Tag: Motley Fool

Key Points

• Fortescue share up 6% year to date
• Rebound in iron ore prices
• Strong Q1 FY22 result could lead to bumper year

The Fortescue Metals Group Limited (ASX: FMG) share price has powered ahead in the last couple of months.

At Wednesday’s closing bell, the mining outfit’s shares finished 1.49% lower to $20.44 apiece. This is a sharp recovery from when its shares were trading around the $14 mark in early November.

What happened with the Fortescue share price?

Investors have been buying up Fortescue shares following a surge in market confidence across the iron ore industry.

Previously, volatility in Fortescue’s key commodity, iron ore saw a downturn from August to the end of November. This was driven by a slowdown in Chinese demand for the steel making ingredient.

The Asian superpower applied political pressure to its steel producers in curbing reliance on Australian iron ore.

Chinese lawmakers introduced new rules, limiting the importation of iron ore in 2021 to no more than 2020 levels. This led to supply issues as China threatened to impose harsh penalties for steel mills that exceed production limits.

As a result, the price of iron ore more than halved during the course of last year. From reaching its lofty highs of US$200 in May, the steel making ingredient price shrunk to around the US$100 mark in the following months.

Fast-forward to today, the current iron ore price has rebounded to US$127 per tonne, an increase of 23% since 1 December.

In addition, the company’s subsidiary, Fortescue Future Industries will team up with energy behemoth, AGL Energy Limited (ASX: AGL).

Both companies entered into a Memorandum of Understanding (MOU) to develop a hydrogen hub for the Hunter Valley coal plants. Namely, this relates to the Liddell and Bayswater coal-fired power stations, which AGL plans to transform the site.

The Liddell coal-fired power station is scheduled to close down in 2023, with Bayswater going offline in 2025.

Fortescue boss, Andrew “Twiggy” Forrest will be involved with the development, which will consist of a 12-month feasibility study.

Can the Fortescue shares hit the $30 mark in 2022?

If the Fortescue share price is to reach $30 in 2022, the price of iron ore will need to accelerate further. Reaching levels above US$200 per tonne will indeed translate to bumper profit from the world’s fourth largest iron ore miner.

In its FY22 first quarter results, Fortescue revealed iron ore shipments of 45.6 million tonnes, up 3% on Q1 FY21.

Average revenue of US$118 per dry metric tonne represents revenue realisation of 73% of the average Platts 62% CFR Index.

In addition, C1 costs came to US$15.25 per wet metric tonne, which is considered one of the lowest in the industry.

A strong performance across the supply chain, together with the contribution of Eliwana could drive a record result in 2022. Furthermore, the inclusion of the Iron Bridge Magnetite project is expected to bring 22 million tonnes each year of high-grade iron ore concentrate. Key milestones to bring the project up to speed have been achieved, with production slated for December 2022.

It’s worth noting that Fortescue is scheduled to report its H1 FY22 scorecard to the ASX on 16 February.

The post Can the Fortescue (ASX:FMG) share price break the $30 barrier in 2022? appeared first on The Motley Fool Australia.

More reading

• Fortescue (ASX:FMG) share price up amid hydrogen supply agreement
• 4 reasons Goldman says the Fortescue (ASX:FMG) share price is a strong sell
• Leading fund manager says these blue-chip ASX shares are buys right now
• Is the iron ore price set to slide?
• 5 things to watch on the ASX 200 on Monday

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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Key points

• Analysts have picked two exciting ASX growth shares with compelling potential
• ELMO Software is a HR tech company that is rapidly growing in Australia and the UK
• Pinnacle is a quality investment manager that is quickly growing FUM and expanding its portfolio overseas

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The Australian Stock Exchange has a number of attractive ASX growth shares that have plenty of long-term growth potential.

Recent share market volatility has brought down the share prices of plenty of the ASX’s star performers.

With that in mind, these are two businesses that analysts like:

ELMO Software Ltd (ASX: ELO)

ELMO is a leading provider of HR and payroll software for small and medium sized businesses in Australia and the UK.

The ELMO share price has fallen by 21% since 25 November 2021. However, the business continues to grow and is delivering strong double digit increases each reporting period.

For example, in the first quarter of FY22, ELMO revealed its annual recurring revenue (ARR) had reached $88.5 million – an increase of 61% year on year, which included 35% organic ARR growth. It achieved 52% growth of actual revenue to $20.7 million and 78% growth of cash receipts to $27.7 million.

Management points to multiple levers to continue high growth. Those are: segment expansion, module expansion and geographic expansion.

Currently its segments are the Breathe business for small businesses with less than 50 employees and ELMO software for the mid-market with 50 to 2,000 employees.

In terms of modules, the ASX growth share is growing the number of modules it offers to clients, making the client more valuable in terms of revenue and making ELMO more useful to clients. One of the newest modules is COVIDsecure, which can track things like vaccination and testing.

Morgan Stanley currently rates ELMO as a buy with a price target of $7.80 – that’s almost 80% higher. However, a breakthrough for ELMO will be when being cashflow positive is clearer.

Pinnacle Investment Management Group Ltd (ASX: PNI)

Pinnacle is an investment business that takes strategic stakes in fund managers, which it calls affiliates, like Coolabah, Hyperion, Plato and Solaris.

One of the main benefits of Pinnacle’s involvement for the affiliates is that it can take care of a number of administrative tasks like legal, compliance, product distribution and so on. The fund manager can focus on the investing.

This ASX growth share is seeing its total funds under management (FUM) managed by affiliates continue to grow through both organic net inflows as well as the occasional expansion of the portfolio. For example, it recently invested in Five V Capital, a private equity outfit.

In FY21 the business saw total affiliate FUM rise 52% to $89.4 billion, with total retail FUM growing 55% to $20.3 billion.

By October 2021, total FUM had risen to $90.9 billion, with retail FUM increasing to $23 billion.

On 23 November 2021, Pinnacle said it’s expecting to deliver growth in FY22 with aggregate affiliate FUM (at the time) more than 30% higher than the average FUM in FY21.

It also revealed it’s looking to take advantage of the significant offshore opportunity by evolving into a global multi-affiliate platform. Pinnacle has announced the establishment of its “first” North American affiliate. It will own 35% of this affiliate, which is a global and Canadian small cap equities fund manager in Canada.

It’s currently rated as a buy by Ord Minnett with a price target of $17 – that’s more than 30% higher than where it is today. The broker puts the Pinnacle share price at 26x FY23’s estimated earnings.

The post 2 top ASX growth shares with compelling potential appeared first on The Motley Fool Australia.

More reading

• 2 ASX shares that now have 80% upside: analysts
• 2 ASX growth shares to buy this month: experts
• 3 small cap ASX shares to watch in January
• 2 very compelling ASX shares for 2022
• Are these 2 impressive ASX shares buys for 2022?

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 Elmo Software and PINNACLE FPO. The Motley Fool Australia owns and has recommended Elmo Software and PINNACLE 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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Key Points

• The BrainChip share price has been one of the best performers on the ASX
• Positive developments has led to investors taking keen interest in the company
• Valued currently at $3.65 billion

The BrainChip Holdings Ltd (ASX: BRN) share price surged over the course of 2021. Market confidence in the company’s technology and interest in the artificial intelligence (AI) sectors led its shares to rally higher.

Since the beginning of 2021, the AI technology company’s shares accelerated by almost 60%. In comparison, the S&P/ASX 200 Index (ASX: XJO) gained roughly 13% over the same period.

While BrainChip shares closed at 68 cents on 31 December, since then its shares have zoomed to incredible highs.

At Wednesday’s market close, the company’s shares finished up 14.52% to $2.13 apiece. It’s worth noting that early that day, its share price touched a record high of $2.34 before treading lower.

What driving BrainChip shares higher?

With the world ushering towards an era of technology innovation across AI platforms, the BrainChip share price has been racing ahead.

In the past few months, the company announced a number of positive developments regarding its Akida chip technology. This steered the company’s shares to strong gains in the latter part of 2021.

The party kicked off when the company struck a deal with Japanese semiconductor firm, MegaChips in November.

Under the deal, MegaChips will have access to BrainChip’s intellectual property for developing next-generation edge-based AI solutions. This will see the use in designing and manufacturing the Akida technology into external customer’s systems on chip designs.

More recently, BrainChip announced that Information Systems Laboratories is developing an AI-based radar research solution for the United States Air Force. The technology will employ BrainChip’s Akida neural networking processor as a tool to incorporate into their portfolio of research engineering and engineering solutions.

And just yesterday, the company announced that it had secured a United States patent regarding its neuromorphic artificial intelligence chips.

The key features on the patent protect the company’s neuromorphic processor. The function revolves around performing complex tasks on a digital input data, thus allowing AI to process images.

Clearly, investors have priced in a lot of good things to come for BrainChip, despite its sky-high valuation.

BrainChip share price snapshot

Over the last 12 months, BrainChip shares have gained more than 280%. The company’s share price reached an all-time high of $2.34 yesterday, before treading lower due to profit-taking.

When looking at valuation grounds, BrainChip has a market capitalisation of around $3.65 billion, with around 1.71 billion shares outstanding.

The post Why did the BrainChip (ASX:BRN) share price have such a stellar year in 2021? appeared first on The Motley Fool Australia.

More reading

• Why BrainChip, Harvey Norman, HUB24, and Lake Resources shares are pushing higher
• Could BrainChip (ASX:BRN) crack into the ASX 200? Here’s what it takes
• BrainChip (ASX:BRN) share price leaps to all-time high. Here’s why
• BrainChip (ASX:BRN) share price up 20% and hits $3bn market capitalisation
• Why Allkem, BrainChip, Data#3, and JB Hi-Fi shares are charging higher

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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Key points

• Zip delivers strong growth across its operations during the second quarter
• This led to record quarterly transaction value and revenue
• Zip’s customer numbers reached 9.9 million at the end of December

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The Zip Co Ltd (ASX: Z1P) share price will be on watch this morning.

This follows the release of the buy now pay later (BNPL) provider’s second quarter update.

Zip share price on watch after record second quarter result

The Zip share price will be in focus on Thursday after the BNPL provider reported further strong growth during the second quarter.

According to the release, Zip posted a 53% year on year increase in quarterly transaction volume to a record of $2.6 billion. This was driven by transaction volume growth of 64% to $1,161.2 million in the USA, 39% to $1,273.7 million in the ANZ region, 118% to $121.5 million in expansion markets, and transaction value of $32.3 million in the UK.

Playing a key role in this transaction growth was another jump in customer numbers. They grew 57% to 9.9 million. This was driven predominantly by its USA business, which recorded a 78% lift in customers to 5.7 million.

This ultimately underpinned record quarterly revenue of $167.4 million, which was up 58% over the prior corresponding period.

At the end of the period, Zip Australia had $431.9 million undrawn and available to fund receivables. Whereas Zip US had US$140.1 million undrawn and available to fund US receivables. Management believes this leaves it well placed with regards to its capital management requirements.

Zip Managing Director and Global CEO, Larry Diamond, said: “Some solid growth in the quarter as Zip delivered another very strong set of numbers. The business continues to execute on its strategy with growth driven by both customer and merchant acquisition, and the increasing levels of engagement as we pursue our mission of becoming the first payment choice everywhere and every day.”

“The growing contribution from expansion markets is pleasing and should continue to build in the medium term in line with Zip’s global strategy. Despite external noise and challenges the business continues to deliver and we are very well placed to continue the growth and momentum in 2022,” he added.

The post Zip (ASX:Z1P) share price on watch amid record second quarter performance appeared first on The Motley Fool Australia.

More reading

• 2 ASX shares that now have 80% upside: analysts
• Zip (ASX:Z1P) will become the largest pureplay BNPL on the ASX this week. What might this mean for shareholders?
• These are the 10 most shorted ASX shares
• Is the slide in BNPL shares like Zip (ASX:Z1P) just getting started?
• The Zip (ASX:Z1P) share price had a year to forget in 2021

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 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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What a long way Australia has come in just 2 years.

In 2019, the Coalition was returned to government on the back of a scare campaign that electric cars would “end the weekends” of Australians.

As a response to Labor’s policies incentivising the adoption of electric vehicles, the Coalition insisted that such cars were not fit to meet the needs of the typical Aussie family.

But now, as the nation heads into another federal election likely in May, such an argument would be laughed at.

As with the rest of the world, Australian investors now know electric is the inevitable next phase of the motoring industry.

As such, it’s not a crazy idea to invest in the companies leading “the charge” in this theme.

But there are a lot of stocks out there purporting to represent the new green future. Lucky for us, ETF Securities this week picked out the 5 best ones to consider buying:

The electric journey starts in Australia

Let’s start with the Australian stock.

Electric cars need batteries, and lithium is a major ingredient for the advanced units that are strong enough for motoring.

This is where Pilbara Minerals Ltd (ASX: PLS) comes in.

“Thanks for surging demand for batteries and electric cars, Pilbara’s revenue doubled from 2019 to 2020, and then it doubled again from 2020 to 2021,” stated ETF Securities.

“Surging revenue, and its inclusion in the S&P/ASX 200 Index (ASX: XJO) in March, have helped its share price shoot up 213% year-to-date.”

The “global success story” regularly tops the rankings of the most traded shares on the ASX.

Pilbara releases its latest results on Thursday 27 January.

Companies that actually build the electric cars

Two car manufacturers make the top 5, one each from the two largest economies in the world.

The name of US company Tesla Inc (NASDAQ: TSLA) is almost synonymous with electric cars these days.

And despite rising 10-fold since over the past couple of years, ETF Securities still reckons Tesla shares are a strong bet.

“Tesla is more than just a car maker. It is also a battery company; a self-driving software business; an Uber challenger; clean energy company; a robotics company; and space company,” said the ETF Securities team.

“With its revenue growing at 50% a year, its order book full, and its competitors unable to sell electric cars profitably, the company can justify a high valuation.”

But over in China, Tesla faces stiff competition from BYD Co Ltd (SHE: 002594).

“BYD makes electric cars and makes them cheap. It holds a near monopoly position in electric car taxis within China,” stated ETF Securities. 

“It also makes other kinds of electric powered vehicles, including forklifts and bikes. Increasingly, it has been branching out into other parts of clean energy too — such as solar panels.”

ETF Securities analysts reminded investors that Warren Buffett’s Berkshire Hathaway Inc (NYSE: BRK.A) (NYSE: BRK.B) owns 25% of the Chinese company.

Electric planes and self-driving

Over in Europe, the ETF Securities analysts love the look of ultra-luxury car and aviation engine maker Rolls-Royce Holding PLC (LON: RR).

“Rolls-Royce have announced they will go fully electric by 2030 — bringing much of the ultra-premium end of the car market with it,” said the team’s notes. 

“Perhaps more interestingly, Rolls-Royce also recently built the world’s fastest all-electric plane.”

Rolls-Royce shares have risen almost 20% over the past 12 months.

All these cars and planes will need many seriously advanced computer chips and batteries, and the last pick, Samsung Electronics Co Ltd (KRX: 005930), provides exactly those.

“Samsung is one of the largest semiconductor and battery companies in the world,” stated ETF Securities. 

“Its chips are being used by car makers to help power self-driving software, which requires a lot of computer power — while its batteries are also being added to electric vehicles.”

Samsung shares are down 12.3% over the past 12 months.

The post 5 best shares to bet on electric cars right now appeared first on The Motley Fool Australia.

More reading

• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• Why the Pilbara Minerals (ASX:PLS) share price surged 35% in a month
• Here are the 3 most heavily traded ASX 200 shares this Tuesday
• Why ASX lithium shares could send heads spinning this earnings season
• These 3 ASX 200 shares are topping the volume charts on Monday

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 Berkshire Hathaway (B shares). 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 wanting to invest in exchange traded funds (ETFs), then you may want to look at the ones listed below.

These ETFs provide investors with access to some of the biggest and brightest tech companies across the globe. Here’s what you need to know about them:

BetaShares Asia Technology Tigers ETF (ASX: ASIA)

The first ETF to consider is the BetaShares Asia Technology Tigers ETF. This ETF gives investors exposure to some of the largest tech companies in the growing Asian market.

Among the ~50 companies included in the fund you’ll find Alibaba, Infosys, JD.com, Kakao, Meituan, Pinduoduo, Samsung, Taiwan Semiconductor, and Tencent.

In respect to Tencent, it is a multinational technology conglomerate and one of the world’s largest companies. It is best known for its super app WeChat, which has over 1.2 billion users. This app provides text messaging, voice messaging, food ordering, shopping, video conferencing, video games, sharing of photographs and videos, location sharing, and payments.

As for Pinduoduo, it is a US$77 billion e-commerce platform that offers a wide range of products from daily groceries to home appliances. The Pinduoduo platform connects distributors with consumers directly through an interactive shopping experience. This allows shoppers to team up to buy items in bulk at lower prices. It has an active customer base closing in on 1 billion.

BetaShares Global Cybersecurity ETF (ASX: HACK)

Another ASX ETF to look at is the BetaShares Global Cybersecurity ETF. This popular ETF gives investors exposure to the leading companies in the growing global cybersecurity sector.

Included in the fund are both global cybersecurity giants and emerging players from a range of global locations. All of which look set to benefit greatly from increasing demand for cybersecurity as online threats increase. Among the companies you’ll be buying a piece of are Accenture, Cisco, Cloudflare, Crowdstrike, Okta, and Splunk.

In respect to CrowdStrike, it provides the increasingly popular Falcon platform. This platform delivers incident response and forensic analysis services that are designed to help businesses understand whether a breach has occurred. It then allows the user to respond and recover from a breach with speed and precision to remediate the threat.

As for Okta, it provides businesses with workforce identity solutions. Okta helps secure access to the popular cloud apps that employees need to do their job such as Gmail, Office 365, and Salesforce to name just three. This is very important given the sensitive information that some of these apps contain.

The post 2 excellent ETFs for ASX investors to buy this month appeared first on The Motley Fool Australia.

More reading

• Here are 2 ASX tech ETFs to buy after recent weakness
• These 2 beaten-down growth ETFs could be a buy today
• Here are the worst performing ASX ETFs of 2021
• 3 excellent ASX shares for growth investors in January
• 2 ETFs for ASX investors to check out this month

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 BETA CYBER ETF UNITS. The Motley Fool Australia owns and has recommended BETA CYBER ETF UNITS. The Motley Fool Australia has recommended BetaShares Asia Technology Tigers ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Key points

• Some of the ASX’s leading tech companies have fallen in recent weeks
• Leading online retailer Temple & Webster’s shares fell 10% yesterday. Revenue keeps growing quickly.
• Xero shares have dropped 20% in the last couple of weeks. But its margins and subscribers continue to rise.

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Some of the leading ASX tech shares have suffered big declines in the last few weeks. This could make them opportunities for investors.

There are always different events occurring that capture news headlines that may or may not have an impact on share markets. COVID-19 has certainly been one of those world-changing events. Rising interest rates might be another factor that investors need to keep in mind.

Yesterday, some ASX tech shares suffered some big declines. Added to falls of recent weeks, these two stocks may be good options to jump on:

Temple & Webster Group Ltd (ASX: TPW)

Temple & Webster offers customers a large range of the latest styles of furniture, homewares and more. It has over 200,000 products on sale from hundreds of suppliers.

One of the advantages of the company’s operating model is that many of the products are sent directly to customers by suppliers, enabling faster delivery times and reducing the need to hold inventory, allowing for a larger product range. Around 74% of sales were through this drop-ship model in FY21.

Yesterday, the Temple & Webster share price fell by around 10%. It is down 23.6% since the beginning of the year.

Morgan Stanley rates this business as a strong buy, with a recent price target of $16.25. That’s a potential upside of almost 100% over the next 12 months if the broker ends up being right.

When the ASX tech share released its FY21 result, it noted it’s operating in a $16 billion market (excluding business to business) where less than 9% of that is sold online.

FY22 has seen revenue continue to rise strongly, with year on year growth of 56% up to 15 October 2021. Management note the business continues to experience strong tailwinds, including the ongoing adoption of online shipping due to structural and demographic shifts.

Xero Limited (ASX: XRO)

Xero is one of the world leaders when it comes to accounting software. A particular advantage that it has had for some time is that its service is entirely online.

It’s quite rare for a quality company like Xero to suffer the quick fall that it has. Since 4 January 2022, Xero shares have declined almost 20%.

However, the company continues to grow. Credit Suisse is one of the brokers that currently likes the ASX tech share, with a buy rating and a price target of $160 – that’s comfortably more than 30% higher than where it sits today.

The broker noted that Xero continues to grow across most operating metrics. The gross profit margin increased again in the first half of FY22, with growth from 85.7% to 87.1%. Subscribers jumped 23% to 3 million. One factor that could help long-term earnings growth is an increase in the average revenue per user (ARPU), which went up 5% to $31.32 in HY22.

Xero continues to re-invest most of its profit back into more growth for the long-term.

It’s also making regular bolt-on acquisitions to improve its offering for subscribers in the various markets it operates.

In November it announced the acquisition of LOCATE Inventory, a US cloud-based inventory management provider.

Then, in December, it revealed it was going to acquire TaxCycle – a leading Canadian tax preparation software company for accountants and bookkeepers to support the growth strategy in that strategically important market.

The post 2 ASX tech shares to buy that have plunged appeared first on The Motley Fool Australia.

More reading

• Why Allkem, Megaport, Redbubble, and Temple & Webster’s shares are falling
• Here are the tech shares leading the ASX 200 on Tuesday
• 3 exciting ASX growth shares with major upside potential in 2022
• 2 beaten-up ASX tech shares analysts rated as quality picks
• 5 things to watch on the ASX 200 on Monday

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Temple & Webster Group Ltd and Xero. The Motley Fool Australia owns and has recommended Xero. The Motley Fool Australia has recommended Temple & Webster Group Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Key points

• The IAG share price suffered through an influx of disatrous weather last year
• Now, the insurer’s boss has come out in support of a plan put forward by the federal opposition
• If implemented, it could see up to $400 million put towards preventing and repairing damage caused by natural disasters such as floods, cyclones, and bushfires

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The Insurance Australia Group Ltd (ASX: IAG) share price suffered through disastrous weather in 2021, but a new mitigation fund put forward by the federal opposition could help reduce insurance providers’ costs.

The fund could see up to $400 million invested in disaster prevention and resilience annually.

As of Wednesday’s close, the IAG share price is $4.45.

Let’s take a look at what the federal opposition is promising Australians and what it could mean for insurers like IAG.

Could this take some pressure off IAG shares in the future?

The IAG share price was hit hard last year when the company announced it had been forced to increase its expected net natural perils claim costs for financial year 2022 by 36%.

Originally, the insurer had budgeted $765 million for natural perils this financial year. But, due to severe storm activity in October, that figure was upped to $1,045 million.

Additionally, as my Foolish colleague Zach recently reported, many brokers believe the perils activity is a material risk to the company’s future earnings.

However, the Australian Labor Party has pitched its Prevent, Prepare, Rebuild plan. If implemented, the plan will see funds going to prevent and protect Australians from severe weather events in the future.

IAG managing director and CEO Nick Hawkins hailed the plan as a way to “reduce the extensive cost of recovering from these disasters”. Hawkins commented:

Over many years we’ve highlighted the importance of greater investment in mitigation initiatives to help protect communities before disasters strike and we welcome Labor’s commitment to establish a fund dedicated to help achieve this.

Labor is pledging to put $200 million each year towards the fund. That may be matched by state and local governments.  

The money will be put towards measures such as flood levees, sea walls, cyclone shelters, evacuation centres, and fire breaks.

The opposition promises the measures will “simplify and speed up payments to disaster victims and repairs to damaged infrastructure”. It also promises to “assist with spiralling insurance premiums in disaster-prone regions, by reducing the risk of expensive damage to homes and businesses”.

By extension, that could also help reduce risks facing insurance providers such as IAG as well. Of course, there are many hoops and there is no timeline for the plan to be put into action.

Still, the company’s boss is seemingly excited by the prospect.

Things are looking up for the IAG share price lately. Although it has fallen 12% in the last year, it has gained 4.69% since the start of 2022.

The post Could this help take pressure off IAG (ASX:IAG) shares in the future? appeared first on The Motley Fool Australia.

More reading

• Why this broker tips IAG (ASX:IAG) shares as a buy in 2022
• Why is the IAG (ASX:IAG) share price having a rollercoaster start to the year?
• Leading brokers name 3 ASX shares to sell today
• What happened to the Insurance Australia (ASX:IAG) share price in 2021?
• What’s happening with the IAG (ASX:IAG) share price today?

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 owns and has recommended Insurance Australia Group 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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Two years after COVID-19 arrived in Australia, the world is still a very uncertain place.

A year ago optimism was high with vaccinations about to roll out — then the Delta variant plunged Australia’s 2 largest cities into long winter lockdowns.

Spring arrived, those lockdowns ended, and by November most of us were vaccinated. Huzzah! 

Then bam, Omicron landed and Australians were left scrambling for rapid tests like they had been for toilet paper 20 months earlier.

So it’s no wonder ASX shares have been up and down in recent times.

Sure, the S&P/ASX 200 Index (ASX: XJO) returned a tidy 13% over the 2021 calendar year. But it has lost 3% since the August reporting season.

In such volatile times, IML Investors Mutual is turning to big reliable businesses.

“As we head into 2022, we believe share markets will be primarily influenced by the direction of interest rates as central banks continue to mull over whether current inflationary trends are [transitory] or becoming embedded,” an IML memo to clients read. 

“We continue to steer away from the riskier parts of the sharemarket and remain focused on identifying and holding what we assess to be good quality companies, …which can do well over the next 3 to 5 years.”

Here are 2 such examples currently held in IML’s Concentrated Australian Share Fund:

A recent loser ready to rejuvenate

Giant biotech company CSL Limited (ASX: CSL) has been a frustrating stock to own the past couple of years.

The share price is still about 19% down on its pre-COVID high, despite good prospects for the years to come.

Late last year it even pulled off a $17.2 billion acquisition of Swiss firm Vifor Pharma. But the market punished CSL even further, sending the shares down 14% since late November.

For IML, all this means is that CSL is a bargain right now.

“The acquisition is forecast to be double-digit accretive to CSL’s earnings as well as provide them with a strong distribution channel to sell their kidney-related drugs currently in phase III development,” the IML memo read.

“CSL continues to look attractively priced, considering the quality of the business and the large number of potential products they have in phase III trials, including CSL 112 and a number of transplant drugs.”

CSL shares closed Wednesday at $270.91 and remain the largest holding in the fund.

A recent winner set to rocket further

Unlike CSL, telecommunications provider Telstra Corporation Ltd (ASX: TLS) has had a nice run of late.

The share price is up 35% over the past 12 months, while giving out a handy 2.36% dividend yield.

But the IML team certainly doesn’t think it’s done yet.

“The company.. Announced at its investor day in November that it has finalised the separation of the company’s fixed line infrastructure into InfraCo Fixed, paving the way to unlock further value through a potential partial sale of that asset,” the memo read.

“This follows the sale of a 49% stake in the company’s tower assets (Amplitel) to the Future Fund earlier in 2021 for a higher than expected price, highlighting the strong valuations currently being achieved for infrastructure-type assets in the current environment.”

The team also loved Telstra’s buyout of Digicell Pacific.

That deal saw the telco only have to pay about 20% of the acquisition cost, while the Australian government footed the rest of the bill as a foreign policy move.

IML analysts don’t think the business from South Pacific islands will make a huge difference in the bottom line of a $50 billion company like Telstra.

But they liked the non-monetary message behind the deal.

“While not overly material from a financial perspective, the deal cements a stronger relationship between Telstra and the government — since highlighted by a 5-year $1 billion contract with the Department of Defence.”

Telstra shares closed Wednesday on $4.18.

The post 2 killer ASX shares to buy for a volatile 2022 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. 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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Are you looking for income options for your portfolio? If you are, then you might want to consider the ASX dividend shares listed below.

Here’s why they could top options for income investors:

Adairs Ltd (ASX: ADH)

The first ASX dividend share to look at is Adairs. It is a leading homewares and furniture retailer with both a bricks and mortar and online presence. This includes through its core brand, the online-only Mocka brand, and the recently acquired Focus on Furniture brand.

The team at Morgans is positive on Adairs. A recent note reveals that its analysts have an add rating and $4.80 price target on the company’s shares. Morgans sees a lot of positives from the acquisition of Focus on Furniture. It believes it will be complementary to the core business and may offer enhanced opportunities for network expansion.

As for dividends, Morgans is forecasting fully franked dividends of 23 cents per share in FY 2022 and 29 cents per share in FY 2023. Based on the current Adairs share price of $3.90, this will mean yields of 5.9% and 7.4%, respectively.

Commonwealth Bank of Australia (ASX: CBA)

Another ASX dividend share to consider buying this week is Australia’s largest bank, CBA.

It could be a top option in the banking sector due to its leadership position in home lending and retail deposits. And while competition for mortgages is likely to weigh on its near term performance, the team at Bell Potter remain positive and is predicting growing dividends.

Bell Potter currently has a buy rating and $111.00 price target on the bank’s shares. As for dividends, the broker is forecasting fully franked dividends per share of $3.94 in FY 2022 and $4.15 in FY 2023. Based on the current CBA share price of $99.33, this will mean yields of 4% and 4.2%, respectively.

The post 2 buy-rated ASX dividend shares with fully franked yields appeared first on The Motley Fool Australia.

More reading

• How are ASX bank shares performing today?
• Will the CBA (ASX:CBA) share price climb another 23% in 2022?
• 2 ASX dividend shares rated highly by analysts
• CBA (ASX:CBA) is about to lose the mantle of the ASX’s largest company, here’s why
• Is Westpac (ASX:WBC) going to be the best big 4 bank for dividends in 2022?

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 ADAIRS FPO. The Motley Fool Australia owns and has recommended ADAIRS 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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