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Santos Ltd (ASX: STO) shares have been among the top performers on the S&P/ASX 200 Index (ASX: XJO) this year.

Since the closing bell on 31 December, Santos shares are up 28%. That compares to a gain of 1% posted by the S&P/ASX 200 Index (ASX: XJO) over that same period.

And with Brent crude oil prices up another 1.2% overnight Monday to US$109 per barrel, the Santos share price closed up 2.27% on Tuesday.

So why may now be a good time to sell?

Why this fund manager is selling

According to Catapult Wealth’s Timothy Haselum, now is a good time to exit Santos shares “on strength”.

In a note published in the Advertiser over the weekend, Haselum said:

The Ukraine conflict has seen energy prices skyrocket on the speculation of oil and gas sanctions in a time where new energy project approvals are out of vogue with climate conscious countries.

Indeed, skyrocketing energy prices have seen the S&P/ASX 200 Energy Index (ASX: XEJ) leap 30% higher year-to-date, trouncing the ASX 200 benchmark.

With oil and gas trading near multi-year highs, Haselum said: “Energy companies like STO look great at the moment, with net cash positions and strong balance sheets, and we have seen incredibly strong rallies from their lows.”

So why sell Santos shares today?

“You have to think ahead here,” Haselum said. “We know that green/renewables are the future, so what’s the long-term plan? The long-term trend is down, and as green energy gains momentum, the opportunities to exit on strength will get rarer.”

How have Santos shares been tracking longer term?

Santos shares remain down 9% from their five-year highs, posted on 10 January 2020, when Brent crude was worth a mere US$65 per barrel.

The share price cratered in the early months of the global pandemic as energy demand evaporated.

Although the ASX 200 energy giant has rebounded strongly since its March 2020 lows, shares have yet to fully recover despite surging oil and gas prices.

The post Why now is the time to sell Santos shares: fund manager appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• Here’s what drove the Santos share price 6% higher in March
• 3 ASX shares to buy in the hottest sector right now: experts
• What sent ASX mining shares flaming higher in March?
• 5 things to watch on the ASX 200 on Tuesday

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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If you’re looking for ASX shares to buy, then you may want to add the two shares listed below to your watch list.

Both of these shares are rated as buys by Goldman Sachs with huge upside potential over the next 12 months.

Here’s what you need to know about these growing ASX shares:

Hipages Group Holdings Ltd (ASX: HPG)

The first ASX share to look at is Hipages. It is a leading online platform and software as a service (SaaS) provider that connects consumers with trusted tradies.

The Hipages platform helps tradies grow their business by providing job leads from homeowners and organisations looking for qualified professionals, while also enabling them to optimise their business through its SaaS product.

Goldman Sachs is a very big fan of Hipages. It believes that “HPG presents a compelling long term growth opportunity as it scales to become the leading trade services marketplace in Australia.”

The broker currently has a buy rating and $3.60 price target on its shares. So, with the Hipages share price currently fetching $1.96, this suggests potential upside of 84% for investors over the next 12 months.

Nitro Software Ltd (ASX: NTO)

Another ASX share that is highly rated is Nitro Software. It is the document productivity software company behind the Nitro Productivity Suite that is aiming to drive digital transformation in organisations around the world.

Goldman Sachs is very positive on Nitro’s long term growth potential. It said: “The market [is] currently pricing in long-term growth and margin assumptions that understate Nitro’s potential, in our view. We are positive on Nitro’s structural growth opportunity, reflected in our DCF scenario analysis implying an attractive asymmetric risk/reward skew.”

It currently has a buy rating and $2.60 price target on its shares. Based on the current Nitro share price, this implies potential upside of 77% for investors.

The post Broker names 2 exciting ASX shares to buy with 80% upside potential appeared first on The Motley Fool Australia.

More reading

• Here are 3 growth shares analysts are tipping to rocket higher
• Why the Nitro (ASX:NTO) share price is jumping 10%
• Why is the Nitro Software (ASX:NTO) share price rocketing 9% higher?
• 2 ASX tech shares to buy now for DIRT CHEAP: experts
• Analysts name 2 exciting small cap ASX shares to buy with huge 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. owns and has recommended Hipages Group Holdings Ltd. The Motley Fool Australia owns and has recommended Hipages Group Holdings Ltd. The Motley Fool Australia has recommended Nitro Software 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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Ask A Fund Manager

The Motley Fool chats with fund managers so that you can get an insight into how the professionals think. In this edition, Atlas Funds Management chief investment officer Hugh Dive humbly names his biggest mistake in investing and how it changed him forever.

The ASX share for a comfortable night’s sleep

The Motley Fool: If the market closed tomorrow for four years, which stock would you want to hold?

Hugh Dive: We don’t own it in the property fund, but we own it in the equity fund: CSL Limited (ASX: CSL). 

Absolutely, totally inelastic demand for their products. No real alternatives. Very hard to pirate… they don’t face the issues that, say, Cochlear Limited (ASX: COH) or ResMed CDI (ASX: RMD) face, with China trying to pirate your devices. 

It’s based on blood, clean blood — high tech but lowest cost producer in the industry. Biggest collection of centres around the United States, and they have a product that demand’s totally inelastic. Their customers need to take that product on a daily basis just to live. 

It’s hard to be pirated, hard to run out of business when you’re selling a life-saving product, with a high-quality management that has had an exceptional acquisition record over the years. 

I’d be happy, if the market was shut for four years, to turn the screens off. I would be very certain that CSL would be around in four years’ time. Doesn’t work with every company. 

Looking back

MF: Is there a move that you regret from the past? For example, a missed opportunity or buying a stock at the wrong timing or price.

HD: Every single fund manager would have one to five of these, and any fund manager who’s been in the market for more than 10 years would be lying to you if they didn’t have a couple where they were just, even now, years later you think about, sort of head in hands, going, “What was I thinking?” 

For me, it’s a company that hasn’t been around for a while, but caused me an enormous amount of pain, and it’s also changed the way I’ve invested money [since]. 

The company in question was Gunns Limited (ASX: GNS). They owned a range of land, about 250,000 hectares of timberland, mainly in Tasmania. 

I bought this based on companies that had NTA [net tangible assets] — potential assets per share that were much greater than their market value. So effectively using that strategy of buying a dollar in cash for 80 cents. And this particular strategy is very seductive for value investors, because it leads you to try to buy some of these asset-rich companies. 

So I invest in Gunns, attracted by this sort of big land bank, owning $500 million dollars worth of land and trees. And that was at quite a premium to the prevailing share price. 

Ultimately… when we had the combination of the GFC in 2008 and ’09 and a rising Aussie dollar, dramatically reduced wood sales to China, and the company had insufficient cash flows to service their debt. 

So Gunns became this asset-rich, cash flow poor company that ultimately couldn’t control its destiny. They couldn’t sell their assets off quickly enough to pay their current liabilities in an extremely stressed market in 2008 and subsequently went into administration. 

I only think about that every three or four days now, but it changed the way [I invest]. It made me focus much more on the cash flow statement and much less on a company’s profit and loss and balance sheet statements. 

Because you need that — cash flow is the lifeblood of a company. 

MF: When a company descends into administration, it’s going to zero for the investors, isn’t it? 

HD: Yeah. We were sold out at 70 cents, so it was a big loss. It didn’t hold its debt. It was a very poor outcome. When a company goes into administration there, if you don’t sell out just before the debt, often a company will go into a share trading freeze. 

Sometimes you end up with a couple of cents in a dollar, but as an equity holder, you’re the last in the queue. The bond holders, the hybrid holders, their hands are out first, and then you’re left… Rarely [do] you get anything. So you’re left holding worthless pieces of paper in that situation. 

MF: Creditors always come above shareholders, don’t they? 

HD: Yeah. There’s a long line of hands with their hands out. That’s the risk you take as an equity investor, and that’s why you get compensated when things go right, above the bond holders, who often get their interest coupon and their money back.

The post This ASX share changed me FOREVER: fund manager appeared first on The Motley Fool Australia.

More reading

• Here’s what $10,000 invested in CSL shares 5 years ago looks like now
• How did the CSL share price perform in March?
• Why is the CSL share price climbing on Wednesday?
• What’s the outlook for the CSL share price in April?
• Expert reveals 3 ASX shares to watch following tonight’s federal budget

Motley Fool contributor Tony Yoo owns CSL Ltd., Cochlear Ltd., and ResMed Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended CSL Ltd. and Cochlear Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended ResMed. The Motley Fool Australia has recommended Cochlear Ltd. and ResMed Inc. 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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On Tuesday, the S&P/ASX 200 Index (ASX: XJO) was a positive performer again. The benchmark index rose 0.2% to 7,527.9 points.

Will the market be able to build on this on Wednesday? Here are five things to watch:

ASX 200 expected to sink

The Australian share market looks set to sink on Wednesday following a poor night in the US. According to the latest SPI futures, the ASX 200 is expected to open the day 54 points or 0.7% lower this morning. On Wall Street, the Dow Jones fell 0.8%, the S&P 500 dropped 1.25%, and the Nasdaq tumbled 2.3%. This was driven by concerns that US Fed hikes will slow the economy.

Oil prices fall

Energy producers such as Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) could have a poor day after oil prices dropped. According to Bloomberg, the WTI crude oil price is down 2.6 % to US$100.58 a barrel and the Brent crude oil price has fallen 2.1% to US$105.25 a barrel. This follows concerns that COVID lockdowns in China could impact demand.

Wesfarmers sells down Coles stake

The Coles Group Ltd (ASX: COL) share price will be on watch today amid reports that Wesfarmers Ltd (ASX: WES) has sold a $500 million stake in the supermarket giant. According to the AFR, after the market close, Wesfarmers sold 28.2 million shares via a block trade at $17.75 per share. This represents a 1.8% discount to the Coles close price.

Gold price drops

Gold miners Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) could have a subdued day after the gold price fell. According to CNBC, the spot gold price is down 0.45% to US$1,925.6 an ounce. Rising U.S. Treasury yields and expectations for more aggressive monetary policy tightening by the US Federal Reserve offset put pressure on demand for safe haven assets.

Allkem remains a buy

The Allkem Ltd (ASX: AKE) share price may have been charging higher this year but one leading broker still sees plenty of upside ahead. According to a note out of Bell Potter, its analysts have retained their buy rating and $18.05 price target on the lithium miner’s shares. The broker said: “AKE is in a strong position to both generate significant free cash flow in the current market strength and to benefit from what we expect to be supply deficits in lithium markets over the medium to long term.”

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

More reading

• What is the highest the ASX 200 has ever been?
• Why has the Northern Star (ASX:NST) share price gained 23% in 2 months?
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• High voltage! Origin (ASX:ORG) share price up 3% to new 52-week high
• Here’s why ASX 200 shares still have ‘a pretty good growth outlook’

Motley Fool contributor James Mickleboro owns Orocobre 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 owns and has recommended COLESGROUP DEF SET and Wesfarmers 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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The Panoramic Resources Ltd (ASX: PAN) share price shot up on Tuesday on the back of a positive drilling update.

The ASX nickel share finished the day at 36.5 cents, a 10.61% gain. In contrast, the S&P/ASX 200 Index (ASX: XJO) climbed 0.19% today.

Let’s take a look at why this ASX nickel share had such a stellar day.

‘Standout’ drill results

Panoramic reported promising drill results from the company’s Savannah Nickel Project in Western Australia.

The company said the “standout” drill result was drill hole KUD1891. This returned an upper and lower mineralisation lens intersection of 40.55m at 1.96% Nickel, 0.75% copper, and 0.15% cobalt.

Drill hole KUD1871 returned upper mineralisation lens intersection of 16 metres at 2.08% nickel, 0.8% copper, and 0.16% cobalt. Meanwhile, drill hole 1874 delivered an intersection of 1.93% nickel, 1.01% copper, and 0.14% cobalt.

The company said these intersections were both thicker and higher grade than predicted.

Managing director and CEO Victor Rajasooriar said the results provide strong confidence in the company’s life of the mine plan and the future of the Savannah Nickel Operation. He added:

The continued success of drilling in the new Upper Splay in the Eastern Zone of Savannah North may also add to our mining inventory which is also very pleasing.

We look forward to announcing more drill results from both areas in due course.

Share price snapshot

The Panoramic share price has soared 170% in the past year while it is up 35% year to date.

In contrast, the S&P/ASX 200 Index (ASX: XJO) has returned about 10% in the past year.

Panoramic has a market capitalisation of about $748.6 million based on its current share price

The post Why did this ASX nickel share surge 11% today? appeared first on The Motley Fool Australia.

More reading

• Four ASX nickel shares are in the green today. Here’s why
• The price of nickel is soaring and these ASX mining shares are cashing in

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 National Australia Bank Ltd. (ASX: NAB) share price has risen by 9% in 2022 to date.

It has gone through volatility over the last few months, like many businesses. But NAB shares show ongoing growth over longer time periods.

In the past six months, the NAB share price has gone up by 16%. In the last 12 months, the NAB share price has risen by around 22%. 

But after outperforming the S&P/ASX 200 Index (ASX: XJO) over each of the above time periods, is the big four ASX bank now fully valued or is it still an opportunity?

Broker opinions on the NAB share price

Lots of analysts now think that the bank offers very little capital growth upside. A few have price targets that are lower than where NAB is today.

For example, both Morgans and Citi have a price target of $30.50. That implies a decline of around 5% over the next year if the brokers are right. However, they have ratings of a hold and neutral on the big four ASX bank.

Morgan Stanley is another broker that doesn’t think the NAB share price will do much over the next 12 months. It has a price target of $31.50 on the bank. That suggests a possible decline of around 2% over the next 12 months.

Credit Suisse is a broker which has a slightly positive outlook for the bank, which is also neutral, with a price target of $32.40. This broker thinks that banks are going to benefit once the Reserve Bank of Australia (RBA) starts increasing the interest rate. The broker thinks the net interest margin (NIM) will increase over the next year.

One of the most positive brokers is Ord Minnett. It has a NAB share price target of $33.50. That implies a potential rise of 4.3% in the next year.

Share buyback 

One of the things that brokers have noticed is the bank’s recent share buyback.

NAB recently completed a $2.5 billion on-market buyback and announced a further on-market buyback of up to $2.5 billion.

This will allow the bank to continue managing its common equity tier 1 (CET1) capital ratio towards its target range of between 10.75% to 11.25% over time.

The NAB CEO Ross McEwan said:

Our capital management strategy reflects the importance of maintaining a strong balance sheet through the cycle while allowing us to continue to support growth and deliver improved shareholder returns.

The further $2.5 billion on-market buy-back announced today supports our ambition to reduce share count and increased sustainable ROE (return on equity) benefits to our shareholders.

NAB share price snapshot

After the 0.3% increase on Tuesday, NAB has a market capitalisation of $103 billion according to the ASX.

The post Is the NAB share price fully valued in April? appeared first on The Motley Fool Australia.

More reading

• ASX 200 banks bounce bank in March. Here are the April forecasts from analysts
• The NAB share price almost doubled the ASX 200’s return in March
• This ASX blue-chip share has notched up 9 52-week highs this month
• How did ASX 200 bank shares perform today?
• What’s the outlook for the NAB (ASX:NAB) share price in April?

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 S&P/ASX 200 Index (ASX: XJO) enjoyed yet another day of gains on the markets on Tuesday, albeit with a dent at the end of the trading day. The ASX 200 ended up finishing at 7,527.9 points, up 0.19%.

This gain is just the latest chapter in what has been a very successful month for the index. Over the past month, the ASX 200 has now gained a healthy 6.95%. And although the index is still in the red for 2022 so far, its fall is only under 1%. That’s not a bad turnaround for an index that had shed almost 10% of its value by the end of January.

But now that the ASX 200 has staged such a robust recovery and is back above 7,500 points, many investors might be wondering how long we have to go until we are once again at a record high.

So how high has the ASX 200 Index ever been?

Well, the ASX 200’s current high watermark is 7,632.8 points. That’s the peak we saw back in mid-August last year. Prior to that date, the index had been on a tear, rising more than 15% between the start of 2021 and the record high. It was only in May 2021 that the index exceeded its previous, pre-COVID, all-time high too. But, as is obvious, the share market has more or less treaded water ever since.

Even so, the rally we have seen since early March would, no doubt, be encouraging for ASX investors. Now, there are only another 104.9 points, or 1.39%, of gains left before we’re once again at a record high for the ASX 200. Let’s see how long it takes to get there!

The post What is the highest the ASX 200 has ever been? appeared first on The Motley Fool Australia.

More reading

• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• High voltage! Origin (ASX:ORG) share price up 3% to new 52-week high
• Here’s why ASX 200 shares still have ‘a pretty good growth outlook’
• ASX 200 (ASX:XJO) midday update: IGO dealt blow, Block’s data breach, Xero jumps
• 5 things to watch on the ASX 200 on Tuesday

Motley Fool contributor Sebastian Bowen 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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ASX green metals are in demand lately, but could a bubble be forming in the green metals sector?

So-called ‘green metals’ are those used in cleaner-energy applications. Such shares on the ASX include Pilbara Minerals Ltd (ASX: PLS), Firefinch Ltd (ASX: FFX), and Mineral Resources Ltd (ASX: MIN). Others include Centaurus Metals Limited (ASX: CTM) and Liontown Resources Limited (ASX: LTR).

So what is the outlook for ASX green metals shares?

Green metal transition

Green metals are metals that will be prominent in the transition from fossil fuels to clean energy. They include lithium, graphite, rare earths, nickel, and copper.

Asked if a bubble could be developing in the sector, Argonaut Natural Resources Fund portfolio manager David Franklyn told the Australian Financial Review:

The green materials sector is certainly volatile, which in part reflects the fact that demand is rising quicker than supply. This has been evident in the huge increase in spodumene prices and the spike in nickel prices.

Against that backdrop, it’s not unexpected that the sector may attract speculative money whilst also making the valuation of stocks more problematic.

A stock market bubble can form when there is a significant surge in share prices beyond the fundamental value of the companies.

Franklyn noted there has been a strong rebound of multiple lithium stocks in March, including Pilbara and Firefinch.

Share price recap

The Pilbara Minerals share price has soared 26% in a month while Firefinch has rocketed 73%. Meanwhile, Mineral Resources has gained 24%, Liontown Resources has leapt 28%, and Centaurus Metals has surged 17%.

In contrast, the S&P/ASX 200 Index (ASX: XJO) has jumped just under 6% in a month.

The post Is a bubble forming for ASX green metals shares? appeared first on The Motley Fool Australia.

More reading

• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• Mineral Resources share price leaps on ‘unprecedented’ lithium demand update
• 2 lithium ASX shares to buy in April 2022: experts
• 3 ASX shares to buy in the hottest sector right now: experts
• The Pilbara (ASX:PLS) share price soared 18% in March. Here’s why

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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Yesterday, we took a look at the ASX’s worst-performing exchange-traded funds (ETFs) over the quarter just ended. The three months to 31 March was a relatively volatile period for ASX shares, even though the S&P/ASX 200 Index (ASX: XJO) ended up recording a gain of 0.7% for the quarter. 

But now it’s time to check out the ASX ETFs that shone during the three months just gone. So here are the ASX’s best ETFs of the March quarter. See if you can spot a theme. 

The 5 best-performing ASX ETFs of the March quarter

VanEck Gold Miners ETF (ASX: GDX)

This ETF from VanEck does exactly what it says on the tin. GDX invests in a portfolio of global gold miners. The ASX’s Newcrest Mining Ltd (ASX: NCM) is there, but so are internationally-based companies like Newmont Corp and Barrick Gold. GDX gave investors a healthy 17.25% return over the March quarter.

BetaShares Australian Resources Sector ETF (ASX: QRE)

BetaShares runs this resources ETF. QRE invests in ASX’s metals, mining and energy shares. You’ll find everything from BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO) to Newcrest Mining and Woodside Petroleum Limited (ASX: WPL) here. As well as some smaller miners like Nickel Mines Ltd (ASX: NIC) and Liontown Resources Limited (ASX: LTR). QRE returned 17.77% over the quarter just passed. 

SPDR S&P/ASX 200 Resources Fund (ASX: OZR)

This ETF from State Street Global Advisors is a very similar ETF in scope and composition to QRE, which explains its near-identical return. It also invests in the ASX’s metals, mining and energy shares. You’ll find virtually the same companies in this ETF as the BetaShares fund. OZR had a corker of a quarter, rising 17.82% over the three months to 31 March.

BetaShares Global Energy Companies ETF (ASX: FUEL)

Here we have yet another resources-based ETF. But this one is a little different to the previous two funds. FUEL only invests in energy shares, or oil and gas companies. But this ETF is globally-based, and not just confined to the ASX. You’ll find energy giants like Chevron, Exxon Mobil, BP and Royal Dutch Shell here. This fund returned a pleasing 24.04% over the March quarter. 

BetaShares Crude Oil Index ETF (ASX: OOO)

Our final and best performing ASX exchange-traded fund of the March quarter is this fund from BetaShares. OOO is an ETF that tracks the price of oil futures, and not individual companies. As such, its investors have benefitted enormously from the rise in oil prices that we’ve seen in recent months. OOO returned a whopping 39.26% over the three months to 31 March. 

The post Here are the 5 best-performing ASX exchange-traded funds over the March quarter appeared first on The Motley Fool Australia.

More reading

• What sent ASX mining shares flaming higher in March?
• 3 fantastic ETFs for ASX investors to buy
• 3 top ETFs for ASX investors in April
• Here are 4 popular ETFs for ASX investors to check out
• 3 top international ETFs for ASX investors to look at this month

Motley Fool contributor Sebastian Bowen owns Chevron and Newcrest Mining Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended BetaShares Global Energy Companies ETF – Currency Hedged. 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 Temple & Webster Group Ltd (ASX: TPW) share price went up by more than 6% on Tuesday to $7.05 a share. But what might have sent the business higher today?

Temple & Webster is one of the fast-growing e-commerce ASX shares. In the company’s recent FY22 half-year result, it reported revenue of $235.4 million, which was a 218% increase compared to the first half of FY20.

Investors may have been responding to a new report finding e-commerce sales are expected to keep growing strongly. The forecast comes from one organisation that is close to the online shopping boom.

Australia Post’s e-commerce report

In its 2022 e-commerce industry report, Australia Post said that it is enabling small and medium businesses to pivot to online shopping with its 4,300-strong post office network.

The delivery business says that there are now 9.2 million Australian households shopping online.

“It’s evident the pandemic has changed the way we shop, and new habits formed over the past two years are now firmly ingrained,” the report said.

Australia Post suggests that retailers need to offer a great end-to-end customer experience, saying it’s paramount to growing and maintaining a loyal customer base.

Certainly, Temple & Webster says that it wants to offer customers a strong proposition. It aims to do this by being a trusted brand, offering a large range of quality products and a great user experience to attract customers, grow its conversion rate, and increase customer satisfaction. Its active customers grew 34% to 906,000 in HY22 and revenue per active customer grew 10%.

Australia Post also suggested that retailers need to know every detail of their products and provide thorough information, supported by images, video, or even virtual reality.

Temple & Webster has been investing in data and technology. It has a 3D/augmented reality offering to complement existing 2D imagery on its product pages. The company is currently testing a number of augmented reality cases using 3D images. Its goal is to have the largest 3D catalogue of furniture and homewares in Australia. This could impact the Temple & Webster share price over the longer-term.

Australia Post also made the following comments about where it expects e-commerce spending to go:

Looking ahead, we expect online shopping to continue to grow much faster than physical retail. It’s clear Australians have grown to love the ease and convenience of buying online and are likely to continue doing so regularly throughout 2022.

Australia Post also cited a survey where 93% of respondents said that they’ll maintain or increase their online shopping activity in 2022.

E-commerce sales to double?

According to reporting by the Australian Financial Review, Australia Post’s CEO expects online shopping revenues to double over the next five years compared to the $62.3 billion it earned last year.

Australia Post CEO Paul Graham said:

81% of all households shopp[ing] online is an amazing statistic but still shows we are not as penetrated as Europe or the United Kingdom, so there is still upside to go.

We are still lagging global trends in terms of the total online spend and the purchasing frequency. If you take South Korea, 53% of shoppers are buying at least weekly, which is more than double Australia’s figure of 25%, so there is still significant growth to come for the Australian market.

Temple & Webster share price snapshot

Despite today’s jump, the Temple & Webster share price is still down 35% in 2022.

The post Is this why the Temple & Webster share price surged over 6% today? appeared first on The Motley Fool Australia.

More reading

• 2 high-growth ASX shares to buy today: brokers
• 7 small-cap ASX shares that have been oversold: Wilsons
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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. owns and has recommended Temple & Webster Group Ltd. The Motley Fool Australia has recommended Temple & Webster Group Ltd. 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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