ASX 200 shares to shift earnings growth up a gear in FY22 – Expert

This fund manager is expecting strong earnings growth from ASX 200 shares in FY22…
The post ASX 200 shares to shift earnings growth up a gear in FY22 – Expert appeared first on The Motley Fool Australia. –

The last financial year delivered the best returns to Australian share market investors since FY07. However, one fund manager is expecting the good times to keep on rolling in this financial year, led by a surge in earnings from S&P/ASX 200 Index (ASX: XJO) shares.

Since the beginning of the new financial year, the ASX 200 has climbed a further 3.1%. This gain has largely been contributed by the materials and industrials sectors. Further growth could be on the cards if the team at Prime Value Asset Management is on the money.

Will ASX 200 shares deliver accelerated profit growth?

In its June update, Prime Value shared with its Opportunities Fund investors what it expects in the latest financial year. The fund aims to invest in 20 to 30 of the best opportunities within the ASX, irrespective of market capitalisation.

While the fund is open to companies of all sizes, its update highlights ASX 200 shares as potential FY22 winners.  

Prime Value’s Opportunities Fund delivered a 27.7% total return in FY21. The best performers within the fund included City Chic Collective Ltd (ASX: CCX), AUB Group Ltd (ASX: AUB), and Pinnacle Investment Management Group Ltd (ASX: PNI). On the other hand, its worst performers during the period included Collins Food Ltd (ASX: CKF), National Australia Bank Ltd. (ASX: NAB), and CSL Limited (ASX: CSL).

Heading into the new financial year, Prime Value resonates with Emma Fisher’s take on the importance of pricing power during inflationary environments. Yet, the fund isn’t trying to predict inflationary winners. Instead, it is eyeing off the ASX 200 shares likely to deliver earnings growth.

In its update, the Melbourne-based Australian investment manager said:

Overall, we expect FY22 to look quite different to FY21, as the drivers to performance will differ. As a base case, we expect the ongoing global vaccine rollout, significant monetary and fiscal stimulus to result in an acceleration in economic growth and corporate earnings… For example, we increased our exposure to the materials sector as a number of companies have been increasing their production and planning for expansion in commodities with strong supportive fundamentals. These investments include Mineral Resources and OzMinerals.

We have already witnessed Rio Tinto Limited (ASX: RIO) deliver exceptional earnings growth of 156%. As a result, the mining giant declared a dividend payout worth US$9.1 billion.

Funds’ top holdings

Reassuringly for investors, Prime Value practices what it preaches. The fund’s top 5 shares are all ASX 200 constituents based on its June update. Specifically, this includes Commonwealth Bank of Australia (ASX: CBA), BHP Group Ltd (ASX: BHP), CSL Limited (ASX: CSL), National Australia Bank Ltd. (ASX: NAB), and Macquarie Group Ltd (ASX: MQG).

The post ASX 200 shares to shift earnings growth up a gear in FY22 – Expert appeared first on The Motley Fool Australia.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of May 24th 2021

More reading

5 things to watch on the ASX 200 on Tuesday

ASX 200 rises, Afterpay soars, Zip jumps

Fortescue (ASX:FMG) share price under most pressure as iron ore crashes to bear market
How is the IAG (ASX:IAG) share price performing against the financial services sector?
ASX 200 midday update: Afterpay to be acquired by Square, Oil Search to merge with Santos

Motley Fool contributor Mitchell Lawler owns shares of Commonwealth Bank of Australia and Macquarie Group Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended CSL Ltd. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia has recommended Austbrokers Holdings Limited and Collins Foods Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!