Share tips and stock recommendations for the Australian (ASX) share market – buy, hold, and sell. Michael Gable is an expert guest commentator for the stock market newsletter thebull.com.au.
This post is an extract from the newsletter dated 17 January 2022. You can access the full version of the article HERE.
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Oil supply remains low and with coupled with recent underinvestment in the sector, we believe that the price of oil will continue to climb and with it the share prices of energy stocks such as WPL. Recently on the share price chart we have seen a tightening of the trading range followed by an upside break on improved volume which should see a rally in the share price.
We continue to be bullish on the price of iron ore and therefore the prospect of the iron ore miners. The share price of MGX has lagged behind the other miners in recent weeks but it now appears to be on the move. It has formed what looks like a solid base on the share price chart and it is now breaking into a new uptrend.
Despite the great share price rally from the last several weeks, we believe that there is further to go. The price of iron ore is still moving higher and we expect this to continue after the Beijing Olympics. The share price momentum in FMG is also very strong which indicates that we should see higher levels.
We expect coal prices to continue to recover, and with it the share price of WHC. The share price recently levelled out near $2.50 and it has since shown enough positive price momentum to have us confident that it is now resuming the uptrend which started several months ago.
Interest rate rises and quantitative tightening should continue to place pressure on technology stocks and those that trade on high P/E’s. PME is one such company that is seeing a lot of heat come out of the share price and it looks set to have further to fall until we see any buying support.
Business growth has been slowing and Z1P is likely to come under increased competition from larger players in the BNPL space. The share price is also vulnerable to rising interest rates and quantitative tightening. Despite falling quite a bit over the last several months, we think that more heat will come out of the share price.
Michael Gable is managing director of Fairmont Equities.
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