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The fear of US interest rates heading upwards has well and truly wafted across the Pacific, sending the S&P/ASX 200 Index (ASX: XJO) spiralling down 8% this month.

But as The Motley Fool chief investment officer Scott Phillips advises, this is the time to continue buying.

“We’ve been here before,” he said.

“But remember: the ASX has never yet failed to regain, and then surpass, its previous highs.”

But that’s easier said than done. 

Buying while everyone else is selling takes courage.

As such, investors might appreciate some advice from experts as to which businesses have bright post-crash prospects.

Burman Invest chief investment officer Julia Lee this week shared a couple of ASX shares that fit that criteria:

Profitable tech companies are looking appealing now

Software provider WiseTech Global Ltd (ASX: WTC) has seen its shares plummet more than 27% since 4 January.

Lee reckons it’s one to pick up as long as investors enter with a long-term mindset.

“WiseTech is one that’s probably going to struggle a little bit in the short term because Omicron has impacted on cargo container ship volumes,” she told Switzer TV Investing.

“But in the medium term I think the outlook is good.”

She noted that WiseTech is a technology company that actually turns a profit.

“I much prefer the profitable ones at the moment,” Lee said.

“[And] I think that growth story is very much still intact.”

WiseTech shares closed Thursday at $43.31.

The business was one of the best tech stocks to own over 2021, gaining a phenomenal 90.5% over the calendar year.

Everybody loves Goodman

Although it’s a real estate group, Lee picked Goodman Group (ASX: GMG) as a standout for the same reasons as WiseTech.

“It’s not a tech stock but it’s very much benefitting from our online shopping trends and e-commerce.”

Goodman develops and manages industrial properties, counting famous online retailers like Amazon.com Inc (NASDAQ: AMZN) among its clients.

Lee noted that this week some analysts speculated Goodman would upgrade its earnings forecasts in the coming reporting season.

Shaw and Partners portfolio manager James Gerrish told The Motley Fool this week that Goodman is also one of his favourite pick-ups at the moment.

“It’s all about buying quality that’s been sold off… Goodman’s down 16% from its highs,” he said.

“That’s a really high quality company that’s growing really strongly. They’ve got caught up in the sell-off of high valuation stocks.”

The Goodman share price sunk 3.72% on Thursday to close at $22.03.

The post 2 ASX shares to buy in the current bloodbath appeared first on The Motley Fool Australia.

More reading

• 2 quality ASX shares going for dirt cheap right now
• 3 blue chip ASX 200 shares to buy after the selloff
• Is the Wisetech (ASX:WTC) share price a bargain after plunging 26% so far this year?
• Top brokers name 3 ASX shares to buy today
• What happened to ASX tech shares today?

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Tony Yoo owns Amazon. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended WiseTech Global. The Motley Fool Australia owns and has recommended WiseTech Global. 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.

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While the recent market weakness has been disappointing, one positive is that it has brought the shares of some quality companies down to attractive levels.

Two such ASX 200 shares are listed below. Here’s why these beaten down ASX shares could be in the buy zone now:

Westpac Banking Corp (ASX: WBC)

The first beaten down ASX 200 share to look at is Australia’s oldest bank, Westpac.

On Thursday, the Westpac share price hit a 52-week low of $20.00. When its shares tumbled to that level, they were down a massive 26% from their highs. This weakness has been driven by the market volatility, its soft margin outlook, and doubts over its cost cutting aspirations.

One broker that believes the Westpac share price is trading at a very attractive level is Morgans. In fact, the broker believes the bank’s shares offer “considerable value” to investors currently.

Morgans has an add rating and $29.50 price target on its shares. This implies potential upside of 46% over the next 12 months. The broker believes the market is wrong with its cost cutting doubts and feels confident Westpac will achieve its targets.

Xero Limited (ASX: XRO)

Another ASX 200 share that has sold off recently is Xero. This cloud accounting platform provider’s shares dropped to a 52-week low of $104.44 on Thursday.

This has of course been driven by significant weakness in the tech sector following concerns over the prospect of rising rates in the United States. Higher interest rates can be bad for growth shares that trade on sky high multiples. This is because they are used as part of the valuation process. Higher rates generally mean lower valuations.

And while the Xero share price does trade on high multiples, one leading broker isn’t fazed and appears to believe its growth outlook justifies this. As a result, this recent weakness could be a buying opportunity for investors.

Goldman Sachs currently has a buy rating and $158.00 price target on the company’s shares. It believes Xero will almost double its revenue and operating earnings from FY 2021 to FY 2024.

The post Are these beaten down ASX 200 shares now too cheap to ignore? appeared first on The Motley Fool Australia.

More reading

• From hero to Xero (ASX:XRO): share price tumbles 8% to hit 52-week low
• 2 ASX growth shares analysts love
• 2 buy-rated ASX dividend shares with big yields and huge upside potential
• Are these 2 high-growth ASX shares now beaten-up opportunities?
• What happened to ASX tech shares today?

Motley Fool contributor James Mickleboro owns Westpac Banking Corporation. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Xero. The Motley Fool Australia owns and has recommended Xero. The Motley Fool Australia has recommended Westpac Banking Corporation. 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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Could the Betashares Nasdaq 100 ETF (ASX: NDQ) be a good opportunity during this correction for both the global share market and the ASX share market?

It has been a volatile time for plenty of shares, both the mega-caps and the smaller ones.

The Betashares Nasdaq 100 ETF has fallen by 14% since the start of 2022. That’s a pretty large, quick decline for an index that includes many of the biggest technology businesses.

Lower prices don’t always translate into better value for stocks.

But there are plenty of high-quality businesses in this exchange-traded fund’s (ETF’s) portfolio. This is one of the potential reasons to consider this investment.

High-quality businesses

Some of the world’s strongest businesses that have dominant market positions in their respective sector are on the NASDAQ, which is one of North America’s main stock exchanges.

Apple is a massive player when it comes to smartphones. Microsoft is a leader in the office software, cloud computing, and gaming space (particularly with its Activision Blizzard acquisition). Both of those businesses make up more than 10% of the NDQ ETF portfolio.

Then there’s internet search, video streaming, smartphone software and cloud computing business Alphabet. E-commerce and cloud computing giant Amazon is another key player in the ETF’s portfolio. Facebook/Meta is another significant position with its various social media leaders like Instagram.

There are plenty of other leaders in the portfolio such as Tesla, Nvidia, Adobe, Broadcom, Costco, Intel, PayPal, Qualcomm, Texas Instruments, Netflix, Intuitive Surgical, Moderna, ASML, Airbnb and Regeneron. There are a total of 100 positions.

As BetaShares points out, with this one trade on the ASX investors can get access to companies like Apple, Amazon and Google that have changed the way we live.

Management costs

Whilst not as cheap as some other ETFs, the Betashares Nasdaq 100 ETF has an annual management fee of 0.48%. This is cheaper than the typical management fee that would be charged by internationally-focused fund managers.

Diversification

Whilst the NASDAQ is tech-heavy, it could be used by Aussies to increase the diversification of their portfolio, both in geographical terms and in industry terms.

The ASX is dominated by the financial industry and resources when it comes to the weightings of the main indices.

The NASDAQ can provide exposure to these giant tech companies, with many of them generating earnings from across the world.

Some investors like the look of the major tech companies

In a recent Bloomberg podcast, Morgan Stanley fund manager Andrew Slimmon said that investor sentiment could leave the growth names for a while. He doesn’t think the high-growth names are going to see a V-shaped recovery.

However, he said that the big tech names like Microsoft and Alphabet are not trading at extremely high earnings multiples and are some of the ones that could be opportunities.

The post Is the Betashares Nasdaq 100 ETF (ASX:NDQ) an opportunity in this market correction? appeared first on The Motley Fool Australia.

More reading

• 2 top international ETFs for ASX investors
• 2 ASX ETFs with strong growth potential
• These 2 beaten-down growth ETFs could be a buy today
• An ASX XI to take on the world
• Here are Scott Phillips’ top 5 ASX shares for 2022. Is it time to buy?

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 BETANASDAQ ETF UNITS. The Motley Fool Australia owns and has recommended BETANASDAQ ETF UNITS. 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

• Firebrick Pharma will debut on the ASX at 12:30pm AEDT today
• The company is developing a nasal spray to help treat the common cold. It’s product will also undergo a COVID-19 trial
• Shares in the company were offered for 20 cents a apiece during its IPO

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Shares in Firebrick Pharma Limited (ASX: FRE) – a company developing a virus-killing nasal spray – will float on the ASX this afternoon.

The stock will hit the decks at 12:30pm AEDT after the company raised $7 million through its initial public offering (IPO). Under its prospectus, Firebrick shares were offered for 20 cents apiece.

Here’s what you need to know ahead of the pharmaceutical development firm’s ASX debut.

All the details on Firebrick Pharma’s ASX IPO and float

Shares in Firebrick Pharma will list on the ASX this afternoon after its fully subscribed IPO.

The float follows nearly 10 years of development of its patented nasal spray, Nasodine, with povidone-iodine as its active ingredient, is designed to kill the common cold where it starts – in the nose.

Nasodine has undergone 3 human clinical trials, confirming it is safe and well-tolerated in adults.

Additionally, a phase 3 clinical trial found the product can significantly reduce the severity of the common cold in people with strong symptoms, confirmed viral infections, or who started treatment within 24 hours of symptoms appearing,

According to Firebrick co-founder and chair Dr Peter Molloy, with one more phase 3 clinical trial, Nasodine could be approved as a treatment for the common cold in adults. That clinical trial is set to go ahead in 2022.

If successful, the company will then seek approvals from regulators in its target markets of Australia, the United States, and Europe.

If all goes to plan, Nasodine could launch in Australia in 2023.

On top of its potential to treat the common cold, the company is planning a phase 2 trial to find if its product can help treat COVID-19.

The trial aims to show the product can reduce shedding of the COVID-19 virus. It will go ahead this year in South Africa.

The funds raised in Firebrick’s ASX IPO will go towards ongoing clinical trials, marketing, and operating costs.

Molloy has previously been a marketer and CEO of 4 biotechnology firms, including Race Oncology Ltd (ASX: RAC). Over his career, he has helped launch Betadine Sore Throat Gargle.

Firebrick co-founder, executive director, and chief operating officer (COO), Dr Stephen Goodall, used to be COO of formerly-ASX-listed Viralytics Limited.

At its offer price, the company is expected to list with a market capitalisation of around $33.8 million.

The post Firebrick Pharma (ASX:FRE) is floating on the ASX today. Here’s what you need to know appeared first on The Motley Fool Australia.

More reading

• Why Tesla stock just tumbled 12%
• Here’s why the Telstra (ASX:TLS) dividend is back over 4%
• 2 ASX growth shares to buy in February with 40% upside
• 2 ASX dividend shares now offering big yields
• ASX shares set to conquer the carnage: expert

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

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

What happened

Shares of electric car titan Tesla (NASDAQ: TSLA) braked hard Thursday, falling 11.55%. That sounds kind of crazy, seeing as Tesla just crushed on earnings last night, reporting $17.7 billion in sales, when Wall Street had only expected to see $16.4 billion, and earning $2.54 per share (non-GAAP) instead of the predicted $2.26.

So why is Tesla tumbling today?

So what

To find out, let’s take a quick look at Tesla’s numbers.

Tesla grew its revenue 65% year over year in the fourth quarter. Gross profit margin on that revenue — which climbed all year long — grew yet again in Q4. Indeed, it was up 8.2 percentage points from last year’s Q4 at 27.4%. Operating profit margin expanded even faster, nearly tripling year over year to top out at 14.7%.

To put that in context, General Motors‘ operating profit margin is currently just 9.5%, and Ford Motor Company‘s is only 2.2%. So if you’re looking for a reason why Tesla stock gets a valuation multiple much higher than GM or Ford enjoy, well, that’s your reason right there.

Finally, on the bottom line, Tesla’s profit for the quarter came to $2.05 per share under generally accepted accounting principles (GAAP) — not quite as high as the $2.54 per share pro forma number that got all the headlines last night, but still a 754% increase over Q4 a year ago.

Now what

Investors, however, don’t seem as impressed with what Tesla has “done for them lately.” What really concerns them are what Tesla plans to accomplish in 2022. (And admittedly, with Tesla stock trading for 330 times earnings, that’s a valid concern.)

Unfortunately — both for Tesla and for its stock price — the company was pretty coy about what it expects for the year ahead.

Guidance for 2022 was limited to a bald assertion that Tesla hopes to “achieve 50% average annual growth in vehicle deliveries … over a multi-year horizon,” and a warning that “equipment capacity, operational efficiency and the capacity and stability of the supply chain” could be limiting factors preventing it from hitting that target. As management admitted, Tesla’s factories “have been running below capacity for several quarters” because of supply chain snarls, and Tesla fears that this “is likely to continue through 2022.”

Final notes: Adding to the bad news, Tesla ruled out potential 2022 catalysts such as a new $25,000 Model 2 economy-class electric car, reports TheFly.com. Indeed, according to TheFly, Tesla “says it won’t introduce [any] new vehicles [at all] in 2022.”

Evidently, that’s not what investors wanted to hear. 

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

The post Why Tesla stock just tumbled 12% appeared first on The Motley Fool Australia.

More reading

• 5 best shares to bet on electric cars right now
• 2 reasons Tesla stock is toast today
• Tesla stock is back above $1,100. Is the EV leader a buy?
• Top 5 stocks mentioned on Reddit’s WallStreetBets right now
• Why Tesla shares jumped 50% last year

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

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

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Like most shares on the S&P/ASX 200 Index (ASX: XJO), the Telstra Corporation Ltd (ASX: TLS) share price has had a pretty rough time of it of late. It was only back on 18 January that Telstra hit a new all-time record high. The company managed to score a share price of $4.31 back then, the highest level it has traded at since 2017. But fast forward by what hasn’t even been a fortnight, and Telstra is starting to put some distance between that new high and its current share price. Yesterday, this ASX 200 telco closed at $3.88 a share. That’s a drop of almost 10%. Ouch.

Going off of the fact that Telstra has made no significant announcements over this period, we can probably assume it is more correlated with what the broader market has been doing, rather than investor concerns over the Telstra business itself. But who are we to understand why the market prices shares, the way it does. Sometimes, it makes sense, other times it doesn’t. That’s probably why the great investor Benjamin Graham once famously said that in the short term, the share market is a voting machine, and in the long term, a weighing machine.

But this slump in value for Telstra shares has uncovered what might be a welcome development for Telstra investors, new and old. It has pushed the Telstra dividend back above a 4% trailing yield.

Why has Telstra’s dividend increased?

This might seem counterintuitive for some. But here’s how that works. Telstra paid out 16 cents in dividend per share last year. It has stated that it intends to keep this payout consistent over 2022 as well.

Since that metric is a static one, it means that the trailing (and forward, if Telstra indeed keeps its dividends consistent) yield is determined by the Telstra share price. A dividend yield is calculated by dividing a company’s annual dividends per share by its current share price.

Telstra’s incredible share price run over the past few months put a large dent in its trailing yield. Back in October 2020, when Telstra shares were under $2.70 each, its dividend yield was approaching 6%. But bewteen late October and 14 January, Telstra shares had risen by more than 57%. Even after the recent falls, that gain is still sitting at almost 45%. Now, when Telstra was hitting its new 52-week high just a week or two ago, its dividend yield was well under 4%.

But, as Telstra’s share price has fallen over the past week or two, its trailing dividend yield has increased to back over this threshold. On yesterday’s closing price, it had hit 4.12%. That grosses-up to 5.89% when you include full franking credits.

There’s a silver lining for investors looking at the Telstra share price today!

The post Here’s why the Telstra (ASX:TLS) dividend is back over 4% appeared first on The Motley Fool Australia.

More reading

• These 3 ASX 200 shares are topping the volume charts on Thursday
• Telstra (ASX:TLS) ‘best placed in the Aussie mobile market’ says JP Morgan
• 2 strong blue chip ASX shares rated as buys
• These 3 ASX 200 shares are topping the volume charts on Tuesday
• Why this leading broker just downgraded Telstra (ASX:TLS) shares

Motley Fool contributor Sebastian Bowen owns Telstra Corporation Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns and has recommended Telstra Corporation 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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If you’re looking to make some additions to your portfolio in February, then the two ASX shares listed below could be great options.

They have been tipped as shares that could generate strong returns for investors in 2022 and beyond. Here’s what you need to know about them:

Domino’s Pizza Enterprises Ltd (ASX: DMP)

The first ASX growth share to look at is Domino’s. It could be a good option due to the pizza chain operator’s strong market position and bold growth targets over the next decade. At the end of FY 2021, Domino’s had a network of 2,949 stores. It is now aiming to more than double this to 6,650 stores by FY 2033. And that’s just in existing markets. The company has the balance sheet capacity to acquire its way into other markets and has revealed that it is actively looking for M&A opportunities.

One broker that is a fan of Domino’s is Goldman Sachs. The broker currently has a buy rating and $147.00 price target on its shares. This compares favourably to the current Domino’s share price of $95.67.

Nanosonics Ltd (ASX: NAN)

Another ASX growth share to look at is Nanosonics. It is one of the world’s leading infection prevention companies and the name behind the trophon EPR disinfection system for ultrasound probes. This product is regarded as the best in its class and has been capturing market share consistently over the last decade. This has underpinned strong unit sales and even stronger recurring revenues from the consumables that the system requires. Looking ahead, Nanosonics appears well-placed for growth thanks to the increased importance of infection prevention following the pandemic and planned new product launches.

Morgans is positive on the company’s outlook. It currently has an add rating and lofty $6.97 price target on its shares. This compares to the latest Nanosonics share price of $4.85.

The post 2 ASX growth shares to buy in February with 40% upside appeared first on The Motley Fool Australia.

More reading

• $20,000 invested in these ASX shares 10 years ago is worth how much today?
• These are the 10 most shorted ASX shares
• 2 stellar ASX growth shares analysts rate as buys
• 3 buy-rated ASX shares
• Why Domino’s, Fortescue, Medibank, and Metcash shares are falling

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 Nanosonics Limited. The Motley Fool Australia owns and has recommended Nanosonics Limited. The Motley Fool Australia has recommended Dominos Pizza Enterprises 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 share prices of some attractive ASX dividend shares have dropped in recent weeks
• Fund manager GQG has seen its share price fall 13%, boosting the forecast dividend yield
• REIT Rural Funds keeps growing its distribution, but the share price has fallen 10% in the ASX share market correction

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The ASX share market is seeing some relatively substantial declines, which are adding up. The S&P/ASX 200 Index (ASX: XJO) fell another 1.8% yesterday. It’s down around 10% in just a few weeks. This is pushing up the potential yields of some ASX dividend shares.

When a share price declines, not only does the value potentially get better but the prospective dividend yield can also improve. For example, if a stock had a 5% dividend yield and then the share price fell 10%, the dividend yield would then be around 5.5%.

With that in mind, these two ASX dividend shares now could be attractive ideas:

GQG Partners Inc (ASX: GQG)

The GQG Partners share price fell 6.5% yesterday, which was on top of declines over recent months.

This is a fund manager that has produced attractive long-term outperformance for its fund investors and had been steadily growing its funds under management (FUM).

The business generates its profit predominately from management fees, rather than performance fees. In the 12 months to June 2021, performance fees represented just 2% of its total revenue.

In FY22, it’s expecting to grow its pro forma net income after tax from $227.6 million to $247.3 million. That would be an increase of 8.6%. That estimate is based on an increase of funds under management (FUM) of 4.4% to finish FY22 at $92.5 billion. At FY22’s halfway stage, FUM had grown to $91.2 billion. But that was before the recent market volatility.

In the first six months of FY22, it saw US$6.2 billion of net inflows.

It’s expecting to target an annual dividend payout ratio of between 85% to 95% of distributable earnings.

The broker Morgans thinks the GQG share price is a buy, with a price target of $2.40. It thinks the ASX dividend share will pay a dividend yield of 7.9% in FY22 and 9.3% in FY23.

Rural Funds Group (ASX: RFF)

Rural Funds is a real estate investment trust (REIT) which specialises in owning farmland.

The agricultural REIT owns a diverse portfolio of different farms including cattle, vineyards, almonds, macadamias and cropping (sugar and cotton).

One of the main aims of the REIT is to grow its distribution to investors by 4% per annum. It has been successful with with this target every year since it listed several years ago.

Unsurprisingly, the REIT has provided guidance for another 4% increase to the distribution for FY22. A payout of 11.73 cents per unit translates into a distribution yield of 4.2%. Part of this distribution growth is driven by organic rental increases which are included in its rental contracts.

The ASX dividend share continues to expand its portfolio with acquisitions. The latest acquisition was the purchase of 27,879 hectares of cattle and cropping properties. The four properties, collectively referred to as ‘Kaiuroo’ are located in central Queensland. It also bought 12,448ML of water entitlements.

The business has provided guidance that its FY22 adjusted funds from operations (AFFO), the net rental profit, will be 11.8 cents per unit. This is higher than the forecast distribution, despite the ongoing investing and property developments that it’s doing.

The post 2 ASX dividend shares now offering big yields appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Friday
• Here are the top 10 ASX shares today
• 3 reasons not to panic in this ASX 200 correction
• These 3 ASX 200 shares are topping the volume charts on Thursday
• Bargain bonanza? Scott Phillips’ advice for a glass-half-full approach to falling ASX share prices

Motley Fool contributor Tristan Harrison owns RURALFUNDS STAPLED. 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 RURALFUNDS STAPLED. 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 been a depressing ride for investors this month as the S&P/ASX 200 Index (ASX: XJO) has plunged more than 8%.

According to Tribeca Investment Partners portfolio manager David Aylward, ASX shares are facing far worse conditions now compared to previous periods in the COVID-19 pandemic.

“With previous COVID-19 variants… when lock-downs were lifted [consumers] later came out and spent money. And the government’s fiscal stimulus programs ensured there was money to spend,” he said.

“But it is different this time. With Omicron, people either don’t want to go out, or they can’t go out because they are isolating – and this time there is no government stimulus to support their spending in the economy.”

As such, when the current slaughter of ASX shares ends, he sees one type of business that might do very well, plus which companies will struggle:

Clean energy will lead market out of the doldrums

The current dip presents a nice opportunity for ASX shares that are involved in the shift to clean energy.

“The energy transition is going to be hugely inflationary. When you combine that with the likely stimulus program coming out of China over the next 6 months, we could be locking in a supercycle round two for commodities,” said Aylward.

“This will have significant ramifications for markets. A lot of stocks in the mid-cap sector will be exposed to benefit from that. And it will be quite a positive for small caps as well.”

These commodity-based ASX shares will do much of the “heavy-lifting” for the Australian market, as much of the rest will struggle in an inflationary environment.

“A rebound in services can contribute as we move past Omicron but non-earners and consumer finance type stocks will likely find inflation and higher interest rates tough going.”

This reporting season will be one for the ages

The coming February reporting season will be enlightening for ASX share investors, according to Aylward.

And it’s not all about just the financial figures.

“This Omicron impact will be an important narrative in the upcoming Australian reporting season,” he said.

“It won’t necessarily show up in the numbers as yet, but it will be interesting to hear company management remarks on how they have been trading recently, and how their supply chains have been impacted.”

Redpoint Investment Management chief investment officer Max Cappetta expects a dividend windfall from certain sectors.

“The mining sector was responsible for carrying the ASX 200 to a record aggregate dividend payment year in 2021 and remains well placed to provide solid cash flows again in 2022 supported by more accommodative policy in China,” he said.

“Those companies benefitting from a domestic consumer unable to travel and move more freely, such as JB Hi-Fi Limited (ASX: JBH), consumer group GUD Holdings Limited (ASX: GUD) and auto retailer Eagers Automotive Ltd (ASX: APE), are also likely to deliver strong dividend yields in February.”

The post ASX shares set to conquer the carnage: expert appeared first on The Motley Fool Australia.

More reading

• 3 ASX shares to buy right now that are famous Aussie brands
• These were the best performing ASX 200 shares last week
• These 3 ASX retail shares have grossed-up dividend yields over 8% right now
• Top brokers name 3 ASX shares to buy today
• 2 ASX dividend shares with large yields and consistent payouts

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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Key points

• The BHP share price has been outperforming the ASX 200 in 2022
• Iron ore continues to rally higher, helping the potential profit of the business
• Some brokers still think there could be more upside for the miner this year

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The ASX share market is going through a lot of volatility right now. The S&P/ASX 200 Index (ASX: XJO) has dropped 10% in recent weeks. What about the BHP share price? It is actually up around 8% in 2022.

Plenty of other ASX shares have seen a decline this year. Businesses like Xero Limited (ASX: XRO), REA Group Limited (ASX: REA) and SEEK Limited (ASX: SEK) have all seen declines of more than 20% since the start of the year.

How has the BHP share price managed to buck the trend?

Resource businesses can earn profit in different cycles compared to most other ASX 200 shares because the earnings are derived from resource prices (and production) rather than other economic factors that affect most other domestic businesses.

BHP operates in several different resources including iron ore, copper, nickel and coal. It’s planning to soon divest its petroleum business to Woodside Petroleum Limited (ASX: WPL).

Iron ore is typically the main profit generator for the company.

In November 2021 the iron ore price fell to around US$80. But it has rallied to around US$130 since then. During 2021, it was a surprise that the iron ore price went to US$230. It can be very tricky to predict which way the iron ore price is going to go next.

An ongoing higher iron price helps BHP generate higher earnings from its iron division. It’s also getting more investor attention.

What do brokers think of the BHP share price?

Some analysts still like the resources giant, such as Morgans and Macquarie, with both of those brokers rating it as a buy. The Macquarie price target is $51 and the Morgans price target on BHP is $48.60. Both of these brokers recognise the strength of BHP’s iron division.

However, there are other brokers like UBS that are only ‘neutral’ on the mining giant. UBS’ price target is just $37. It notes that the performance for the period to December 2021 was mixed by the business.

Latest quarter

Last week, BHP revealed how it performed for the half-year to 31 December 2021.

It said that iron ore volumes were up 1% to 129.4mt year on year thanks to a strong supply chain performance, increased ore car availability and the continued ramp up of South Flank.

However, one negative, as pointed out by the brokers, was that copper production was weaker. Total half-year copper production was down 12% with lower volumes at Olympic Dam due to the planned smaller maintenance campaign.

Nickel production also dropped 15% year on year for the half, though it was up 21% quarter on quarter because of planned maintenance across the supply chain in the previous quarter.

Unification

Another development that might be impacting the BHP share price recently is the unification of the business.

On 20 January 2022, BHP announced that shareholders had voted in favour of unification. The UK court has also sanctioned the unification.

The unification is expected to complete by 31 January 2022. This will help with deals and also make the administration of the business easier.

The post Is the BHP (ASX:BHP) share price a buy in all of this volatility? 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 Xero. The Motley Fool Australia owns and has recommended Xero. The Motley Fool Australia has recommended REA Group Limited and SEEK 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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