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The Transurban Group (ASX: TCL) share price is dipping lower during afternoon trade on Friday. This comes after the toll road operator announced that it has reached financial close of the remaining interest in WestConnex.

At the time of writing, Transurban shares are fetching for $13.435, down 1.79%.

Transurban completes WestConnex acquisition

In a statement to the ASX, Transurban advised that Sydney Transport Partners (STP) has completed the takeover of WestConnex.

The New South Wales Government offloaded the last of its 49% stake in the asset for an $11.1 billion price tag. Transurban secured the initial 51% interest in 2018 for $9.3 billion.

The acquisition will take STP’s total ownership interest in WestConnex to 100%. Transurban owns 50% of STP alongside other strategically aligned partners.

This brings the company to control most of the toll roads in New South Wales, Victoria and Queensland. However, there are fears that having a dominant position, Transurban can force motorists to pay high tolls.

Transurban owns all toll roads located in Sydney, except for the Harbour Bridge and the tunnel.

The deal was funded through a combination of existing corporate liquidity and new equity that was raised in September. Transurban received $4.22 billion through a capital raise with $3.97 billion from an accelerated pro rata renounceable entitlement offer.

Transurban CEO Scott Charlton touched on the Sydney’s WestConnex project nearing completion, saying:

We feel privileged to take Sydney Transport Partners’ holding in this critical asset – one of the largest road infrastructure projects in the world – to 100%. This transaction is expected to generate significant Free Cash for the life of the concession, underpinned by strong asset fundamentals and potential upside from future infrastructure development and economic growth across Greater Sydney.

Transurban share price summary

In the past 12 months, Transurban shares have moved in circles recording nil gains for investors. When looking at year-to-date returns, the same has been logged for the majority of 2021.

Transurban has a price-to-earnings (P/E) ratio of 172.41 and commands a market capitalisation of roughly $42.21 billion.

The post Transurban (ASX:TCL) share price edges lower amid completion of WestConnex acquisition appeared first on The Motley Fool Australia.

More reading

• 2 excellent ASX dividend shares rated as buys
• Why Credit Suisse says the Transurban (ASX:TCL) share price could be a bargain
• Top brokers name 3 ASX shares to buy next week
• Transurban (ASX:TCL) share price slides as traffic volumes push lower
• Why is the Transurban (ASX:TCL) share price beating the ASX 200 today?

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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The Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price has run out of steam on Friday.

In afternoon trade, the banking giant’s shares are down almost 1% to $28.35.

Despite this, the ANZ share price is still up 23% since the start of the year.

Where next for the ANZ share price?

The good news is that one leading broker still believes the ANZ share price can rise further from here.

In response to the bank’s full year results on Thursday, the team at Goldman Sachs has retained their buy rating and lifted their price target on the company’s shares to $31.82.

Based on the current ANZ share price, this suggests there’s still 12.2% upside for investors before dividends.

And with Goldman expecting a $1.50 per share fully franked dividend in FY 2022, the total potential return stretches to approximately 17.5%.

What did the broker say about FY 2021?

Goldman Sachs was pleased with the bank’s performance during the second half of FY 2021. It notes that ANZ delivered a result well ahead of its expectations.

The broker said: “ANZ’s 2H21 cash earnings were up 37% on pcp to A$3,208 mn and 11% ahead of GSe, with the beat largely driven by a lower than expected BDD charge. 1H21 PPOP came in 6% higher than GSe, driven by higher trading income and a better-than-expected performance on NIMs, partially offset by higher expenses. The proposed final DPS of A72¢ implies a payout ratio of 63% (non-discounted DRP, to be neutralised) and 2H21 CET1 ratio of 12.3% (18.35% globally-harmonised) was 13 bp stronger than GSe.”

What about the future?

Goldman named a number of reasons why it remains bullish on the ANZ share price.

It explained: “Overall, we see today’s result as a positive and we maintain our Buy rating on ANZ given i) ANZ appears to be on track to reach its FY23 cost target of A$8 bn, which should alleviate some of its revenue pressures, ii) management notes capacity to drive better housing volumes has been expanded, and volume growth is evident across other parts of the balance sheet, iii) its Markets income has exhibited a positive divergence in trend versus peers, which ANZ attributes to a more diversified business that it expects can be sustained, iv) the stock is trading more than one standard deviation cheap versus the sector on PPOP multiples (27% discount vs. 11% 15-year average discount), and v) our 12-mo TP offers c. 17% TSR.”

This could make ANZ a share to consider if you’re looking for options in the banking sector.

The post Leading broker says ANZ (ASX:ANZ) share price is a buy appeared first on The Motley Fool Australia.

More reading

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• ASX 200 (ASX:XJO) midday update: ANZ result impresses, Fortescue higher
• ANZ (ASX:ANZ) share price higher after beating expectations in FY21
• ANZ (ASX:ANZ) share price on watch after FY21 profit surge
• 5 things to watch on the ASX 200 on Thursday

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

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The Origin Energy Ltd (ASX: ORG) share price is trending downwards. The negative price movement comes after the energy company released its first-quarter update for FY22.

At the time of writing, shares in Origin are trading for $5.05 – down 1.37%. For context, the S&P/ASX 200 Index (ASX: XJO) is 0.66% lower.

Let’s take a closer look.

Why the Origin share price is dipping

In a statement to the ASX, Origin Energy gave an update on its trading and production levels.

• Australia Pacific Liquified Natural Gas (APLNG) production and sales volumes for the quarter were stable compared to the June quarter “despite planned downstream shutdown during the period”.
• APLNG commodity revenue increased 25% on the prior quarter and 69% on the corresponding 2020 quarter, primarily driven by higher realised oil prices.
• Electricity sales volumes were up 3% compared with the corresponding 2020 quarter. Retail volumes were “flat” with higher residential demand offset by lower usage due to solar and energy efficiency. However, natural gas sales were 7% lower.
• There was a 6% increase in business volumes due to net customer wins, which “more than offset” COVID-related losses, according to the company.

These mixed results aren’t impressing investors, at least judging by the falling Origin share price.

Management commentary

Origin CEO Frank Calabria said:

The rebound in global commodity prices drove a significant increase in revenue at Australia Pacific LNG for the quarter.

The announcement to sell a 10 per cent interest in Australia Pacific LNG represents an opportunity for Origin to crystalise some of the significant value we have created in this world-class asset, while retaining a substantial shareholding and our role as upstream operator.

In Energy Markets, our electricity volumes increased with net business customer wins and higher residential usage, offsetting lower demand from business and commercial customers due to a downturn in economic activity across many sectors.

Origin share price snapshot

Over the past 12 months, the Origin share price has increased 25.8%. Year-to-date, the company’s shares appreciated only 4.7%.

Its 52-week high is $5.48 and its 52-week low is $3.87 per share.

Origin Energy has an approximate market capitalisation of $8.9 billion.

The post Origin (ASX:ORG) share price slides on mixed energy market sales appeared first on The Motley Fool Australia.

More reading

• 3 ASX shares the ‘Aussie Berkshire Hathaway’ loves the most right now
• Could the Origin (ASX:ORG) share price hit $6 by the end of 2021?
• Latest ASX 200 shares to make it on top brokers’ buy list
• Why Beach, Mineral Resources, Origin, and Telstra are storming higher
• Origin Energy (ASX:ORG) share price on watch following $2b deal

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

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There are plenty of quality, high performing ASX shares.

Like online luxury goods retailer Cettire Ltd (ASX: CTT). The Cettire share price tops the leader’s board of big gainers on the All Ordinaries Index (ASX: XAO) in 2021, up a remarkable 618% year-to-date.

With that said, ASX shares make up only some 2% of the total global share market. So it’s worth considering looking beyond our shores to potential opportunities overseas.

But don’t just take my word for it.

According to The Motley Fool’s own Scott Phillips:

Investing internationally delivers tremendous portfolio diversification benefits and brings a world of opportunities to your investment doorstep.

And indeed, while the diversification benefits are very important, I actually think they run second to the sheer investment opportunities that exist overseas. Some of the very best companies on this blue and green planet aren’t on the ASX – so why would we limit ourselves to just our home market?

With that in mind, we take a look at 3 small-cap international shares tipped during yesterday’s ‘Bell Asset Management – Global equities market update and outlook for 2022’ webinar.

Looking beyond ASX shares

Ned Bell, Bell Asset Management’s chief investment officer, spearheaded the webinar.

On the buy side for the asset manager, he named 3 international shares that have come off their highs to be trading within Bell Asset’s buy level. Namely: Amedisys Inc (NASDAQ: AMED), GN Store Nord A/S (CPH: GN) and Intertek Group plc (LON: ITRK).

According to Bell:

GN, Intertek and Amedisys… are 3 names that we’ve been watching. We’ve owned Intertek before… They’ve been a little bit too expensive. We’ve been waiting from some earnings uncertainty and volatility to give us a buying opportunity. And that’s exactly what’s happened.

Those 3 names have come off their highs. They’ve got down to our buy levels, and that’s what triggered the buy here…

What these stocks all have in common, Bell added, “is that we’ve been patient on getting into them. And we think, looking ahead to the next 12-24 months, you’re going to get some P/E [price to earnings ratio] re-ratings.”

If you’ve been focused primarily on ASX shares you may not be familiar with these names.

In a nutshell:

Amedisys is a US healthcare company with a market cap of approximately US$5.4 billion. Shares finished up 4% yesterday but remain down 40% over the past 6 months.

GN is a Danish manufacturer of hearing aids and headsets. The GN share price finished up 1% yesterday and is down 24% over the past 6 months.

Intertek is a London-based global quality assurance provider. Shares finished flat yesterday and are down 20% over the past 6 months.

The post Beyond ASX shares: Bell Asset tips three international shares as buys appeared first on The Motley Fool Australia.

More reading

• Brokers name 3 ASX shares to buy today
• Why the Peninsula Energy (ASX:PEN) share price is lifting 4% today
• Why Audio Pixels, Marley Spoon, PointsBet, and Vulcan shares are sinking
• Why HT&E, JB Hi-Fi, Reece, and ResMed shares are charging higher
• Here’s why the Blue Star Helium (ASX:BNL) share price is sinking 8% on Friday

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Cettire Limited. The Motley Fool Australia has recommended Cettire Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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It has been another busy week for Australia’s top brokers. This has led to the release of a large number of broker notes.

Three broker buy ratings that you might want to know more about are summarised below. Here’s why brokers think these ASX shares are in the buy zone:

BlueBet Holdings Ltd (ASX: BBT)

According to a note out of Morgans, its analysts have retained their add rating and lifted their price target on this sports betting company’s shares to $2.60. The broker made the move in response to the release of a stronger than expected first quarter update. In addition, Morgans believes that management’s first half guidance is conservative and expects its Australian business to continue winning market share. The BlueBet share price is trading at $1.99 today.

Corporate Travel Management Ltd (ASX: CTD)

A note out of Citi reveals that its analysts have retained their buy rating and lifted their price target on this corporate travel management company’s shares to $27.78. In response to the company’s first quarter update, the broker has increased its revenue and earnings estimates for FY 2022. It also feels Corporate Travel Management is likely to be trading ahead of consensus forecasts at present thanks to an uptick in activity levels across all regions. The Corporate Travel Management share price is fetching $24.62 today.

Pointsbet Holdings Ltd (ASX: PBH)

Analysts at Credit Suisse have retained their outperform rating but cut their price target on this sports betting company’s shares to $12.80. This follows the release of a softer than expected first quarter update. Nevertheless, Credit Suisse remains positive on the company’s future and continues to believe it can win a 10% share of the US market. The PointsBet share price is trading at $8.25 on Friday afternoon.

The post Brokers name 3 ASX shares to buy today appeared first on The Motley Fool Australia.

More reading

• Why Audio Pixels, Marley Spoon, PointsBet, and Vulcan shares are sinking
• PointsBet (ASX:PBH) share price extends losses on Friday, down 25% this week
• ASX 200 (ASX:XJO) midday update: Macquarie doubles profit, ResMed jumps
• Why Goldman says PointsBet (ASX:PBH) share price sell off is a buying opportunity
• Why Codan, IOOF, Orocobre, and PointsBet shares are tumbling

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 shares of and has recommended MEGAPORT FPO. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia has recommended MEGAPORT 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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Shares in uranium mining company Peninsula Energy Ltd (ASX: PEN) are climbing in afternoon trade and are currently 4.9% higher at 26 cents each.

Peninsula Energy shares are on the move after the company released its quarterly activities and earnings report.

We pull apart the central points of Peninsula’s performance for the period ending 30 September 2021.

Peninsula Energy share price up as uranium market value lifts

The company outlined several investment highlights for the quarter, including:

• Available cash of US$7.4 million at 30 September 2021
• Sale of 200,000 pounds of U3O8 at US$50.35 per pound, up from US$49.57 quarter on quarter
• Generated a net cash margin of US$3.5 million in October 2021, in line with previous quarter
• 310,000 pounds of uranium in converter accounts at 30 September 2021
• Market value of uranium in converter accounts US$13.1 million (US$42.20 per pound U3O8), a 32% increase from the quarter prior.

What happened this quarter for Peninsula Energy?

Peninsula took steps to address inefficiencies following variability in the well production results at the Lance Project in Wyoming.

It first prepared a hydrogeologic model to “simulate solution flow paths” and capture where the inefficiencies were occurring. It installed two additional wells within “potentially unaddressed zones of the pattern area” at the site.

There was a positive outcome as the “two new injection wells drove the composite recovery grade higher soon after activation”. Peninsula also evaluated “additional pattern configurations with shorter expected overall response times”.

Separately, Peninsula sold 200,000 pounds of uranium under long-term contracts. The realised average cash price was US$50.35 per pound, up from US$49.67 in the previous three months.

The release notes that deliveries were completed using uranium purchased in the market. This generated a net cash margin of $3.5 million which is equal to the past quarter.

By the end of the quarter, Peninsula had “uranium concentrate sale agreements with major utilities for up to 5.05 million pounds of uranium”.

These agreements stipulate an average price of US$51-$53 per pound. There is a firm commitment to 3.7 million pounds, with an optional extra 1.35 million pounds available to customers.

What’s next for Peninsula Energy?

Based on its secured long-term uranium sale agreements, Peninsula forecasts a secured net cash margin of US$7 million to US$8 million for the remainder of CY21.

Uranium sales are expected to generate a net cash margin of US$8 million to US$9 million in CY22. This is a 12-14% bump.

The forecast net cash margin is based on the difference between the fixed purchase price and the likely sales price.

Coming into December this year, Peninsula has “scheduled open committed sales of 50,000 pounds of uranium pursuant to long-term contracts”. It intends to source this from its existing portfolio of binding purchase agreements.

Peninsula Energy share price snapshot

The Peninsula Energy share price has soared by 114% this year to date. This extends its 12-month returns to 328%.

Peninsula’s gains are far greater than those of the S&P/ASX 200 index (ASX: XJO), which is up 24% in 12 months.

The post Why the Peninsula Energy (ASX:PEN) share price is lifting 4% today appeared first on The Motley Fool Australia.

More reading

• Why did the Peninsula (ASX:PEN) share price leap 5% on Tuesday?
• ASX uranium shares are surging this week. Here’s why
• Why the Peninsula Energy (ASX:PEN) share price is rocketing 20% today
• Why ASX uranium shares are bouncing back on Friday
• How did ASX uranium shares perform in September?

The author Zach Bristow has no positions 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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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to end the week on a disappointing note. At the time of writing, the benchmark index is down 0.7% to 7,378.9 points.

Four ASX shares that are falling more than most today are listed below. Here’s why these ASX shares are sinking:

Audio Pixels Holdings Ltd (ASX: AKP)

The Audio Pixels share price has tumbled 11% to $23.55 following the release of its quarterly update. Investors may be concerned with the digital speaker development company’s balance sheet. At the end of the period, the company had cash of just under $500,000 and a $2 million loan facility. This gives it just 1.7 quarters worth of funding.

Marley Spoon AG (ASX: MMM)

The Marley Spoon share price has crashed 31% to $1.04. This follows the release of the meal kit delivery company’s quarterly update. Due to volatile consumer behaviour, the company has downgraded its full year revenue growth guidance. It now expects growth of 26% to 28% compared to previous guidance of 30% to 35% growth.

Pointsbet Holdings Ltd (ASX: PBH)

The Pointsbet share price is down 6% to $8.11. Investors have been selling the sports betting company’s shares since the release of its first quarter update yesterday. That update revealed softer growth than the market was expecting. Goldman Sachs believes the selloff is a buying opportunity.

Vulcan Energy Resources Ltd (ASX: VUL)

The Vulcan Energy share price is sinking 14% to $12.89. This morning this lithium developer’s shares returned to trade after responding to a scathing report from short-focused activist investor J Capital. In response, Vulcan stated that the report contains many claims that are wrong and misleading. Despite this, a good number of investors appear to have been spooked and have been rushing to the exits on Friday.

The post Why Audio Pixels, Marley Spoon, PointsBet, and Vulcan shares are sinking appeared first on The Motley Fool Australia.

More reading

• PointsBet (ASX:PBH) share price extends losses on Friday, down 25% this week
• ASX 200 (ASX:XJO) midday update: Macquarie doubles profit, ResMed jumps
• Marley Spoon (ASX:MMM) share price crashes 34% to new 52-week low
• Why Goldman says PointsBet (ASX:PBH) share price sell off is a buying opportunity
• Vulcan (ASX:VUL) share price sinks 20% after responding to short seller

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 shares of and has recommended Marley Spoon AG and Pointsbet Holdings Ltd. The Motley Fool Australia owns shares of and has recommended Marley Spoon AG. The Motley Fool Australia has recommended Pointsbet Holdings Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The S&P/ASX 200 Index (ASX: XJO) is out of form and tumbling notably lower. In afternoon trade, the benchmark index is down 0.7% to 7,378.9 points.

Four ASX shares that are not letting that hold them back are listed below. Here’s why these ASX shares are charging higher:

HT&E Ltd (ASX: HT1)

The HT&E share price has surged 32% higher to $1.94. This morning the advertising and media company announced that it has reached a binding heads of agreement to settle the taxation dispute with the ATO for the sum of $71 million.

JB Hi-Fi Limited (ASX: JBH)

The JB Hi-Fi share price is up over 4% to $50.48. Investors have been buying this retail giant’s shares after it was upgraded by a leading broker. According to a note out of Macquarie Group Ltd (ASX: MQG), its analysts have upgraded JB Hi-Fi’s shares to an outperform rating with a $52.50 price target. The broker notes that consumer electronic purchases have rebounded strongly across its Macquarie Credit Card dataset.

Reece Ltd (ASX: REH)

The Reece share price is up 6% to $19.93. Investors have been buying the plumbing parts company’s shares following the release of its first quarter update. That update revealed sales growth of 13.2% for the three months ended 30 September. In light of this, management is guiding to first half EBITDA growth of 8% to 11%.

ResMed (ASX: RMD)

The ResMed share price is up 5% to $37.36. This follows the release of a first quarter result ahead of the market’s expectations. The sleep treatment focused medical device company reported a 20% increase in revenue to US$904 million and GAAP earnings per share of US$1.39. This compares to consensus estimates of US$860 million and US$1.24 per share, respectively.

The post Why HT&E, JB Hi-Fi, Reece, and ResMed shares are charging higher appeared first on The Motley Fool Australia.

More reading

• Here’s why HT&E (ASX:HT1) share price is rocketing 31% today
• ASX 200 (ASX:XJO) midday update: Macquarie doubles profit, ResMed jumps
• JB Hi-Fi (ASX:JBH) share price jumps on broker upgrade
• ResMed (ASX:RMD) share price jumps 7% on Q1 earnings beat
• 5 things to watch on the ASX 200 on Friday

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 recommended ResMed. The Motley Fool Australia has recommended ResMed Inc. 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 Blue Star Helium Ltd (ASX: BNL) share price is plummeting today after coming out of a trading halt. This comes after the energy company announced it has successfully completed an equity raise.

During early afternoon trade, Blue Star Helium shares are swapping hands for 6.1 cents, down 7.58%.

Placement complete

Investors are heading for the hills, dumping Blue Star Helium shares as impending share dilution appears on the horizon.

According to its release, Blue Star Helium advised it has received firm commitments to raise $15 million from institutional and sophisticated investors. The strong support saw a number of new domestic and international customers be added to the company’s registry.

The well-supported placement will see Blue Star Helium create 267.86 million new ordinary shares at an issue price of 5.6 cents apiece. This represents an 11.7% discount to the 10-day volume weighted average price (VWAP) of 6.34 cents up to 27 October. In addition, this is a 15.2% reduction on Wednesday’s closing price of 6.6 cents (before going into a trading halt).

Under listing rule 7.1, Blue Star Helium will allocate 141.8 million shares to investors. Furthermore, the company will also use an extension – listing rule 7.1A to issue the remaining 126.1 million shares.

The proceeds will be used for helium exploration and development evaluation activities across its Las Animas County acreage in Colorado. This includes a number of strategic objectives such as expanding the helium exploration well and water well drilling activities, further key acreage leasing initiatives and production development studies.

What did management say?

Blue Star Helium managing director and CEO Trent Spry commented:

Following the grant of our Form 2A OGDP approval for the Enterprise 16#1 well, we are excited to be in the final phase of approval to commence drilling of our maiden helium exploration well. We expect to commence drilling of this well promptly upon receipt of the approved final permit to drill (Form 2), which is typically received within 30 days of submission which will happen shortly.

Drilling of the next water well (BBB#1) is also expected to commence in November. This well is located close to Blue Star’s Voyager prospect, which is positioned approximately six miles north from the Model Dome field. Our water well drilling program not only offers significant community relationship benefits but is also a source of valuable additional data with respect to helium prospectively across our acreage.

About the Blue Star Helium share price

Despite today’s fall, the Blue Star Helium share price has shot up by more than 70% in the past 12 months. When looking at year-to-date, the company’s shares are sitting on a gain of close to 40%.

Blue Star Helium has a market capitalisation of roughly $76.9 million with a tad over 1.26 billion shares on hand.

The post Here’s why the Blue Star Helium (ASX:BNL) share price is sinking 8% on Friday appeared first on The Motley Fool Australia.

More reading

• Will inflation pressure your ASX shares in 2022? Here are Bell Asset’s strategy tips
• Here’s why HT&E (ASX:HT1) share price is rocketing 31% today
• Why is the Airtasker (ASX:ART) share price falling on Friday?
• Here’s why the Rhythm Biosciences share price (ASX:RHY) is jumping higher today
• What’s sending the Seven West Media (ASX:SWM) share price up 6% on Friday?

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned.

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ASX shares have broadly had a great run over the past 12 months. The All Ordinaries Index (ASX: XAO), for example, is up a whopping 25% since this time last year.

ASX tech shares have managed to hold their own as well. The S&P/ASX All Technology Index (ASX: XTX) is up 23% over the past 12 months.

Many listed companies have benefited from ultra-low interest rates. Not only does this bring down their borrowing costs, but it also makes ASX shares more attractive relative to low-yielding bonds or cash deposit accounts. Meaning more investors tend to put money into the share market.

But with sticky higher inflation now flashing red on investors’ radars, what’s the outlook for the year ahead?

Not so “transitory” inflation

According to Ned Bell, the chief investment officer at Bell Asset Management, investors’ interest rate expectations should broadly direct markets in the year ahead.

Presenting at yesterday’s ‘Bell Asset Management — Global equities market update and outlook for 2022’ webinar, Bell pointed to US Federal Reserve chairman, Jerome Powell’s change of words on the durability of recent price spikes.

“Powell was using the word transitory with great effect a couple of months ago. But essentially it’s disappeared from the vocabulary,” Bell said.

And wage inflation could be among the more durable price increases impacting global companies and ASX shares.

According to Bell:

You’ve got much higher oil prices and commodity inflation, that’s obviously causing some issues. And it remains to be seen how long this will be an issue. But on the other side of the coin, you’ve got wage inflation. The wage inflation is becoming more of an issue, and we feel like that is going to be with us for some time.

One of the most common things we keep hearing from companies is that staff availability is a real problem. One of the side effects of COVID is that a lot of people simply don’t want to go back to work. They’re rethinking their lives and willingness to work. That’s causing some real labour constraints, across multiple jobs and multiple industries.

Strategies for ASX shares and global markets

With higher energy costs and potentially increased wage costs, some ASX shares are likely to do better than others.

“Clearly things like energy” have outperformed this year, Bell said. “Some of the actual causes of the inflation are good places to be.”

What else should investors consider in an inflationary environment?

According to Bell:

From a style perspective, quality companies that have pricing power. They can pass on those commodity price increases. Those are the ones that are going to benefit over and above the ones that can’t…

Services businesses, like a software company or a consulting business, they don’t have any input price pressure. Those types of businesses, and the less capital intensive businesses, tend to do better during inflationary periods.

Generally, lower margin businesses are the ones that are really going to struggle. You’re seeing some of the consumer staples companies starting to feel the effects of that. Things like packaging but also food prices are ticking higher.

Higher inflation equates to higher interest rates

As noted above, many ASX shares have benefited from ultra-low interest rates. But the days of record-low rates may be ending sooner than expected. And that could throw up some unwanted headwinds for certain ASX shares.

Bell explained:

That tends to be trouble for the most expensive stocks in the market. As night follows day, when interest rates go up, high P/E [price to earnings ratio] stocks go down. We’re seeing that now … That will arguably trigger a bit more of a rotation out of the most crowded growth names into the rest of the market.

Now it’s not as binary as sell the highest growth stocks and buy the cheapest, junkiest. It’s about having more diversification.

So, investors worried about inflation may want to run the slide rule over their ASX shares and make sure they don’t hold too many in any single basket.

The post Will inflation pressure your ASX shares in 2022? Here are Bell Asset’s strategy tips 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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