The experts have dropped in and set the tone for Ampol shares.
The post What this top broker is saying about the Ampol (ASX:ALD) share price appeared first on The Motley Fool Australia. –
The Ampol Ltd (ASX: ALD) share price is edging higher in afternoon trade with the company’s shares changing hands at $30.04 each at the time of writing.
For reference, the S&P/ASX 200 Index (ASX: XJO) is ticking lower today, down 0.46% at 7,266.2 points.
Ampol shares have soared into the money lately, coming off a low of $26.18 on 29 September to cannonball north to today’s price.
Why is the Ampol share price charging higher lately?
Ampol has been on the receiving end of several tailwinds that have contributed positively to its share price in the last month.
The first thing factor that may be behind its momentum is the company’s exposure to the price of both oil and gasoline.
Each of these commodities has ticked upwards since mid-September, in line with Ampol’s share price.
For instance, Brent Crude now trades at US$83/Bbl – up from US$73.9/Bbl on 20 September. During the same time frame, the price of gasoline has spiked 13% after a wonky few months.
A number of factors, including strong demand from the reopening of economies and a recent US hurricane, have contributed to the rise.
One other factor in recent months is soaring natural gas and energy prices around the globe. This has also led to increased demand for oil, with it being used in energy production as a lower-cost alternative.
It is set to buy the NZ company on a cash consideration of NZ$3.78 per share, allowing for a NZ$0.10 per share dividend.
And one leading broker reckons Ampol’s timing couldn’t be more perfect in light of the strength in the oil and gasoline markets.
Is Ampol’s proposal a good buy?
Analysts from leading broker RBC Capital Markets have weighed in on the acquisition and believe it will be accretive to the Ampol share price.
The broker likes Ampol’s timing on the deal and believes it will capitalise on the rebound in NZ travel as the pandemic winds down.
It particularly sees the company profiting from jet and fuel oil as travel numbers begin to return to pre-pandemic volumes. For reference, in 2019, over 11 million international visitors visited and departed New Zealand’s shores.
Aside from this, the broker reckons the Z Energy acquisition could strengthen Ampol’s balance sheet. It’s cited Z Energy’s high cash flows and the sale of Gull New Zealand – a likely requirement of the NZ regulator to approve the deal.
But RBC understands the regulator will look favourably on the deal as “Ampol firmly believes a larger, more capable company will enhance New Zealand’s fuel security needs”.
Ampol shares have struggled this year to date, posting a return of just 5% but are up 22% over the last 12 months.
Should you invest $1,000 in Ampol right now?
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*Returns as of August 16th 2021
Ampol (ASX:ALD) share price zooms higher on NZ$2.8bn Z Energy acquisition
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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.