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Share markets have stumbled and tumbled the past few weeks on the back of fears that interest rates would rise in the US.

While the Reserve Bank of Australia may downplay the impact of inflation here in Australia, any rise in US rates would force other central banks to consider doing the same.

This is because countries that are too out of step with the world’s largest economy risk having their currency depreciate excessively — and worsen their own inflation.

This climate of fear means, according to Investors Mutual Limited director Anton Tagliaferro, that investors now must seek current cash flow.

“Replacement costs are rising, and financing costs will increase going forward,” he wrote on the IML blog.

“Return thresholds will suddenly have bond rates of more than zero to compete with.”

With this in mind, Tagliaferro named 3 ASX shares that are ideally equipped to thrive in a rate-rising environment:

• Aurizon Holdings Ltd (ASX: AZJ)
• Orica Ltd (ASX: ORI)
• Pact Group Holdings Ltd (ASX: PGH)

Growth shares will destroy your wealth, says fund manager

According to Tagliaferro, all 3 companies have been “shunned” in recent years by a market that’s been obsessed with growth stocks.

“With interest rates rising, these stocks suddenly don’t look so boring or dull as things normalise,” he said.

“And as investors begin to appreciate real cash flows generated by companies in the next 2  to 3 years, as opposed to hoped-for cash flows in 10 or 20 years’ time.”

He said that share investors were at a crossroads now where they had to make sure growth assets didn’t “destroy” their wealth.

“With interest rates almost certainly to be on the rise in 2022, the sustainability of the returns from growth and speculative stocks is likely to be severely tested.”

Tagliaferro’s fund is continuing to hunt for value ASX shares that have excellent current cash flow and “very positive outlook” over 3 to 5 years.

“We continue to focus on real companies which have a durable competitive advantage, and that typically have substantial real assets or long-term, monopoly-like licences — not start-ups.”

The post Interest rate anxiety? 3 ASX shares to stay calm and carry on appeared first on The Motley Fool Australia.

More reading

• 2 beaten-up ASX shares tipped to rebound in 2022
• What went wrong for the Aurizon share price (ASX:AZJ) in 2021?

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 recommended Aurizon Holdings 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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These fundies are sceptical of ASX retail shares in 2022. However, they believe 2 ASX retail shares still represent a bargain.

Let’s take a look at what the experts predict might be facing the retail sector and which shares they have got their eyes on.

Why are some experts wary of the retail sector?

Retailers have weathered a “perfect storm” since the beginning of the pandemic, Investors Mutual Limited senior portfolio manager Simon Conn told Livewire.

Consumers were stuck at home with many boosting their incomes with government stimulus. And that extra time and cash often found its way to ASX-listed retailers.

As a result, Conn thinks margins in retail stocks look slightly inflated and valuations “don’t reflect more normal underlying running conditions”.

And, as consumers enjoy more ‘normal’ lives in 2022, the sector could be in for a struggle.

Conn’s fellow fundie Bruce Williams, Elston Asset Management portfolio manager, is also bearish on ASX retail shares. Livewire quoted Williams as saying:

They’ve had a period of unbelievable demand because we’d had no other choice… In our view, it meant these companies are actually over-earning.

Williams is concerned retailers might have seen earnings and sales “pulled forward” into the COVID period and could be about to experience a drop in demand.

However, Conn flagged two ASX retail shares that still look cheap in 2022.

2 ASX retail shares going cheap

Conn flagged Myer Holdings Ltd (ASX: MYR) and Best & Less Group Holdings Ltd (ASX: BST) as retail shares that still look very cheap.

“Both stocks have been impacted by the shutdowns and lockdowns, having had stores closed, and their margins haven’t been artificially inflated by what’s happened,” he said. “So, we think both those businesses on price-to-earnings (P/Es) of less than 11, and 6 times in Myer’s case, are good opportunities.”

The Myer share price has tumbled 8% year to date. It’s currently trading at 42 cents. Over the same period, that of Best & Less has slumped 6% to $3.89.

Meanwhile, Williams told the publication that he’s waiting to learn what “normal sales” are and the growth rate of said sales.

“For us, it always just comes down to whether the valuation stacks up and we’ve got a margin for safety built-in there,” he said.

The post 2 ASX retail shares going cheap: Fund manager appeared first on The Motley Fool Australia.

More reading

• Own Mineral Resources (ASX:MIN) shares? Here’s what to watch when the miner reports tomorrow
• This is how we’ll know the share market has bottomed
• Macquarie (ASX:MQG) share price on watch following ‘record quarter’
• 2 small-cap ASX shares to handsomely reward patient investors
• 2 growing ASX dividend shares analysts rate as buys

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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Mineral Resources Limited (ASX: MIN) shares will be on watch this week when it releases its half year results on Wednesday.

Ahead of the release, let’s take a look to see what the market is expecting from the mining and mining services company.

What is the market expecting from Mineral Resources?

Unfortunately for shareholders, the team at Goldman Sachs believes the market may be expecting too much from Mineral Resources during the first half.

According to a note this week, the broker has named Mineral Resources as one of four companies that could negatively surprise during earnings season.

Goldman is forecasting an earnings before interest, tax, and depreciation (EBITDA) result 5% below consensus estimates and a net profit after tax result a sizeable 16% lower than estimates.

Why could Mineral Resources fall short of expectations?

The broker believes this earnings miss will be driven largely by higher than expected cost and freight (CFR) costs and margin pressures from labour shortages.

Goldman explained: “GSe -5%/-16% below VA consensus 1H FY22 EBITDA/NPAT respectively, likely on higher expected CFR costs across Commodities operations and margin/cost pressure in Mining Services, as a result of labour and resourcing tightness, potential supply chain constraints, and broad cost inflation being experienced by the mining industry (diesel, steel).”

And while its analysts are expecting stronger iron ore and lithium prices to support its performance, it isn’t ultimately enough to offset the higher costs and lower volumes.

“As we noted from the recent quarterly, we lowered our FY22E EBITDA/EPS by -13%/-19%, largely driven by lowering forecast iron ore volumes (-10%) and increased CFR costs (+6%), and tighter Mining Services margins, offsetting the increase to commodity prices (Fe/Li),” it added.

Are Mineral Resources shares in the buy zone?

Goldman has a neutral rating and $53.50 price target on Mineral Resources’ shares.

Elsewhere, the team at Citi also has a neutral rating and a $61.00 price target on its shares. Its analysts are forecasting a net profit after tax of $262.4 million for the half.

The post Own Mineral Resources (ASX:MIN) shares? Here’s what to watch when the miner reports tomorrow appeared first on The Motley Fool Australia.

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• Here’s why the Mineral Resources (ASX:MIN) share price is shooting higher today
• Here’s why Santos (ASX:STO) is attracting some investor ire this week
• ASX lithium shares in focus amid potential supply squeeze

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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The share market has been on a downward spiral this year.

Both the S&P/ASX 200 Index (ASX: XJO) and S&P 500 Index (INDEXSP: .INX) took significant tumbles over January.

A small revival the past few days has triggered much speculation about whether there will be further pain to come for investors or if the sell-off is about done.

There are plenty of experts who think there will be more trouble coming, and others who say it’s now time to buy up all the bargains out there.

Forager Funds chief investment officer Steve Johnson has a foot in each camp.

“Individual stocks can bottom out a long, long, long time before the overall market bottoms out,” he told a Forager webinar.

“Stock prices can fall further and harder than what we’ve seen so far, but it’s a far more attractive entry point than it was 6 and 7 months ago.”

Here’s the sign to look out for

It has been an especially brutal time for technology stocks. The NASDAQ-100 (NASDAQ: NDX) index has plummeted 12.3% this year so far.

This is because that sector has more companies that are dependent on future earnings to justify their current valuations. 

Rising interest rates immediately slash future earnings for such growth businesses, so their share prices go south. 

So is it time to grab all those cheap tech shares?

While no one has a crystal ball that can determine whether the stock market has “bottomed”, Johnson has one omen that he’ll be looking at.

“I don’t feel like this tech bubble is going to be properly burst until Tesla Inc (NASDAQ: TSLA)’s half the price it is today rather than still trading at US$900 bucks,” said Johnson.

“We’re not at a point where there’s widespread distress out there. But we have seen 70% and 80% falls in individual stocks.”

If it’s truly cheap, then don’t worry about timing the market

This phenomenon of specific shares being “out of synch” with the general market means investors could purchase some bargains right now, even if the bottom has not yet arrived.

Johnson took the example of the old Rams Home Loans business, which used to be listed on the ASX.

This was personally his biggest holding back in 2008 when the global financial crisis struck.

Rams shares hit their bottom on 30 June 2008, but the rest of the market continued to plunge until March 2009.

By that time, the Rams stock price had tripled.

“I think it is highly likely that you’re going to see that [in the current correction].”

The post This is how we’ll know the share market has bottomed 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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The Macquarie Group Ltd (ASX: MQG) share price will be on watch this morning.

This follows the release of the investment bank’s third quarter operational update.

Macquarie share price on watch following solid quarter

Macquarie had a strong quarter with the majority of its businesses performing positively.

The Macquarie Asset Management (MAM) business had assets under management (AUM) of $750.1 billion at 31 December 2021, up 2% since the end of September. The release notes that that Public Investments AUM rose 2% to $522.5 million and Private Markets AUM rose 3% to $227.6 billion. This was driven by a combination of positive market movements and fund investments.

The Banking and Financial Services (BFS) was on form and reported total deposits of $91.6 billion at the end of the quarter, which is up 4% since the end of September. In addition, its home loan portfolio increased 8% to $82.8 billion and its business banking loan portfolio increased 4% to $11.4 billion.

Macquarie’s Commodities and Global Markets (CGM) business was a highlight for the quarter, delivering strong results across the commodities platform. This was particularly the case in global Gas & Power and Resources, driven by increased client hedging and trading opportunities from unusually challenging market conditions.

Finally, the Macquarie Capital business completed 126 transactions valued at $105 billion globally during the quarter. This meant that fee revenue was significantly up across Advisory, DCM and ECM, and investment-related income was also up substantially following exceptionally strong investment realisations. The release notes that Macquarie Capital is the number one global financial adviser for infrastructure/project finance.

What about its profits?

Macquarie hasn’t provided the market with any financials with its update. However, it notes that the sum of the above is “a record quarter” for the company.

This is despite its MAM and BFS businesses reporting a combined net profit contribution down on the prior corresponding period due to the timing of performance fees and investment-related income. Their net profit contribution remains up on a year to date basis.

The key drivers of its growth during the third quarter were its market-facing businesses, CGM and Macquarie Capital. Their combined profit contribution was up substantially on the prior corresponding period. This is also the case on a year to date basis.

In light of the above, Macquarie finished the period in a very strong financial position, with a CET1 ratio of 12.2% and group capital surplus of $11.5 billion.

Outlook

Macquarie’s Group Managing Director and Chief Executive Officer, Shemara Wikramanayake, was cautiously optimistic on the future.

She said: “We continue to maintain a cautious stance, with a conservative approach to capital, funding and liquidity that positions us well to respond to the current environment. More broadly, we remain well positioned over the medium term, based on our deep expertise in major markets, a diversified and adaptable mix of strong businesses, an ongoing program to identify cost saving initiatives and efficiency, a strong and conservative balance sheet and a proven risk management framework and culture.”

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

The post Macquarie (ASX:MQG) share price on watch following ‘record quarter’ appeared first on The Motley Fool Australia.

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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, SG Hiscock portfolio manager Rory Hunter reveals the 2 medical tech ASX shares that will reward those with enough patience.

Hottest ASX shares

The Motley Fool: What are the 2 best stock buys right now?

Rory Hunter: As the small companies guy, I’d probably mention two smaller caps in this space at the moment, with the caveat of course that within a rising rate environment, you’re going to get to the valuation-multiple compression. So one would have to be quite patient with the stock picks. 

The first one I’d mention would be a company called Beamtree Holdings Ltd (ASX: BMT).

So Beamtree used to be known as PKS Holding, which, I think, was Pacific Knowledge Systems. Basically, it’s a technology that works — they capture, manage, and analyse and review AI [artificial intelligence] analysis to provide to decision support systems — to doctors in hospital settings. 

Operating in the same space — data analytics or health IT — as the likes of Alcidion Group Ltd (ASX: ALC), Mach7 Technologies Ltd (ASX: M7T), and others. 

The first thing I’d say is, Beamtree is a fantastic growth profile. We see the prospect of them getting to about $50 million of ARR [annual recurring revenue] over the next 3 to 5 years from a base of around $10 million they are now. They operate in over 20 countries, 4 continents. 

From a valuation perspective, they’re trading on about 5 times ARR currently. 

If you look at the wider sector, you’ll probably get valuation multiples of, from about 9 to 15 times sales. So with the growth profile, we’re protective of the functionality that they have. Customer satisfaction, they have 99% client retention. We think that they’re fantastically placed to continue to grow really strongly.

Within the healthcare industry, something that’s key to remember, is that when customers come to making a decision on buying a product, technology or anything, a lot of the time it’s about the people involved. They need to be able to trust the people that they’re buying from. 

Tim Kelsey, who’s the CEO of Beamtree, he’s got a fantastic reputation in the industry. He was previously the national director for patients and information in the NHS in the UK. He’s incredibly well connected in this space and has a very reputable track record. 

So bringing all of that together in a really good place.

MF: And your second pick?

RH: I’d say Lumos Diagnostics Holdings Ltd (ASX: LDX). You’ve probably seen there’s been a bit about Lumos in the news over the past few days. 

I think a lot of the institutional and retail holders that took positions in Lumos with the IPO went looking for a bit of a stag [short-term speculation]. And when they didn’t get that, they sold out. They’re not actually long-term holders. That’s why you’ve seen a bit of a weakness in the share price since the IPO. I think it’s a function of the construction of the register as opposed to the health of the company itself.

One thing that has been disappointing is the fact that the approval of their FebriDx product or device by the FDA has been somewhat delayed. We fully expect that approval to come through. We think that will be one huge catalyst. 

Also just looking at the wider thematic, what you’ve seen as a result of the pandemic is that it’s ultimately been a global lesson for consumers in how to undertake home-based rapid diagnostics, in terms of prevention testing. The reality is, that doesn’t stop when the COVID pandemic becomes endemic. Once we get through the other side of the pandemic, there are so many applications for rapid testing. 

Lumos are ahead of the curve, in the sense that they’re developing a test, CoviDx, and that will basically be an all-in-one COVID test with flu test as well. They’ve recently announced that they’re going to receive government funding for a manufacturing facility in Victoria. We don’t know what the quantum of the funding is as yet. But it will give them the capacity to develop or manufacture 50 million tests per annum. 

We fully expect that rapid diagnostics to be undertaken from the home, and will continue to accelerate on the back of the pandemic. We think Lumos is very well placed for that. We have a lot of conviction around the management team in order to execute as well.

MF: Certainly a very topical thematic, isn’t it?

RH: Very topical. I think what you’re seeing is that people are hesitating to buy in because there’s very much a feeling that we’re over the other side in terms of the pandemic, and so they think that actually their earnings profile, or the demand for their products, isn’t that durable. People are missing a trick there. 

MF: After the January sell-off, do you reckon there are plenty of bargains out there?

RH: Yeah. There definitely are. 

Whether the bargains are as good as they’re going to get, is another question.

Without going too deep into the macro… if you see any durability or duration in this rate hike cycle amongst global central banks, then all medical technology or technology healthcare businesses are going to be under pressure for some time, just because my nature they are long duration, so they derive a significant portion of their intrinsic value from earnings found in the future.

So in an environment of increasing bond yields, you’re going to get valuation multiple compression. So they’re going to have to grow at exponential rates. The growth in those businesses is going to have to be absolutely extraordinary for them to push against, or sort of push against the hot flow of water, if you like. 

If you’re looking back on the last 12 months, you’d perceive a lot of the opportunities right now as bargains, but the market could be on sale for a while longer, given what’s playing out now.

I think there is the prospect of central banks actually having to put a stop to the tightening cycle earlier than people expect, and that’s when there will come an opportunity. That’s really why we’ve positioned the fund as we have — we’ve been very defensive. We had 35% of the total fund in large companies and we’ve handled about 20% cash. So less than 50% in smaller companies. That’s basically to… make us as nimble as possible, to actually take advantage of the bargains that present themselves.

If you were to watch our monthly newsletters, what you’ll see, as you expect the sell-off to continue the same pace, you’ll see a lot of that weight in cash and larger holdings shift to smaller holdings, as they get cheaper and cheaper. 

The reality is that even if things play out as we expect them to do, timing is really challenging. So the way we do it is just incrementally shift the weight, just to make sure that we’re constantly topping up at discounted pricing, basically.

The post 2 small-cap ASX shares to handsomely reward patient investors appeared first on The Motley Fool Australia.

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• The Lumos Diagnostics (ASX:LDX) share price is soaring another 8% today. Here’s why
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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. owns and has recommended Alcidion Group Ltd, Beamtree Holdings Limited, and MACH7 FPO. The Motley Fool Australia has recommended Alcidion Group Ltd, Beamtree Holdings Limited, and MACH7 FPO. 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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Fortunately, in this low interest rate environment, the Australian share market is home to a collection of quality dividend shares.

Two that could be in the buy zone are listed below. Here’s what analysts rate these dividend shares as buys:

Elders Ltd (ASX: ELD)

The first ASX dividend share for investors to look at is Elders. It is one of Australia’s largest agribusiness companies providing livestock, real estate, feed and processing, wool agency services, financial planning, and grain marketing services to rural and regional customers.

After going through a tough time during the 2010s, things are now looking very positive for the company. This has been driven largely by the success of Elders’ transformation plan and acquisitions.

Goldman Sachs is a big fan of Elders and has a conviction buy rating and $15.65 price target on its shares. It likes Elders due to the rationalisation of the rural services industry, margin expansion through backward integration, and the benefits of its large scale systems modernisation project.

Another positive is that Goldman expects solid dividend growth in the coming years. It is forecasting fully franked dividends of 40 cents per share in FY 2022 and 42 cents per share in FY 2023. Based on the current Elders share price of $11.72, this will mean yields of 3.4% and 3.6%, respectively, over the next two years.

Transurban Group (ASX: TCL)

A second ASX dividend share to look at is Transurban. It is a toll road operator with a portfolio of important roads throughout Australia and North America. These include CityLink in Melbourne, WestConnex in Sydney, and the Logan Motorway in Brisbane.

Although traffic volumes have been impacted by lockdowns, they are rebounding now Australia is moving on from the pandemic. In addition, with international borders reopening later this month, its airport-focused roads should be given a boost.

Morgans is positive on Transurban. It believes the company will benefit from employment and population growth, urbanisation, and the value of time. It has an add rating and $14.57 price target on its shares.

As for dividends, the broker is forecasting dividends per share of 35 cents in FY 2022 and then 55.3 cents in FY 2023. Based on the current Transurban share price of $12.85, this implies yields of 2.7% and 4.3%, respectively.

The post 2 growing ASX dividend shares analysts rate as buys 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 Elders 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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Experts are always looking for investment opportunities as ASX shares. There are some stocks that are highly-recommended by top brokers.

When a business is well-liked by a number of different analysts, it could suggest that it’s a standout opportunity.

With that in mind, here are two that are highly-recommended:

Credit Corp Group Limited (ASX: CCP)

Credit Corp is one of the biggest debt collectors in Australia with a growing position in the US.

It’s currently rated as a buy by at least three different brokers, including Ord Minnett which has a price target of $37 – that’s around 20% higher than it is today.

The broker refers to the company’s recent FY22 half-year result for its latest rating.

In that report, Credit Corp said that its net profit after tax (NPAT) went up 8% to $45.7 million. There was a record half-year investment driven by a step-up in US purchased debt ledger investment to at least $150 million each year, and the Radio Rentals acquisition.

There was 9% growth in the ASX share’s consumer loan book over half to $200 million.

Credit Corp says that it’s on track for strong earnings growth across all segments over the full year. While market volume remains subdued, organic purchasing continues to recover, reaching its highest level since the start of the pandemic.

According to Ord Minnett, the Credit Corp share price is valued at 22x FY22’s estimated earnings.

Elders Ltd (ASX: ELD)

Elders is an agribusiness which works with primary producers to provide products, marketing options and specialist technical advice across rural, wholesale, agency and financial product and service categories. It’s also a leading Australian rural and residential property agency and management network.

In November 2021, it reported its FY21 result for the 12 months to 30 September 2021. Sales grew 22% to $2.55 billion. Statutory net profit after tax also grew by 22% to $149.8 million and underlying net profit after tax surged 40% to $151.1 million. This result also allowed the business to grow the dividend by 91% to $0.42 per share.

In terms of the outlook for FY22, Elders said that continued favourable seasonal conditions and high demand for agricultural commodities are expected to create excellent trading conditions in the first half of FY22.

The ASX share’s rural products outlook remains positive, with the summer crop expected to drive strong demand in the first half of FY22, particularly for agricultural chemicals, fertiliser and seed. Cattle and sheep prices are expected to remain high in the medium-term.

Strong demand for residential and farmland properties is expected to continue.

Management also believes that there are good opportunities in the market for Elders to execute more acquisitions.

Elders is currently rated as a buy by at least three brokers, including UBS. The price target by the broker is $13.43, however it’s expecting cattle prices to drop back over the year.

UBS numbers put the Elders share price at 16x FY22’s estimated earnings.

The post 2 highly-recommended ASX shares by experts appeared first on The Motley Fool Australia.

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• Why Amcor, Ansell, Block, and Credit Corp shares are sinking today
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08Motley 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 Elders 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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It’s bargain hunting season!

The S&P/ASX 200 Index (ASX: XJO) is down more than 6% this year. But with the mining sector carrying the market, most stocks have actually tumbled much more than that.

So which quality shares are selling for a heavy discount at the moment?

Here are a couple of suggestions.

Ready, set, go!

People management software provider ReadyTech Holdings Ltd (ASX: RDY) has seen its valuation shrink 14% so far this year. It’s been a 22% drop since its high in early November.

And it’s not just a general shift away from growth stocks that it can blame, according to Wilsons investment advisor Peter Moran.

“The share price of this software-as-a-service business has fallen significantly in the past three months due to missing out on a government licensing project,” he told The Bull.

But he added that this means now is the perfect opportunity to buy ReadyTech shares.

“ReadyTech has a strong track record of profitability and can still be expected to generate double-digit earnings growth for at least the next few years,” said Moran.

“We hold an overweight rating.”

He’s not the only one who thinks this. According to CMC Markets, all five analysts covering ReadyTech rate the shares as either “strong buy” or “moderate buy”.

An old favourite that won’t let you down

Healthcare giant CSL Limited (ASX: CSL) is Moran’s other tip to buy right now.

Its shares are going for close to its 52-week low currently, after tanking almost 14% this year. It has lost almost 20% of its valuation since late November.

The Wilson team thinks it can only head up from here.

“The pandemic negatively impacted the company’s core plasma collection business,” Moran said.

“Performance is steadily improving amid increasing demand for CSL products. Also, the company has a pipeline of new products.”

Moran also likes CSL’s recent $17.2 billion takeover of a European business.

“The recent acquisition of pharmaceutical company Vifor Pharma, which specialises in renal disease and iron deficiency, should provide additional growth streams,” he said. 

“We hold an overweight rating.”

CSL is currently a favourite of many analysts. 

IML Investors Mutual urged investors to pick up the shares a fortnight ago, and SGH Medical Technology Fund portfolio manager Rory Hunter told The Motley Fool this week it was one of its two biggest holdings.

The post 2 ASX shares at a golden buying opportunity right now appeared first on The Motley Fool Australia.

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Motley Fool contributor Tony Yoo owns CSL Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended CSL Ltd. and Readytech Holdings Ltd. The Motley Fool Australia has recommended Readytech Holdings 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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The Zip Co Ltd (ASX: Z1P) share price could go through a significant recovery in the next 12 months according to one broker.

Since the start of the year, the Zip share price has sunk 30%. But the last six months has seen a very big drop – down just over 60%.

However, whilst some investors have gone really negative on the company, there are a few analysts that believe the buy now, pay later business can still recover a lot of lost ground this year.

Zip share price target

Ord Minnett has a price target on the company’s shares of $6. That suggests a potential rise of the business of around 100% over the next year.

The broker came to its price target – which was a reduction from the previous target of $9.50 – after seeing Zip’s latest update.

Ord Minnett’s price target reduction came about with the shift in valuation changes for tech shares as well as expecting that over the next few years Zip is going to make bigger losses than previously expected.

Despite those concerns, the buy now, pay later (BNPL) business continues to grow.

Latest quarter

Zip reported a record group quarterly revenue number of $167.4 million, up 58% year on year. Transaction volumes increased 53% to $2.6 billion. Customer numbers increased by 57% to 9.9 million whilst merchant numbers rose 110% to 81,800.

On top of that, it achieved its target of more than $50 million transaction volume per month from expansion markets in both November and December. Those expansion markets include Canada, Mexico, Poland, the Czech Republic, UAE and Saudi Arabia.

It has signed on numerous merchants over the years, with some of the latest being Footlocker, Nespresso, Virgin Australia and Under Armour.

In Australia and New Zealand, the net bad debts increased from 2.44% at 30 September 2021 to 2.83% at 31 December 2021.

Sezzle Inc (ASX: SZL) acquisition?

A couple of weeks ago, Zip confirmed that it’s in discussions with BNPL competitor Sezzle about potentially buying the US-based business, though the talks are preliminary.

The Zip board said that it:

…remains committed to ensuring any transaction delivers value to shareholders and will always be disciplined in its assessment of potential opportunities. It will only pursue transformational transactions that help accelerate the delivery of Zip’s broader strategic objectives such as enhanced scale in core markets, improved customer and merchant propositions and a faster path to profitability through significant synergy opportunities.

Zip share price snapshot

After the heavy decline in recent months, Zip’s market capitalisation is now $1.76 billion.

The post The Zip (ASX:Z1P) share price has 100% upside – broker appeared first on The Motley Fool Australia.

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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 ZIPCOLTD FPO. 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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