Tag: Motley Fool

Key points

• Crude oil has rocketed over the past month, and is now at its highest level since 2014
• Energy shares have been rising
• Woodside is still a long way off its old highs. So, what’s going on?

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The Woodside Petroleum Limited (ASX: WPL) share price is enjoying a solid day so far this Wednesday. At the time of writing, Woodside shares are up a healthy 3.05% at $25.82 a share. That’s a handy beat of the S&P/ASX 200 Index (ASX: XJO), which has risen a still-robust 1.25% so far today.

As we covered earlier this week, ASX 200 energy shares have been some of the best performers on the entire share market over 2022 thus far. That’s in stark contrast to many energy shares’ lacklustre performances last year. In Woodside’s case, this oil driller is up a pleasing 17% or so year to date. That’s very favourable compared to the ASX 200’s loss of 4.76% (including today’s gains).

Crude oil hits 8-year high

Most of the credit for this outperformance can likely be laid at the feet of crude oil prices. Oil has been on fire recently. According to Bloomberg, the price of Brent crude has risen from under US$70 a barrel two months ago to almost US$90 a barrel today. That’s the highest price oil has commanded for years. The last time we saw US$90 for a barrel of oil was back in 2014.

Yet we haven’t seen the same enthusiasm spill over into the Woodside share price. Sure, Woodside shares are today reaching their highest levels since February 2020, just prior to the COVID-induced market crash of that year. But we are a long way from the highs this company has seen in the past. Back in early 2020, Woodside shares were going for close to $35, a good 26% from where they are today.

But back then, oil was a lot lower than it is today. And back in 2014, when crude was at levels similar to what we see today (albeit if not higher), Woodside shares were hitting highs over $42 a share. And let’s not even mention 2008, when Woodside hit its current reigning all-time high of over $66 a share.

So what’s going on here?

Well, it could be down to a few factors.

Why haven’t Woodside shares kept up with crude?

The first is that Woodside is just a different company today compared to what it was a few years ago. Last year, Woodside announced that it would acquire the petroleum/energy assets of BHP Group Ltd (ASX: BHP) in an all-stock merger.

It’s also been dabbling in the emerging hydrogen industry.

Secondly, investing in energy companies like Woodside is a lot different than it used to be. With many investors now placing ethical and environmental, social and corporate governance (ESG) concerns at the top of their agenda, investing in fossil fuel companies like Woodside has arguably lost its glamour.

There is now a wide range of popular ethical investment products on the ASX, and the trend is still experiencing strong growth. Most funds that invest with an ethical or ESG mandate will not even consider buying Woodside shares, regardless of pricing. This could lead to compression of Woodside’s price-to-earnings (P/E) multiples, which in turn could be holding the Woodside share price down, even though its fundamentals might be improving.

This could be another reason why Woodside shares have yet to reclaim their former glory, despite higher energy prices.

We can’t say for sure why Woodside shares have not followed oil prices to an eight-year high. But even so, investors have just enjoyed one of the best months they’ve had in years.

At the current Woodside share price, this ASX 200 energy share has a market capitalisation of $25 billion, with a trailing dividend yield of 2.25%.

The post Oil prices are at a 6 year high, so why isn’t the Woodside (ASX:WPL) share price? appeared first on The Motley Fool Australia.

More reading

• ASX 200 (ASX:XJO) midday update: Amcor slides, BHP and Fortescue storm higher
• Rates unchanged, a gain for the ASX and travel stocks soar. Scott Phillips on Nine’s Late News
• Fortescue (ASX:FMG) Future Industries to buy stake in Sparc Hydrogen
• Will a growing dividend help the AFIC (ASX:AFI) share price?
• 5 things to watch on the ASX 200 on Wednesday

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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Key points

• 240 companies listed on the ASX in 2021
• 6 of the top-10 IPOs are trading below their listing price
• Retail investors could be better off waiting 1-2 years before investing

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There were 240 listings on the ASX in 2021. That’s the most initial public offerings (IPOs) in any given year since 2007.

Yet, despite a lot of excitement in the leadup to and in the early days of a new ASX listing, many of these companies are now trading below their IPO prices.

In fact, according to The Australian Financial Review, the 10 biggest IPOs in 2021 are currently trading at a median 10% below their issue price.

Some, as you’d expect, have done better while others have fared significantly worse.

The top 3 ASX listings in 2021

GQG Partners Inc (ASX: GQG) was the biggest new IPO last year. The global boutique asset management firm was valued at $5.9 billion at listing with an offer price of $2 per share. GQG is currently trading at $1.52 per share, down 24%.

The second biggest listing on the ASX last year was APM Human Services International Pty (ASX: APM). The company provides services to job seekers and employers. It was valued at $3.2 billion at listing with an offer price of $3.55. APM is currently trading at $2.65 per share, down more than 25%.

Then there’s PEXA Group Ltd (ASX: PXA). Coming in as the third biggest listing on the ASX in 2021 with an initial valuation of $3 billion, Pexa breaks the trend by posting a solid gain since its IPO. The company, which provide an electronic conveyancing platform for Aussie real estate, listed at an offer price of $17.13 per share. Its currently trading for $19.42 per share, up 13%.

What the experts are saying about IPOs

With these figures in mind, here’s what the experts are saying about new listings on the ASX.

Carlos Gil is the chief investment officer at Microequities Asset Management. According to Gil (quoted by the AFR):

The sweet spot to buy a new listing is often 12 to 24 months after its IPO. By then, the fizzle that accompanies that IPO has faded. There’s less media coverage and hype… Small-cap listings fall off the radar if there is a lack of news after listing or if the share price disappoints. Investors quickly forget about the company.

The 1-2 year pause before buying also revolves around the issue of seed investors. Those are the initial investors, frequently institutional, that get into the IPO often with conditions that they can’t sell their shares until some time in the future, like 12-24 months after listing. And that can put pressure on the share prices.

According to Hugh Dive, chief investment officer of Atlas Funds Management:

If you look at the biggest IPOs, the amount of capital raised was only a small proportion of the market capitalisation at listing. Big investors in these companies will look to sell this year or next – there could be a lot of elephants trying to get through a small door at the same time.

Commenting on the new ASX listings in 2021, Paul Biddle, portfolio manager of Celeste Funds Management, said many of the valuations were overly optimistic.

“We looked at a lot of them, but valuations overall were frothy,” he said, as reported by the AFR. “Growth expectations factored into the valuations of a lot of IPOs won’t be met this year. Some will do well, but the forecasts for many will be too bullish in hindsight.”

Then there’s the question of even getting in on the ground floor of an attractive IPO. Often you’ll find most of the shares have been snapped up by what are known as cornerstone investors.

Richard Ivers, a portfolio manager at Prime Value Asset Management, pointed out, “There were some good floats, but most of the stock went to a small group of cornerstone investors. There was little left over for other investors.”

Some food for thought the next time you’re eyeing an upcoming ASX listing.

The post When to buy into new ASX listings. Hint: not during an IPO appeared first on The Motley Fool Australia.

More reading

• Here’s why the Renascor (ASX:RNU) share price is rocketing 19% today
• 2 reasons the Nasdaq has led the market lower in 2022
• Could South32 (ASX:S32) be set to downgrade its guidance when it reports this month?
• Here’s why the Strike Energy (ASX:STX) share price is surging 11% today
• ASX 200 (ASX:XJO) midday update: Amcor slides, BHP and Fortescue storm higher

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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Key points

• The Renascor share price is up 19% in lunchtime trade
• The company has received an $185 million loan to develop its South Australian graphite project
• Its SA site is the world’s “second largest proven resource”

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The Renascor Resources Ltd (ASX: RNU) share price is flying 19% higher today off the back of an already green month.

The price jump comes amid the energy company receiving the green light for a federal government loan for its South Australian graphite site. Renascor touts the project as “the largest reported graphite reserve outside Africa”.

At the time of writing, the energy company’s shares are trading at 28.5 cents each, up 18.75% after hitting their all-time high of 31 cents earlier in the session.

Let’s take a look at the company’s latest news.

What did the federal government approve?

This morning, Renascor announced it had received a $185 million government loan to develop its Siviour Graphite Project on SA’s Eyre Peninsula (around 120km northeast of Port Lincoln).

This loan will assist the company in achieving its goal of becoming “a world leader in the sustainable production of 100% Australian-made graphite product for use in the lithium-ion batteries fuelling the electric vehicle revolution”.

The loan will help Renascor combine its SA site with an “eco-friendly” purification processing facility to produce purified spherical graphite.

The conditional loan comes under the umbrella of the federal government’s $2 billion Critical Minerals facility and will be administered by Export Finance Australia (EFA).

The loan facility, established last year, assists projects to “secure the vital supplies of resources needed to drive the new energy economy and support the resources jobs of the future”, Renascor explained.

The government had previously granted the venture “major project status”. It will involve an estimated $204 million in capital expenditure.

Comment from management

Renascor managing director David Christensen said:

The Siviour Graphite Project represents an important opportunity for Australia, and South Australia in particular, to develop a world class, globally competitive downstream processing capability in a critical mineral that is fundamental to the development of the electric vehicle revolution.

The support from the Australian Government and EFA is a significant and tangible endorsement of this opportunity and Renascor’s ambition to become a world-leading supplier of Purified Spherical Graphite.

We look forward to working closely with EFA to satisfy the conditions of approval and to conclude all required facility documentation.

Renascor share price snapshot

Over the last 12 months, the Renascor share price has skyrocketed a whopping 840%.

The company’s share price now eclipses its previous 52-week high of 28 cents last month. This compares to its lowest point of 3 cents exactly a year ago.

Renascor has a market capitalisation of $530 million with approximately 1.89 billion shares issued.

The post Here’s why the Renascor (ASX:RNU) share price is rocketing 19% today appeared first on The Motley Fool Australia.

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• Here’s why the Strike Energy (ASX:STX) share price is surging 11% today
• ASX 200 (ASX:XJO) midday update: Amcor slides, BHP and Fortescue storm higher
• Rio Tinto (ASX:RIO) boss: ‘This is not the type of company we want to be’

Motley Fool contributor Alice de Bruin 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.

Investors took a pause on Tuesday morning, with major stock market benchmarks easing lower after massive gains over the past two trading sessions. As of 10:30 a.m. ET today, the Nasdaq Composite (NASDAQINDEX: ^IXIC) was down more than half a percent, taking far larger losses than fellow indexes like the Dow Jones Industrial Average (DJINDICES: ^DJI). That’s been a trend lately, with the Nasdaq seeing a much larger drop in January than the Dow.

For casual investors, there’s often confusion when different indexes don’t behave the same way. However, two fundamental differences in the makeup of the Dow and the Nasdaq explain the disparity. Below, we’ll go into both of those factors to see how they’ve played out lately.

1. The Dow doesn’t have many Nasdaq stocks

When you look at the broader market, you’ll see a roughly even split among stocks listed on the New York Stock Exchange (NYSE) and those on the Nasdaq stock market. If anything, there are slightly more companies that choose to list on Nasdaq.

However, among the 30 stocks that make up the Dow Jones Industrial Average, the two exchanges aren’t even close to parity. Nearly two dozen Dow stocks are listed on the NYSE, compared to just seven on Nasdaq.

That split reflects the historical respect that investors gave companies with NYSE membership. Even though Nasdaq has tightened its standards, blue chip investors still seem to value the clout that comes with an NYSE listing, and that’s reflected in the choices the Dow has made in bringing companies into the average.

2. The Dow’s price-weighted methodology underweights Nasdaq-listed components

The relative lack of Nasdaq stocks in the Dow explains much of the difference in index performance. But related to that is the fact that the Dow’s price-weighted methodology doesn’t give the Nasdaq-listed stocks that do make the cut their fair influence compared to the Nasdaq Composite’s calculation method, which is market-capitalization weighted.

The most obvious way this plays out is with Apple (NASDAQ: AAPL). With a market cap that has at times exceeded $3 trillion recently, Apple is by far the largest company listed on U.S. stock market exchanges. Yet because its price is relatively middle-of-the-road for a Dow stock at $170 to $175 per share, Apple gets only an average weighting of around 3.3% within the Dow. By contrast, for the Nasdaq-100 index, Apple’s high market cap gives it a more than 12.5% weighting — nearly four times the influence over the index’s movements.

All told, the seven Nasdaq stocks in the Dow have only about a 20% weighting within the average. That’s largely because three of the Dow’s four lowest-priced stocks are Nasdaq-listed, combining for just a 2.9% weighting.

2 measures of the same stock market

Some argue that the Dow’s idiosyncrasies make it a poor benchmark of stock market performance and that investors shouldn’t pay any attention to it. Yet while it’s true that the Dow marches to its own beat, it remains a popular way for non-investors to keep track of what’s happening with the stock market.

Keeping track of both the Dow and the Nasdaq, therefore, can actually add some insight into what’s happening in the market. As long as you understand why there can be differences in performance, the movements of the two indexes can point you toward trends that might help some stocks at the expense of others in the future. 

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

The post 2 reasons the Nasdaq has led the market lower in 2022 appeared first on The Motley Fool Australia.

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Dan Caplinger owns Apple. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and recommends Apple. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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 Apple. 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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Key points

• South32 has flagged upcoming changes to its coal production guidance for financial year 2022 and financial year 2023
• The updates will be included in the company’s half year results – set to drop on 17 February
• While South32 hasn’t said whether the changes will be positive or negative, there is reason to believe the guidance could be dropped

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The South32 Ltd (ASX: S32) share price tumbled 5% last week when it downgraded its manganese production guidance in its report for the December quarter.

But the company also flagged another worrying possibility. It told the market it will soon be adjusting its coal production guidance for the coming years.

Let’s take a look at what investors might want to keep an eye out for in the metals and mining company’s results for the first half of financial year 2022 (FY22).

At the time of writing, the South32 share price is $3.97.

Could South32 be getting ready to drop its FY22 guidance?

Own South32 shares? Let’s break down what might be in the company’s half year earnings report.

First off, it’s expecting to update its FY22 and FY23 production guidance for Illawarra Metallurgical Coal.

The company hasn’t said if the change will be an upgrade or a downgrade. However, it flagged some notable disruptions in its report for the December quarter.

South32 noted that an extended longwall move at Illawarra Metallurgical Coal saw its production drop 23% over the first half.

It also stated it made no energy coal sales of low-margin coal wash as increased freight costs made it “uneconomic”.

It also said its operating unit cost for the first half of FY22 was US$101 per tonne –20% higher than its previously given guidance.

Additionally, COVID-19 is continuing to weigh on the company’s activities. The company is wary workforce restrictions in New South Wales could impact its coal operation’s workforce in the second half of FY22.

Finally, South32 expects to increase its FY22 operating unit cost guidance for Worsely Alumina. Though, its production guidance will likely remain the same.

It’s a similar story for its Australia Manganese operation. It dropped the operation’s FY22 production guidance by 9% last week and is expecting to increase its operating cost guidance later this month.

Though, it’s worth noting the company upgraded its production guidance for Cannington by 5% in its quarterly results.

As a result, plenty of eyes will likely be watching the South32 share price when the company releases its half year results to the ASX on 17 February.

The post Could South32 (ASX:S32) be set to downgrade its guidance when it reports this month? appeared first on The Motley Fool Australia.

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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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Key points

• Strike Energy shares accelerate on back of Major Project Status award for Haber Project
• Proposed development of fertiliser production facility expected to reduce carbon intensity of Australian farming
• The award streamlines approvals processes for Strike Energy

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The Strike Energy Ltd (ASX: STX) share price is pushing higher at midday on Wednesday.

This comes after the company announced an update on its Project Haber, located near Geraldton in Western Australia’s mid-west region.

At the time of writing, the energy producer’s shares are swapping hands for 24.5 cents, up 11.36%.

Strike Energy secures ‘Major Project Status’ award

The company’s latest release has pushed Strike Energy shares up to a near four-month high today.

According to today’s statement, the Australian Federal Government has awarded Stike Energy’s Project Haber Major Project Status.

The proposed fertiliser production facility will replace Australia’s reliance on more than $1 billion of fertiliser imports each year.

Strike Energy intends for Project Haber to provide locally sourced fertiliser that would improve Australian agriculture’s competitiveness. In addition, this is expected to reduce the carbon intensity of Australian farming.

The decision to award the major project status is based on the opportunity to advance Australia’s downstream manufacturing industry and support the integration of low carbon technologies and renewable hydrogen.

Notably, the project aligns with Australia’s National Hydrogen Strategy and has the potential to reduce carbon intensity of the urea used in Australia by 60%. This is through adopting current ammonia technology and integrating green hydrogen supplies.

Major Project Status will provide Strike Energy’s Haber Project with certain services to streamline approvals processes.

Strike Energy managing director and CEO Stuart Nicholls commented:

Australia has one of the world’s greatest endowments of natural resources, whether that is gas, wind, solar or geothermal energy. At Strike we believe we should maximise the benefit of those resources for the nation by adding value to them here.

By re-domesticating urea manufacturing in WA’s Mid West, Strike’s Project Haber will create regional jobs, incubate WA’s hydrogen economy whilst making our agriculture sector more competitive and carbon efficient.

About the Strike Energy share price

Over the past 12 months, the Strike Energy share price has fallen by around 20% in value. However, when looking at year to date, its shares are up 19%, attributable mostly to today’s gains.

Strike Energy commands a market capitalisation of roughly $445 million, with approximately 2.03 billion shares on its books.

The post Here’s why the Strike Energy (ASX:STX) share price is surging 11% today 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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At lunch on Wednesday, the S&P/ASX 200 Index (ASX: XJO) is having a strong day and is charging notably higher. The benchmark index is currently up 1.4% to 7,106.3 points.

Here’s what is happening on the ASX 200 today:

Virgin Money shares rise following Q1 update

The Virgin Money UK (ASX: VUK) share price is rising today after investors responded positively to its first quarter update. The UK based bank revealed that its net interest margin (NIM) improved from 170bps to 177bps during the quarter. This was driven by higher hedge contributions, lower cost of funds, and a higher yielding lending mix. Management now expects its full year NIM to be ~175bps.

Amcor shares fall on half year update

The Amcor (ASX: AMC) share price is falling on Wednesday following the release of its half year results. For the six months ended 31 December, the packaging company revealed that its net sales rose 12% to US$6,927 million and its adjusted EBIT grew 5% to US$769 million. And while its net profit fell a touch short of expectations (US$548 million vs US$554 million), it is worth highlighting that management reiterated its full year earnings guidance.

Mining shares rise

A key driver of the ASX 200’s gains today has been the resources sector. Mining giants such as BHP Group Ltd (ASX: BHP) and Fortescue Metals Group Limited (ASX: FMG) are recording particularly strong gains on Wednesday. This has led to the S&P/ASX 200 Resources index rising by a sizeable 2.7% at lunch.

Best and worst ASX 200 performers

The best performer on the ASX 200 today has been the Champion Iron Ltd (ASX: CIA) share price with a gain of 5%. This follows the aforementioned gains in the resources sector today. The worst performer has been the Credit Corp Group Limited (ASX: CCP) share price with a 4% decline. This follows a mixed response to yesterday’s first half update by brokers.

The post ASX 200 (ASX:XJO) midday update: Amcor slides, BHP and Fortescue storm higher appeared first on The Motley Fool Australia.

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• Will a growing dividend help the AFIC (ASX:AFI) share price?
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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 owns and has recommended Amcor 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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Key points

• The Rio Tinto share price is climbing on Wednesday morning
• The company published a review of its workplace culture including findings of bullying, racism, and sexual assault
• Rio Tinto is determined to implement the report’s recommendations

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The Rio Tinto Ltd (ASX: RIO) share price is lifting in morning trade amid the company describing findings of a review into its workplace culture as “disturbing”.

The mining giant’s shares are up 3% at the time of writing, trading at $112.16 apiece. This has recouped yesterday’s loss when the company’s shares dropped 2.74%.

Rio Tinto is the world’s second-largest metals and mining company. Let’s take a look at its latest news.

Review into company culture handed down

Rio Tinto has published a report into its workplace culture carried out by former Australian Sex Discrimination Commissioner Elizabeth Broderick.

It found 28.2% of women and 6.7% of men have experienced sexual harassment at Rio Tinto worksites. 21 women reported attempted rape or sexual assault.

The review also identified incidences of bullying, sexism, and racism.

The company’s chief executive Jakob Stausholm described the findings as disturbing and offered his apologies. He said:

The findings of this report are deeply disturbing to me and should be to everyone who reads them. 

I offer my heartfelt apology to every team member, past or present, who has suffered as a result of these behaviours. This is not the kind of company we want to be.

Rio Tinto said it will implement all the report’s 26 recommendations. Leadership will ensure the company and its camp and village facilities are safe, respectful, and inclusive.

The company will bring in early intervention options and improve how it responds to workplace complaints.

Commenting on the future direction of the company, Stausholm added:

I am determined that by implementing appropriate actions to address the recommendations, and with the management team’s commitment to a safe, respectful and inclusive Rio Tinto in all areas, we will make positive and lasting change and strengthen our workplace culture for the long term.

Rio share price snapshot

The Rio Tinto share price has dropped 2.86% in the past 12 months but has had a good start to the year, up almost 12% in 2022. It’s 4.55% higher in the past week alone.

For perspective, the S&P/ASX 200 Index (ASX: XJO) Index has returned 4.55% in the last 12 months.

Last week, my Foolish colleague James reported Rio Tinto was one of the best performers on the ASX. A broker note out of Macquarie gave the company’s share price an outperform rating with a $130 price target.

Rio has a huge market capitalisation of $41 billion based on its current share price.

The post Rio Tinto (ASX:RIO) boss: ‘This is not the type of company we want to be’ appeared first on The Motley Fool Australia.

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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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Shares in Bank of Queensland Limited (ASX: BOQ) are rangebound today after spiking into the green as the gates opened for trading today.

At the time of writing, the Bank of Queensland share price is charging less than 1% higher and is fetching $7.84 in early trading.

The bank’s share price collapsed from its 52-week high of $9.74 back in October and hasn’t managed to recover to that level since – even after thrusting from lows of $7.60 in December

Even with the pullback in share price, the team at JP Morgan is heavily bullish on Bank of Queensland, noting it is “well positioned to deal with industry headwinds” in its outlook for the ASX banking sector in 2022. Let’s take a closer look.

Why’s JP Morgan bullish on Bank of Queensland?

The broker ranks Bank of Queensland amongst its top banking picks within its coverage universe. JP Morgan reckons the bank is set to absorb industry-specific headwinds better than its peers in 2022 for a number of reasons.

For instance, the bank has funding cost savings from “Term Funding Facility and deposits costs which have further to fall than peers”, the broker says.

Not only that but JP Morgan is excited about the bank’s growth and efficiency prospects following its recent ME Bank acquisition.

This has “potential for optimisation in both its own deposit book and the funding mix of ME Bank”, according to the firm.

Folding this acquisition, alongside the bank’s digitisation efforts and strengths in its term deposit book, JP Morgan estimates a return on tangible equity (ROTE) of 10.3% for Bank of Queensland this year.

With these drivers in mind, plus the recent pullback in share price, analysts at the firm believe that investors are overlooking key growth levers that the Bank of Queensland has in place, especially following the ME Bank acquisition.

Whilst it acknowledges successful integration of ME Bank into the Bank of Queensland’s portfolio is a tedious task, the firm is also perplexed as to why the market is under-appreciating the potential there.

“We argue that, given the large valuation discount vs peers, the market is not paying for synergies from the ME
Bank acquisition, albeit we acknowledge that this will require careful execution, given the already-full transformation/fix agenda”, the broker said.

As such, analysts with JP Morgan maintained their overweight rating on the stock, urging clients to buy in or to allocate more weight within portfolios if already holding.

The broker values Bank of Queensland at $9.80 per share, suggesting an upside potential of 25% at the time of writing.

Bank of Queensland share price summary

The Bank of Queensland share price has struggled lately after tumbling from its former highs in late 2021. As such, it has lost more than 1% in the past 12 months and is down more than 3% to start off the new year.

Despite the calamity, shares have regained support this week and are now up 3% in the past 5 days of trading, although trading volume has been slim compared to the monthly average.

The post Own Bank of Queensland (ASX:BOQ) shares? This broker sees 27% upside in 2022 appeared first on The Motley Fool Australia.

More reading

• Goldman tips Bank of Queensland (ASX:BOQ) share price to rise 25%
• What’s happening to ASX bank shares today?
• What do rising bond yields mean for the Bank of Queensland (ASX:BOQ) share price in 2022?
• How are ASX bank shares performing today?
• Here’s what happened to the Bank of Queensland (ASX:BOQ) share price in 2021?

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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The Novonix Ltd (ASX: NVX) share price is pushing higher on Wednesday morning.

At the time of writing, the battery technology company’s shares are up 2% to $7.86.

Why is the Novonix share price pushing higher?

Today’s gain appears to have been driven by broad strength on the Australian share market and an update on its US listing.

In respect to the latter, this morning Novonix revealed that its American Depositary Receipts (ADRs) have now commenced trading on the Nasdaq Stock Market. The Bank of New York Mellon has been appointed depositary, custodian, and registrar for the program.

The release notes that the ADRs are based on the company’s ordinary shares currently on issue, with each ADR representing four fully paid shares of Novonix.

Is the Novonix share price going higher?

Unfortunately, one leading broker believes the Novonix share price may have peaked for the time being.

This morning the team at Morgans retained its hold rating and cut its price target to $6.97. This implies potential downside of 11% from current levels.

Though, it is worth noting that the broker does see scope for the Novonix share price to trade beyond its price target.

Morgans commented: “NVX offers ASX investors an opportunity to get direct exposure to the North American battery market. The share price exceeds the value of our base case DCF valuation but it has had a tendency to push higher on positive news. Should NVX secure a major customer like Samsung or Sanyo then the stock could push higher on positive sentiment.”

“We think that once any potential momentum stalls though the price will be vulnerable to pull backs and we maintain our HOLD rating. NVX’s share price has shown very high levels of volatility which we think will continue,” it concluded.

The post What this broker is saying about the Novonix (ASX:NVX) share price appeared first on The Motley Fool Australia.

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• ASX 200 (ASX:XJO) midday update: Credit Corp impresses, Boral’s $3bn capital return
• Novonix (ASX:NVX) share price surges 5% on finalised US investment and supply agreement
• Novonix (ASX:NVX) share price lifts 4% on quarter of expansion
• Why Accent, BrainChip, Fortescue, and Novonix shares are sinking
• ASX 200 (ASX:XJO) midday update: Zip confirms Sezzle talks, Fortescue’s Q2 update

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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