Orica Surges as BHP Appears Expensive Amid Market Volatility
The S&P/ASX 200 Index has struggled over the past year, dropping by almost 1%.
Recently, the market experienced a downturn as investors grew increasingly cautious about another interest rate hike due to stubborn inflation.
Several ASX shares have recently received new ratings from experts. Among them are Orica Ltd (ASX: ORI), BHP Group Ltd (ASX: BHP), and GQG Partners Inc (ASX: GQG).
The Orica share price has risen 5.7% over the past year, according to Ord Minnett's analysis.
Ord Minnett maintains a buy rating on Orica shares, citing several key points in support of this recommendation.
Natrium cyanide (NaCN) is an essential reagent used in gold extraction. The two largest global producers, Orica and Draslovka, have both reported that their production capacity is fully committed.
This has resulted in improved pricing power for Orica, as seen in recent Australian trade data. Additionally, the costs of NaCN have not increased at the same pace as broader mining costs, despite being an essential input. This suggests further price increases may be achievable, particularly given strong gold prices and elevated profitability among gold miners.
BHP's share price has surged 53% over the past year, with Dylan Evans from Catapult Wealth maintaining a hold rating on BHP shares.
Evan notes that while BHP's recent results have been impressive, the company's share price has risen significantly, making it appear expensive. The global miner's revenue and profit increased in its last full-year report due to growth driven by its copper division, which is now the primary revenue generator for BHP.
The future of BHP's earnings will be influenced by the copper price, which is underpinned by long-term themes such as electrification and growing digital infrastructure.
The GQG Partners share price has dropped 37% over the past year. Andrew Wielandt from DP Wealth Advisory maintains a sell rating on GQG shares due to concerns about the sustainability of earnings and income.