $101 in the prior corresponding period (pcp) and $204 over the first half of 2022. Rising commodity prices — largely the result of the Russia-Ukraine conflict — have led to a cash bonanza for Whitehaven.

Even after paying out $80 million in dividends and spending $67 million on share buybacks during the March quarter, the coal producer reported a net cash position of $161 million as of 19 April.

The company says it is on track to deliver its FY22 production guidance. Other highlights include:

• Run-of-mine (ROM) production of 5.2Mt, up 62% on the December quarter and down 5% on pcp
• Saleable coal production of 4.5Mt, up 50% on the December quarter and up 5% on pcp
• Sales of produced coal of 4.4Mt, up 5% on pcp
• Equity sales of produced coal of 3.5Mt, up 3% on pcp
• Managed coal stocks of 2.1Mt at 31 March, in line with 2.1Mt at 31 December 2022.

The strong production results came despite COVID-19 continuing to cause labour shortages. The company noted that rising case numbers during the quarter meant more workers had to self-isolate.

What did management say?

In its statement, Whitehaven said it expected to increase its June quarter ROM production to between 5.4Mt and 6.9Mt (relative to 5.4Mt in the June 2021 quarter and 5.2Mt in the March 2022 quarter). It said the Maules Creek and Narrabri mines should contribute significantly to the lift in ROM production.

Whitehaven managing director and CEO Paul Flynn said:

Coal prices increased to record levels during the March quarter and remain very well supported in an environment of strong demand and constrained supply. As the developed world re-focuses on the critical importance of energy security, Whitehaven presents a compelling investment thesis.

What else is happening at Whitehaven?

Also this morning, Whitehaven released an update on its Winchester South Coal project in central Queensland’s Bowen Basin.

Whitehaven says there is more coal at the site than originally thought, with JORC Reserves upgraded from 350Mt to 380Mt and JORC Proved Reserves upgraded from 140Mt to 270Mt.

The open cut mine is expected to have 20 years or more of life. The company has a ROM production target of 15 million tonnes per annum. It is 100% owned by Whitehaven.

Whitehaven said the mine “continues to progress through the Queensland Government’s Coordinated Project approval process”.

Whitehaven share price snapshot

The Whitehaven share price has soared by 76% in the year to date. It is up 237% over the past 12 months.

The post Coal hard cash: Here’s why the Whitehaven share price just hit a multi-year high appeared first on The Motley Fool Australia.

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• Why ASX coal shares are charging higher again today

Motley Fool contributor Bronwyn Allen 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 Bruce Jackson.

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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.

What happened

Finding itself among the many tokens that are rising today, The Sandbox (CRYPTO: SAND), a popular metaverse cryptocurrency, is also soaring today. But why are investors so eager to scoop up this token in particular? Apparently, the company is looking to raise funds, so investors may be speculating that the company has growth plans on the horizon.

As of 1:50 p.m. ET, The Sandbox’s token has risen 9.3% over the previous 24-hour period.

So what

According to Bloomberg, The Sandbox, whose majority owner is blockchain game developer Animoca Brands, is interested in raising $400 million from current as well as new investors at a valuation of $4 billion. At the moment, The Sandbox has a market cap — the market value of its circulating supply — of $3.35 billion. 

Citing people familiar with the matter, Bloomberg is reporting that the size of the funding and the valuation are both flexible, predicated on market sentiment and investor demand. The company didn’t respond to a request for comment.

Previously, The Sandbox had raised $93 million in Series B funding from SoftBank in November. In the related press release, The Sandbox stated that the funds it had raised would be used to:

[S]cale the platform’s growth as a prime entertainment destination where brands, IPs, and celebrities can engage with their fans through virtual experiences, including games, live performances, and social experiences.

Presumably, the funding that it’s currently seeking will be used for similar purposes. 

Now what

Among the companies seeking to flourish in the metaverse, The Sandbox is one of the more familiar names and its early foray into the space will likely prove advantageous as others are seeking to gain ground. For crypto-curious investors, this name is one to watch closely.

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

The post Why The Sandbox cryptocurrency is soaring today appeared first on The Motley Fool Australia.

More reading

• Should you buy Metaverse real estate?

Scott Levine 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 Bruce Jackson.

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

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It has been a stunning day for the Ramsay Health Care Limited (ASX: RHC) share price on Wednesday.

In morning trade, the private hospital operator’s shares have rocketed 28% higher to $82.50.

Why is the Ramsay share price rocketing higher?

Investors have been bidding the Ramsay Health Care share price higher today after the company confirmed speculation that it has received a takeover offer.

Ramsay Health Care revealed that it has received a conditional, non-binding, indicative proposal from a consortium led by private equity giant KKR.

According to the release, the KKR consortium has tabled an $88.00 cash per share offer to acquire Ramsay, less any dividends. This includes the recently paid interim dividend for FY 2022.

This offer represents a premium of 36.7% to the Ramsay Health Care share price at the close of play on Tuesday.

Ramsay will also be allowed to pay shareholders a fully franked special dividend, which would reduce the offer price accordingly. This is so the healthcare giant can distribute all available franking credits to shareholders. Prior to its most recent dividend, Ramsay’s franking account balance was a sizeable $823 million.

Potential spanner in the works

While Ramsay has granted the KKR consortium with due diligence, it highlights that the offer was made on the condition that it remained confidential.

Now that the proposal has leaked, the KKR consortium can walk away from talks without penalty.

This adds an element of risk that could explain why the Ramsay share price isn’t trading even higher and a touch closer to the offer price today.

In addition, the proposal is subject to a number of conditions such as regulatory approvals. This includes FIRB approval.

Ramsay intends to keep the market informed as things develop.

The post Ramsay Health Care share price rockets 28% higher on takeover bid appeared first on The Motley Fool Australia.

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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 Ramsay Health Care Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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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.

What happened

Electric cars giant Tesla (NASDAQ: TSLA) is set to report earnings after close of trading tomorrow, Wednesday, April 20.

Even before the news is out, however, Tesla investors are taking a victory lap today, and Tesla stock is up 2.4% as of 12:05 p.m. ET as investors begin to place bets on what the news will hold. 

So what

Wall Street is of two minds about what Tesla will report tomorrow. On the one hand, Tesla perma-bear Gordon Johnson at GLJ Research is warning that Tesla’s operating cash flow is going to come in only half as strong as the $2.3 billion that other analysts have forecast, sending Tesla’s stock price plummeting tomorrow afternoon. On the other hand, Credit Suisse is raising its Tesla price target to $1,125 on the theory that earnings calculated according to generally accepted accounting principles (GAAP), at least, will be better than others expect.

(Credit Suisse sees earnings coming in at $2.56 per share, versus the $2.26-per-share consensus, reports TheFly.com.)

Now what

Whether Tesla beats or misses the precise numbers that analysts are forecasting for tomorrow, however, here’s what you should actually be focusing on:

Chinese news agency Xinhua reported this morning that at long last, Tesla has resumed car production at its Shanghai factory. The reopening is going slower than predicted, however, and Tesla apparently won’t be up to running even one full shift (out of four total shifts in a week) until the end of this week.

Still, the restart is happening, and that means that Tesla is getting back on track toward its goal of producing 1 million electric cars globally this year. With Shanghai alone able to cover nearly half that number, restarting production there is absolutely crucial to Tesla’s success in hitting its goal this year. Expect Tesla to update investors on the status of its restart tomorrow and to confirm or deny that it can still reach its target after losing three full weeks (and counting) of production capacity in China.  

In the long term, those three weeks will probably dwindle in significance. In the short term, however, whether Tesla is forced to move the goalposts for 2022 could have a marked affect on the stock price this week. 

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

The post Why Tesla stock popped before earnings appeared first on The Motley Fool Australia.

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns 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 Bruce Jackson.

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

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The Rio Tinto Limited (ASX: RIO) share price is on the slide on Wednesday.

At the time of writing, the mining giant’s shares are down 2.5% to $118.62 following the release of its first quarter production update.

First quarter production highlights

For the three months ended 31 March, Rio Tinto’s production was largely down across the board both in comparison to the prior corresponding period and the previous quarter. This explains much of the weakness in the Rio Tinto share price today.

The company’s Pilbara operations had a challenging first quarter. Rio Tinto produced 71.7 million tonnes of iron ore, which was 6% lower than the first quarter of FY 2021. Pilbara shipments were 71.5 million tonnes, 8% lower year on year.

Positively, the company expects increased production volumes and improved product mix in the second half with the commissioning and ramp up of Gudai-Darri, commissioning of the Robe Valley wet plant and improved mine pit health.

It was a similar story for its aluminium production, which at 0.7 million tonnes was 8% lower than the first quarter of FY 2021. This was due to reduced capacity at its Kitimat smelter following a strike.

Finally, mined copper production came in at 125,000 tonnes, which was 4% higher than the first quarter of FY 2021. This was driven by higher recoveries and grades at Kennecott, which was partly offset by lower grades at Oyu Tolgoi and lower throughput at Escondida.

Management commentary

Rio Tinto’s Chief Executive, Jakob Stausholm, was a touch disappointed with the company’s performance during the quarter but remains positive on the future. He said:

“Production in the first quarter was challenging as expected, re-emphasising a need to lift our operational performance. We launched seven more deployments of the Rio Tinto Safe Production System, building on the achievements from the previous rollouts. As we ramp up Gudai-Darri, our iron ore business will have greater production capacity and be better placed to produce additional tonnes of Pilbara Blend in the second half.”

Outlook

Despite this weak first quarter, management has reiterated its production guidance for FY 2022.

This includes iron ore shipments of 320Mt to 335Mt, aluminium production of 3.1Mt to 3.2Mt, and mined copper production of 500kt to 575kt.

This compares to FY 2021’s production of 322Mt, 3.2Mt, and 494kt, respectively.

Also remaining unchanged is the mining giant’s cost guidance. It expects iron ore unit costs of $19.50 to $21.00 per tonne and copper C1 unit costs of 130 to 150 US cents per pound.

Though, judging by the Rio Tinto share price performance today, some investors may have doubts over this guidance.

The post Rio Tinto share price falls on weak Q1 update appeared first on The Motley Fool Australia.

More reading

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

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Owners of BHP Group Ltd (ASX: BHP) shares may want to know that the company is due to release its operational update this week. However, one broker thinks the update could disappoint.

On 21 April, the company is expected to tell investors how it performed in the three months to 31 March 2022. Shareholders will get an understanding of the nine months ending 31 March 2022.

Could the quarterly update disappoint?

According to reporting by the Australian Financial Review (AFR), the broker RBC Capital Markets has suggested that BHP’s third quarter won’t be as good as investors are expecting.

There are two reasons for the negativity. One reason is COVID-19, and the other is wet weather.

It was suggested that the spread of COVID-19 in Western Australia, as well as port data, indicates that it’s going to be a “weak” quarter for BHP’s iron operations. Due to those factors, the broker decided to decrease its forecast for FY22 iron ore by 1.1%. The third-quarter estimate is now 67.5 million tonnes.

The AFR reports that RBC Capital suggested that copper production at Escondida and Spence struggled in February. It’s possible that the Escondida guidance for FY22 could be dropped by between 20,000 tonnes to 50,000 tonnes, according to the broker.

Coal production could also be affected by wet weather.

Despite those potential issues, RBC reportedly increased its BHP share price target to $50 from $49. That implies a decline of 6% from where the BHP share price currently sits.

Commentary on BHP

The AFR reported on comments made by RBC analyst Tyler Broda, who said:

We see BHP as a strong and well run mining company with a solid balance sheet and upside risk to near-term consensus cash returns, albeit moderated by rising costs.

We continue to see better upside and strategic positioning elsewhere amongst global peers and maintain a sector perform recommendation.

Other ratings on the BHP share price

Macquarie rates BHP as ‘outperform’, with a price target of $61. That implies a potential upside of around 15% for the resource business.

The broker UBS is ‘neutral’ on the company, however the price target is just $43. That suggests a possible downside of almost 20%.

Both of these ratings came after the merger investor presentation between Woodside Petroleum Limited (ASX: WPL) and BHP’s petroleum division.

The independent expert concluded that the merger is in the best interests of Woodside shareholders. The expert said the merger is broadly supported by various financial and other relative contribution measures.

The share consideration for the deal is 914,768,948 new Woodside shares issued to BHP, with each BHP shareholder receiving approximately 0.1807 new Woodside shares per BHP share. The pro forma equity ownership will be approximately 52% for Woodside shareholders and 48% for BHP shareholders.

There will also be a cash adjustment. Woodside is entitled to around $1.6 billion for net cash flow from the BHP petroleum business from 1 July 2021. But, BHP is entitled to $830 million for dividends paid by Woodside since 1 July 2021.

The post Own BHP shares? Here’s why this week’s operations update could disappoint appeared first on The Motley Fool Australia.

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• The BHP share price has had a stellar start to the year. Is it just the beginning?

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 Bruce Jackson.

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The Fortescue Metals Group Limited (ASX: FMG) dividend has been a talking point over the years, rewarding shareholders with big payouts.

This comes as the mining giant has enjoyed bumper profits, particularly from the surging iron ore spot price.

Nonetheless, we take a look to see how the Fortescue dividend stacks up against its peers.

How does the Fortescue dividend compare to its sector?

As a broad comparison, the Fortescue dividend is on par with BHP Group Ltd (ASX: BHP), but less favourable than Rio Tinto Limited (ASX: RIO).

As an example, Goldman Sachs is predicting Fortescue to pay fully-franked dividends per share of US$1.16 in FY22 and US 74 cents in FY23.

Based on the current Fortescue share price of $21.73, this implies a dividend yield of 7% and 5%, respectively.

Next up, BHP is forecast to pay dividends of US$2.56 in FY22 and US$2.33 in FY23.

This reflects a dividend yield of 7.5% and 6.9% respectively.

While both miners are predicted to pay similar yields, it is Rio Tinto that offers the most bang for buck.

As such, Rio Tinto is assumed to pay big fully-franked dividends, outmatching the major miners.

Goldman Sachs has projected Rio Tinto to pay dividends of US$9.30 in FY22 and US$8.90 in FY23.

Again, based on the closing Rio Tinto share price, this equates to dividends yields of 11% and 10% respectively.

Are Fortescue shares a buy?

A recent broker note from RBC Capital Markets raised its rating on Fortescue shares by 6.7% to $16.00.

On the other hand, Citi had a different tone, slashing its outlook by 5.9% also to $16.00.

Based on both brokers, this implies a potential downside of around 26%.

Most notably, Goldman Sachs retained its sell rating on Fortescue shares last week. The broker indicated that the company’s share price is trading at a significant premium compared to its peers.

However, one near term tailwind is an improvement in Fortescue’s low-grade price realisations for iron ore.

In summary, Goldman Sachs put a 12-month price target on Fortescue shares at $15.20. This implies a downside of roughly 30% on the miner’s most recent share price.

Fortescue commands a market capitalisation of roughly $66.91 billion, making it the eighth largest company on the ASX.

The post How does the Fortescue dividend compare to its sector? appeared first on The Motley Fool Australia.

More reading

• These 2 blue-chip ASX shares are opportunities: Expert
• Can the Rio Tinto share price break its all-time high in 2022?
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• 2 ASX 200 dividend giants named as buys by brokers
• 2 ASX dividend shares expected to pay HUGE yields in 2022

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 Bruce Jackson.

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Investing in a monopoly is, perhaps, one of the oldest plays in the book, and this S&P/ASX 200 Index (ASX: XJO) share could be just that.

Monopolies, by definition, dominate their sectors, facing low or no competition to provide a product needed – rather than wanted – by their customers.

With that in mind, could ASX 200 share, Transurban Group (ASX: TCL) be one of the ASX’s major monopolies?

At the time of writing, the Transurban share price is $13.75.

Could this ASX 200 share be a monopoly play?

Considering investing in ASX 200 giant, Transurban? Experts believe the toll road operator has plenty of reoccurring revenue and the ability to boost its fees alongside inflation.

Transurban operates toll roads in Melbourne, Sydney, Brisbane, and North America.

According to reporting by GEM Capital financial advisor, Mark Draper, published by the Australian Financial Review, investments in toll roads come with a side of certainty.

The job of a toll road operator is to build and maintain roads that convenience the public. They make their money by collecting fees from those who travel on their roads.

They generally have the right to collect tolls on their roads for a specified number of years. When that period ends, a toll road reverts to public infrastructure.

Investors Mutual portfolio manager Dan Moore was quoted by Draper as saying toll road operators’ income is generally protected from inflation, as their fees can be increased alongside the metric.

Additionally, according to Atlas Funds Management chief investment officer, Hugh Dive, the risk of competing toll roads being built nearby existing assets is low.

On top of that, once a road is built, maintaining it is relatively cheap. The assets can bring in margins of up to 80%, said Dive.

And governments tend to support the sector, even helping to collect unpaid fees.

Though, no investment ­­– not even in ASX 200 shares – is without risks.

Moore noted that recessions and resulting high employment could dampen toll road operators’ income.  

Additionally toll roads are, in a way, leased from governments. That m means there’s a risk that governments fail to stay true to their agreements. Perhaps, not allowing fees to rise in line with inflation – or expropriation – whereby fees are taken from the operator.

Transurban share price snapshot

2022 so far has been tough on the Transurban share price.

It has slipped 1.36% year to date. It’s also 0.87% lower than it was this time last year.

The post Could this ASX 200 share be one of the best monopoly plays there is? appeared first on The Motley Fool Australia.

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• Why did the Transurban share price have such a good run in March?
• Broker names 3 more of best ASX 200 shares to buy in April
• 5 things to watch on the ASX 200 on Wednesday
• 2022 is not being kind to the Transurban (ASX:TCL) share price. Could this be set to change?

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 Bruce Jackson.

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The fund manager Wilson Asset Management (WAM) has recently identified some ASX blue-chip shares that it owns (or owned) in one of its leading portfolios.

WAM operates several listed investment companies (LICs). Two of those LICs are WAM Capital Limited (ASX: WAM) and WAM Research Limited (ASX: WAX).

There’s also one called WAM Leaders Ltd (ASX: WLE) that looks at the larger businesses on the ASX, which investors can call ASX blue-chip shares.

WAM says WAM Leaders actively invests in the highest quality Australian companies.

The WAM Leaders portfolio has delivered gross returns (before fees, expenses, and taxes) of 16.1% per annum since its inception in May 2016. That is superior to the S&P/ASX 200 Accumulation Index average return of 10.1%.

These are the blue-chip ASX shares that WAM outlines in its recent monthly update.

BHP Group Ltd (ASX: BHP)

WAM pointed out that BHP benefitted from the widespread volatility in commodity prices in March 2022. The fund manager believes that the higher prices will help earnings momentum going into FY23.

According to Wilson Asset Management, another factor helping BHP is the rising iron ore price despite increasing COVID-19 cases in China. WAM noted that the Chinese government promises to stimulate the economy.

WAM said signals by the government have become “louder” in recent weeks as it implements more lockdowns across the country. The fund manager thinks China will likely need to stimulate the economy in the second half of 2022 to achieve its annual GDP growth target, which could benefit the ASX blue-chip share.

Wilson Asset Management believes there is further upside for the BHP share price because of the strategic locations of the ASX mining share’s assets “deserving higher valuations” due to geopolitical tensions and concerns about the security of supply globally.

Wilson points out another bonus for BHP is that proceeds from the petroleum demerger will mean shareholders can expect a “significant” capital return over the next six months. WAM estimates this to be more than $40 billion.

Ramsay Health Care Limited (ASX: RHC)

WAM revealed that it had recently increased its position in Ramsay Health Care because of its earnings growth potential over the coming years.

There is a growing backlog of private and public hospital admissions after multiple suspensions of elective surgeries globally due to COVID lockdowns. According to WAM, this has led to an extended pipeline of elevated demand.

The fund manager said that between New South Wales, Victoria, Queensland and Western Australia, there are more than 260,000 people on public waiting lists for surgery.

There are a few things that WAM finds appealing about the private hospital operator. There are the “structural industry tailwinds” – that is, there are ageing populations in the countries where Ramsay operates. The ASX blue-chip share has $9 billion of land backing. WAM also points to a “favourable valuation” in an expensive sector.

The fund manager also points out that Ramsay’s Asia-based joint venture with Sime Darby received an indicative non-binding proposal from IHH Healthcare to buy the business for approximately $1.8 billion on a cash and debt-free basis. WAM thinks the proceeds would be put into debt reduction if that transaction goes ahead because of the recent acquisition of Elysium Healthcare.

The post These 2 blue-chip ASX shares are opportunities: Expert appeared first on The Motley Fool Australia.

More reading

• How does the Fortescue dividend compare to its sector?
• Ramsay Health Care share price on watch amid $14.8bn takeover offer
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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 recommended Ramsay Health Care Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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