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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.

Netflix (NASDAQ: NFLX) skeptics had a field day with January’s fourth-quarter report. Customer growth came in just below management’s guidance and the official user-growth projections for the next quarter were downright disappointing. The stock plummeted 21% lower the next day as the bears finally found some hard data to chew on.

However, the Netflix worriers are laser-focused on the wrong data point. Let me explain.

Subscriber slowdown sparks a stock stampede

The management team said as much in the fourth-quarter earnings call. Co-CEO Reed Hastings noted that the quarter was healthy due to higher viewer engagement and lower subscriber churn. CFO Spencer Neumann pointed out that Netflix is adding customers even in this lull, just at a slower pace than usual. Overall, Netflix’s leaders tried to steer the discussion in a more productive direction, but the effort was in vain.

Investors saw this discussion, shrugged, and moved on to cut Netflix’s share price down to size. 

How Netflix views its financial figures

A few weeks later, Netflix had another chance to point investors at the right metrics. Speaking at last week’s Morgan Stanley Technology, Media, and Telecom Conference, Neumann gave this succinct description of how Netflix evaluates its business:

I think there’s probably an overly focused attention on subscriber numbers.

What we focus on is, building a great business. We’re focused on growing revenue, growing profits, growing cash flow, and that’s about driving not just membership, but in increasing engagement and obviously, as we increase member value, pricing occasionally into that value that we create.

So for us, it’s the combination of those things as opposed to a year-to-year or quarter-to-quarter member number. And we believe, with high conviction, that we’ll continue to drive double-digit revenue growth, continue to increase our profit margins as we’ve talked about. And not just that path to cash flow breakeven, but now growing positive free cash flow.

Netflix is a passion brand

In other words, it would be silly to focus exclusively on growing the membership counts.

To that end, Netflix would perhaps be best served by slashing prices and licensing lots of content from other producers at pennies for the dollar. That approach would pull in millions of price-sensitive customers, but those subscribers would have little reason to stay loyal to the Netflix service. Another bargain-bin streaming service could easily steal those customers away.

So Netflix makes billion-dollar investments in producing original shows and movies of prize-winning quality, and then charges a premium price for the opportunity to watch that exclusive content. As the company states in its publicly available long-term plan, Netflix wants to be a top-shelf name that people get excited about and are willing to pay more for:

“Netflix is a focused passion brand, not a do-everything brand: Starbucks, not 7-Eleven; Southwest, not United; HBO, not Dish.”

There’s a constant tug-of-war between subscriber growth and monetizing efforts. Right now, Netflix has a slightly tighter focus on boosting the bottom line than on optimizing subscriber counts. Throw in the uncertainty of the ongoing pandemic and geopolitical tensions, and you may get a brief period of limited subscriber growth.

But the long-term growth story remains massive. Balancing that line between growth and profit, Netflix wants to generate meaningful cash profits and pour most of the winnings back into a robust business model and content portfolio for the long haul. So staring yourself blind on a quarter or two of modest subscriber growth is a big mistake.

At a 51% discount to October’s all-time highs, Netflix is a no-brainer buy today. 

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

The post Are Netflix bears looking at the wrong numbers? appeared first on The Motley Fool Australia.

More reading

• Magellan (ASX:MFG) share price hits multi-year low after fund outflows accelerate
• These are the 10 most shorted ASX shares
• 2 top cryptocurrencies to buy and hold forever
• The Transurban (ASX:TCL) share price has gained under 2% in 3 years. Have the dividends been worth the wait?
• US inflation is at 40-year highs. What does this mean for ASX shares?

Anders Bylund owns Netflix. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Netflix and Starbucks. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. Southwest Airlines and recommends the following options: short April 2022 $100 calls on Starbucks. The Motley Fool Australia has recommended Netflix and Starbucks. 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 case of another day, another decline for the Magellan Financial Group Ltd (ASX: MFG) share price.

In morning trade on Monday, the fund manager’s shares are down 5.5% to a new multi-year low of $13.43.

This means the Magellan share price is now down 70% over the last 12 months.

Why is the Magellan share price falling again?

Hot on the heels of revealing a very poor investment performance for its flagship global fund on Friday, which you can read about here, this morning Magellan provided an update on its dwindling funds under management.

According to the release, at the close of US trading on Friday 11 March, Magellan had funds under management of approximately $69.1 billion. This comprises $39.2 billion in global equities, $20.4 billion in infrastructure equities, and $9.5 billion in Australian equities.

This means that Magellan’s funds under management have fallen by $8.1 billion or 10.5% from $77.2 billion since its most recent update on 25 February.

The damage has been felt hardest in global equities, which is down 16.8% from $47.1 billion since its last update. Both infrastructure and Australian equities were down by approximately $100 million over the same period.

Management advised that the weakness in its funds under management reflects market movements (including foreign exchange and recent market volatility), net outflows, and notifications of intention to redeem.

In respect to the latter, Magellan revealed that it has experienced net outflows of approximately $5 billion since its most recent update. This comprised net institutional outflows of $4.7 billion and net retail outflows of $0.3 billion. It has also received notifications of intention to redeem of $1 billion, which has been reflected in the above figures.

Unfortunately for shareholders, last week the team at UBS warned that it is seeing an emerging risk to infrastructure funds under management. This follows the recent underperformance from this side of the business. So this may not be the end of its fund outflows.

The post Magellan (ASX:MFG) share price hits multi-year low after fund outflows accelerate 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 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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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) remains the most shorted ASX share after its short interest rose week on week to 17.8%. Short sellers don’t appear to believe that the travel market recovery will be as smooth sailing as the company may like.
• Betmakers Technology Group Ltd (ASX: BET) has seen its short interest rise again to 12.6%. Short sellers aren’t giving up on this betting technology company despite its shares falling 30% in 2022. The prospect of rising rates is weighing heavily on the valuations of tech shares like Betmakers.
• Nanosonics Ltd (ASX: NAN) has short interest of 12.2%, which is flat week on week. A major and sudden change to its sales model in the United States has been weighing heavily on the infection prevention company’s shares.
• Webjet Limited (ASX: WEB) has short interest of 10.5%, which is up week on week. It appears as though short sellers believe the market could be too optimistic on the travel market recovery.
• Mesoblast limited (ASX: MSB) has short interest of 9.9%, which is up slightly week on week. Short sellers have been going after this biotech after its lucrative deal with Novartis was cancelled. Combined with poor trial results and high cash burn, Mesoblast’s future looks challenged.
• Redbubble Ltd (ASX: RBL) has short interest of 9.2%, which is flat week on week. This ecommerce company’s poor form has been weighing on sentiment. In addition, changes to Apple’s privacy settings appear to be hurting margins and leading to higher marketing costs.
• Polynovo Ltd (ASX: PNV) has seen its short interest reduce to 9.2%. This medical device company’s underperformance and lofty valuation appear to have attracted shorts.
• Kogan.com Ltd (ASX: KGN) has seen its short interest ease materially to 9%. Some short sellers may be locking in their returns following a sharp decline in this ecommerce company’s shares over the last 12 months.
• EML Payments Ltd (ASX: EML) is a new entry in the top ten with short interest of 9%. With this payments company’s shares trading at ~30x estimated FY 2022 earnings, some short sellers appear to believe they are overvalued.
• Appen Ltd (ASX: APX) is another new entry in the top ten with 8.4% of its shares hold short. There are concerns that demand for this artificial intelligence data services company’s offering could fall materially if major customers, such as Facebook, take things in-house.

The post These are the 10 most shorted ASX shares 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. owns and has recommended Appen Ltd, Betmakers Technology Group Ltd, EML Payments, Kogan.com ltd, Nanosonics Limited, POLYNOVO FPO, and REDBUBBLE FPO. The Motley Fool Australia owns and has recommended Appen Ltd, 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 Bruce Jackson.

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As inflationary pressures continue to mount on global markets, the US has just experienced its highest jump in core inflation in 40 years.

There are a multitude of undertones feeding into the inflation narrative, not in the least the enormous quantitative easing (QE) programs made by central bank’s over the last 2 years in response to the COVID-19 pandemic.

The result has been a flooding of liquidity in financial markets, propping equity indices around the world to reach heights never once thought possible.

ASX shares have no doubt fared well over this time as well, such that the benchmark S&P/ASX 200 Index (ASX: XJO) was setting record highs last year, shown on the chart below.

However, inflation appears to be getting too far ahead of governments around the world, and conflict from Europe only adds to the pressure. Commodity indices have soared to decade-long highs as well.

Add in red hot markets for housing, mortgages, equities, and now, raw materials, the stage is set for inflation to continue driving north from 2022, many experts say.

What got us here?

The pandemic resulted in a number of unconventional measures of government and monetary policy around the world.

In the US, its central bank released untold amounts of liquidity into the system through its QE programs. Inflation has basically followed suit along the way (shown below).

Government-enforced lockdowns from COVID-19 then sent global supply chains into turmoil, resulting in supply backlogs and manufacturing bottlenecks.

The US Fed responded by releasing several, multi-trillion dollar “bazookas” as they were labelled, in order to flood the system with liquidity.

Let’s just dispel something first – the US (or any central bank) wasn’t ‘printing money’. None of them do.

In fact, there isn’t really such a thing as printing or creating money. The only money ‘creation’, is done via banks when lending money on credit to obtain interest.

Instead, the government ‘prints money’ through its bond-buying programs, by purchasing Government bonds and mortgage backed securities (MBS) from the public markets. It does this via its own federal reserves.

The impulse effect is that there is a huge flood of money onto the scene, as the Government has in a way released more liquidity into the system.

In effect, the US loaned investors money, which is an unconventional way of conducting monetary policy.

Normally, it’s the other way around – the Government issues bonds and the public buys them. That is, investors are loaning the Government money by buying their bonds.

This is typically done to finance large capital projects, such as roads and other infrastructure.

For their risk, investors earn some interest and their principal back after a set time. Don’t forget – in this standard scenario, the Government pays.

But this time it’s different. This time, with QE programs, the US lent investors the money – meaning they are now liable to pay back that debt, with interest – and not the other way around.

One other factor driving the liquidity spike and inflation jump is record low interest rates that have been at nearly zero for a few years now.

These record low rates have allowed borrowers to take on more debt at lower cost in all aspects, not just obvious areas like housing.

Low interest rates are also great for asset prices, considering the impact they have on valuations, discussed below. Hence with record low rates, it’s not surprising to see global stock markets charge higher these last couple of years.

That’s also been fuelled by a huge thirst for growth and tech shares, such that the ASX and US indices are heavily weighted towards these themes.

But as the liquidity has flushed its way throughout the economy, aggregate prices have caught up to speed. Now US inflation is at record highs of almost 7% and shows no signs of slowing down.

What does this mean for ASX shares?

The US has finally thrown its term of ‘transitionary’ for the current rate of inflation out the window. It has now accepted that inflation is a problem and that actions must be taken.

The best tool central banks have in curbing inflation is to influence interest rates in the real economy, in order to reign in spending and cost increases. In Australia, the Reserve Bank does this via the cash rate.

Market pundits are already pricing in a number of rate hikes from both the US and Australia this year and next.

As such, the bond market has begun pricing in the chance of a rate hike as well, a fact that has hurt the valuations of ASX large cap and small cap shares in 2022, as seen below.

Valuations and the yield on long-dated bonds are inversely related, such that an increase in yield will compress stock valuations.

Not only that, but these yields tend to match the direction of various rate movements in the real economy, and give a good sign into the current state of affairs.

Now let’s bring it all together so it’s clearer – Inflation is at 40-year highs in the US. Central banks try and raise aggregate interest rates to curb inflation.

In Australia, that’s done via the cash rate. Bond yields often reflect this rate, and these bond yields are inverse to stock valuations.

If these interest rates rise, this might hurt the performance of ASX shares due to this relationship.

The result of this activity so far has been a correction in ASX shares in 2022 as bond yields have begun climbing once more.

So if inflation continues running hot in the US – the world’s largest economy by GDP – and central banks respond by jacking up rates, this could further influence stock valuations here in Australia.

The post US inflation is at 40-year highs. What does this mean for ASX shares? appeared first on The Motley Fool Australia.

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• The Transurban (ASX:TCL) share price has gained under 2% in 3 years. Have the dividends been worth the wait?
• 2 top cryptocurrencies to buy and hold forever
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• Why has the Lake Resources (ASX:LKE) share price soared 30% in a week?

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

For long-haul investors, trust is everything. Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH) offer exactly that. Let’s explore the reasons why these “blue chip” cryptocurrencies can keep ahead of the competition with their strong brands and active development teams.  

1. Ethereum 

Ethereum was the first public blockchain to enable decentralized applications (dApps), which are programs that use self-executing smart contracts to provide services on the blockchain. The platform’s first-mover advantage and respected development team can help it create long-term value for investors. 

With a market cap of $320 billion, Ethereum is the second-largest cryptocurrency behind Bitcoin. And it attracts the vast majority of dApp development with roughly 3,000 of the 4,000 total projects — a big driver of user demand. But Ethereum isn’t without challenges.

According to data from Coinbase, Ethereum’s transaction capacity of 15 per second is far below rivals like Solana, which can handle 50,000 per second. And this means the platform struggles to handle its massive volume. But Ethereum’s developers plan to solve this problem through an upgrade called the Consensus Layer, which will change its proof-of-work (PoW) verification system to a proof-of-stake (PoS) system. 

In Ethereum’s current PoW system, miners solve computational problems to verify transactions, which is expensive because it consumes real-world resources. PoS will allow miners to verify transactions using tokens they already own to hopefully speed up the process. It is unclear when Ethereum’s changes will go live, but the developers have a track record of successfully upgrading the network. 

2. Bitcoin 

Launched in 2009 by anonymous developer Satoshi Nakamoto, Bitcoin is the cryptocurrency that started it all. The hugely popular digital asset can maintain its dominant position through its widespread mainstream acceptance and decentralized investment community. 

With a market cap of $790 billion, Bitcoin accounts for a whopping 43% of the entire cryptocurrency market. This scale gives it some advantages. According to fintech company Fundera, over 15,000 businesses worldwide accept Bitcoin as payment (the report doesn’t provide data for other cryptos). The asset also has significant institutional adoption. For example, the derivatives marketplace CME Group offers Bitcoin futures, which helps add liquidity to the Bitcoin market while boosting its reputation compared to newer cryptocurrencies that may lack institutional support. 

Bitcoin’s ownership is also less centralized than newer rivals. According to data from coinmarketcap.com, its top 100 stakeholders control only 14% of the coins in circulation, compared to meme coins such as Dogecoin and Shiba Inu, where the top holders control 65% and 81% of available coins, respectively (data for Ethereum ownership is not available). Bitcoin’s decentralized ownership structure makes it harder for large holders to tank the price by unloading their positions, which is great news for investors who value stability. 

The first-mover advantage 

Bitcoin and Ethereum both enjoy first-mover advantages in their respective niches, giving them a lasting advantage in the cryptocurrency market. As the oldest public cryptocurrency, Bitcoin likely boasts the best brand recognition. But Ethereum is also a top choice because of its expanded functionality and active development team. 

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

The post 2 top cryptocurrencies to buy and hold forever appeared first on The Motley Fool Australia.

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Will Ebiefung has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Bitcoin, Coinbase Global, Inc., and Ethereum. The Motley Fool Australia owns and has recommended Bitcoin and Ethereum. 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 Transurban Group (ASX: TCL) share price has travelled sideways over the course of the last few years.

COVID-19 headwinds impacted traffic levels as state government-mandated restrictions were enforced Australia-wide. This led Transurban shares to falter while management focused on navigating the business through the pandemic.

Below, we calculate if the dividends have been worth the wait if a shareholder made an investment 3 years ago.

What if you had invested $10,000 in Transurban shares 3 years ago?

If you had invested $10,000 in Transurban shares on this day 3 years ago, you would have bought them for around $12.53 each. This would have given you approximately 798 shares without factoring in any dividend reinvestments over the years.

Fast-forward to today, the current Transurban share price is $12.73. This means those 798 shares would now be worth around $10,158.54 (798 shares x $12.73). When considering percentage terms, this implies an upside of 1.59%.

In contrast, the ASX 200 has returned a yearly average of 4.75% to shareholders in the past 3 years.

And the dividends?

Over the course of the last 3 years, Transurban has made a total of 6 bi-annual dividend payments from June 2019 to 2022.

Adding those 6 dividends payments gives us an amount of $1.285 per share. Calculating the number of shares owned against the total dividend payment gives us a figure of $1,025.43 (798 shares x $1.285).

When putting both the initial investment gains and dividend distribution, an investor would have made roughly $11,183.97.

In comparison, investing the same amount in the ASX 200 would have netted you a total figure of $11,493.76.

Transurban share price snapshot

Over the past 12 months, the Transurban share price has shed around 1%, driven by poor trading conditions.

Its shares hit a 52-week low of $12.03 in January, before finding support around the mid $12 mark.

Based on the current share price, Transurban commands a market capitalisation of around $39.09 billion.

The post The Transurban (ASX:TCL) share price has gained under 2% in 3 years. Have the dividends been worth the wait? appeared first on The Motley Fool Australia.

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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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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.

On March 9, Amazon (NASDAQ: AMZN) announced a 20-for-1 stock split, the company’s first split since 1999 and its fourth since the IPO in 1997. Additionally, Amazon announced a $10 billion share buyback plan. The company’s shares have rocketed 4,300% since its last stock split announcement. Amazon’s stock price soared to all-time highs after the pandemic, but it’s been trading sideways to lower since. Do the shares have more pain ahead, or is Amazon stock a buy now?

Of course, you do not own more of Amazon because of the stock split. If you cut a pizza into 20 slices, you still have one pizza. With that said, lower share prices can equate to more pin action because of options contracts, and I think the company looks attractive here as a long-term investment.

In the video below, I break down the key fundamental highlights that will power Amazon over the next decade. I’ll also chart out Amazon’s price-to-sales ratio and provide an opinion on where I think the stock price is headed from here.

*Stock prices used in the below video were during the trading day of March 11, 2022. The video was published on March 11, 2022.

[youtube https://www.youtube.com/watch?v=VRPbsiObpqg?feature=oembed]

 

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

The post Is Amazon stock a buy now before the 20-for-1 stock split? appeared first on The Motley Fool Australia.

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Eric Cuka owns Alphabet (A shares), Amazon, Apple, and Nvidia. Eric is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool. The Motley Fool owns and recommends Alphabet (A shares), Amazon, Apple, Cisco Systems, and Nvidia. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and recommends Alphabet (A shares), Amazon, Apple, Cisco Systems, and Nvidia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Alphabet (C shares) and recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Amazon. 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 Lake Resources N.L. (ASX: LKE) share price powered ahead by 30% last week. At market close on Friday, 4 March, the clean lithium developer’s shares were swapping hands for as little as 97 cents apiece.

However, investors have been bidding up the company’s shares since following a couple of positive announcements.

During midday trade on Friday, Lake Resources shares touched a record high of $1.335 before pulling back to close at $1.29, up 7.5%. That’s a gain of 33% over the week.

Let’s take a look at what’s been driving the excitement around this company.

What’s been happening with Lake Resources?

The Lake Resources share price was on the move last week as investors appeared upbeat about the company’s prospects.

Last Monday, Lake Resources advised it had utilised a market subscription agreement with Acuity Capital to raise $39 million.

In return, Lake Resources issued 40 million fully paid ordinary shares to Acuity Capital at a cost of 97.5 cents each.

While further strengthening the balance sheet, the funds will support development across the company’s four brine projects in Argentina.

In addition, the S&P Dow Jones Indices announced some changes in its quarterly rebalance of the S&P/ASX Indices.

As such, Lake Resources will be added to the S&P/ASX 300 Index on 22 March.

It’s possible the updated list has led investors to take advantage of the upcoming change.

Most fund managers are required to adhere to their strict guidelines, which allows them to buy shares only within a certain index. On the other hand, exchange-traded funds (ETFs) usually pick up and/or dump the appropriate shares to keep in line with the benchmark.

About the Lake Resources share price

The Lake Resources share price has zoomed upwards of almost 300% over the past year. This is likely in part due to renewed investor sentiment within the battery industry.

Based on today’s price, Lake Resources commands a market capitalisation of roughly $1.46 billion, with approximately 1.22 billion shares outstanding.

The post Why has the Lake Resources (ASX:LKE) share price soared 30% in a week? appeared first on The Motley Fool Australia.

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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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It’s only 2.5 months old, but 2022 has been action-packed. And not in a good way.

First, we saw the share market in freefall about inflation and interest rate rises. Then just as it partially recovered from that, the war in Ukraine broke out.

So while there are plenty of cheap ASX shares out there, experts caution careful selection when picking up bargains right now.

As such, the team at Firetrail provided some guidance to 2 ASX shares that they think will still do well in a turbulent year:

$300 million to come, by doing nothing 

Firetrail portfolio manager Scott Olsson likes the look of QBE Insurance Group Ltd (ASX: QBE) during a time when interest rates are sure to rise.

But he did admit the insurance giant has disappointed shareholders in recent years.

“It is a stock that’s been very hard to own over the past 15 years,” he told a Firetrail webinar.

“But now is the time to own QBE.”

The simple fact is that QBE holds $3 billion of premiums before claims payouts. This means a one percentage point increase in interest rates would mean a $300 million uplift for the business.

Also, business insurance premiums have increased 30% over the past three years, according to Olsson.

“That can flow through into better profitability rolling forward.”

QBE shares are now at a 15% discount to its long-term trend, said Olsson.

“And that just screams very cheap to us, given earnings can grow by 20% into FY23 and 20% again into FY24.”

QBE shares are down more than 11% in the year to date, ending Friday at $10.55. 

Inevitable growth for aged care sector

Even for a small companies analyst like Firetrail’s Eleanor Swanson, chaotic times has her retreating into more defensive investments.

And one ASX share that she has her eye on at the moment is aged care provider Estia Health Ltd (ASX: EHE).

“Estia Health is an undervalued defensive, with material tailwinds,” she said.

“What matters for Estia is that Australia has an ageing population.”

Swanson cited forecasts that the number of aged care beds will have to increase 2.5 times over the next 20 years.

While the sector faces uncertainty about regulation and funding, Swanson believes the government will be “highly incentivised” to improve business conditions to attract investment.

The Firetrail team also believes Estia will improve occupancy rates, which will directly benefit the bottom line, as much of its costs are fixed.

And compared to recent acquisitions in the aged care industry, Estia’s valuation is very low at around $100,000 per bed, implying future growth potential.

“Bolton Clarke‘s acquisition of Allity… The acquisition multiple implied a value per bed of $160,000,” said Swanson.

“Calvary recently acquired Japara… and paid $130,000 per bed.”

Estia shares have risen by more than 11% over the past month, closing Friday at $2.27.

The post 2 ASX shares to buy now, no matter what else happens this year: experts appeared first on The Motley Fool Australia.

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Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has 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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There are certain exchange-traded funds (ETFs) out there that can provide investors with plenty of exposure to long-term growth, with a tech weighting.

Some ETFs are just based on a broad share market or index, such as the S&P/ASX 200 Index (ASX: XJO).

But there are other options that are based just on a particular sector with growth characteristics.

Here are two ETF candidates that own businesses that have been growing for a long time:

Betashares Global Cybersecurity ETF (ASX: HACK)

This ETF gives investors a way to get access to the world’s cybersecurity companies.

There is a mixture of global giants and emerging players in the portfolio.

Some readers may have heard of some of the ETF’s biggest holdings, such as: Palo Alto Networks, Cisco Systems, Crowdstrike, Accenture, Mandiant, Check Point Software, Leidos, Thales, Juniper Networks and Tenable.

BetaShares explains that with cybercrime on the rise, the demand for cybersecurity services is expected to grow strongly for the foreseeable future.

According to Statista, the size of the global cybersecurity market is expected to grow from $137.63 billion in 2017 to $248.26 billion in 2023. BetaShares also points out that Australian investors currently have few local options for gaining exposure to this fast-growing cybersecurity sector.

Past performance is not a reliable indicator of future performance. Over the past five years, the ETF has produced an average net return per year of 20.5% to 28 February 2022.

VanEck Video Gaming and Esports ETF (ASX: ESPO)

This ETF is about the global gaming and e-sports sector.

There is a total of 26 positions in the portfolio. These are the biggest ten, by weighting: Advanced Micro Devices, Tencent, Activision Blizzard, Nintendo, Nvidia, Netease, Nexon, Electronic Arts, Take-Two Interactive Software and Bandai Namco.

VanEck points out that the global gaming sector has seen consistent global growth in revenue. Video gaming has seen 12% average annual growth since 2015.

E-sports has created new potential revenue streams from game publisher fees, media rights, merchandise, ticket sales and advertising. E-sports revenue growth has increased by 28% on an average each year since 2015.

The companies in this portfolio are positioned to benefit from the increasing popularity of video games and e-sports. The companies in the portfolio make a significant portion of their revenue from the video gaming sector.

VanEck also notes that this investment can provide tech exposure away from Apple, Amazon, Facebook, Google and Microsoft.

Again, past performance is not a reliable indicator of future performance. Over the last five years, the video gaming index that this ETF tracks has returned an average of almost 27% per annum to 28 February 2022.

The post 2 high-growth tech ETFs appeared first on The Motley Fool Australia.

More reading

• 3 popular ETFs for ASX investors to check out
• 3 exciting ETFs for ASX investors in March
• 3 ASX ETFs hitting 52-week lows on Friday
• 2 compelling ASX shares expecting big growth this decade
• 3 excellent ETFs for ASX investors to look at in March

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 BETA CYBER ETF UNITS. The Motley Fool Australia owns and has recommended BETA CYBER ETF UNITS. The Motley Fool Australia has recommended VanEck Vectors ETF Trust – VanEck Vectors Video Gaming and eSports ETF. 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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