2 killer ASX shares to buy for a volatile 2022

Experts are warning this year will see much turbulence in stock markets. Here are a couple of reliable names that could withstand the storm.

| More on:
Scared looking people on a rollercoaster ride representing the volatile Mineral Resources share price in 2022

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Two years after COVID-19 arrived in Australia, the world is still a very uncertain place.

A year ago optimism was high with vaccinations about to roll out — then the Delta variant plunged Australia's 2 largest cities into long winter lockdowns.

Spring arrived, those lockdowns ended, and by November most of us were vaccinated. Huzzah! 

Then bam, Omicron landed and Australians were left scrambling for rapid tests like they had been for toilet paper 20 months earlier.

So it's no wonder ASX shares have been up and down in recent times.

Sure, the S&P/ASX 200 Index (ASX: XJO) returned a tidy 13% over the 2021 calendar year. But it has lost 3% since the August reporting season.

In such volatile times, IML Investors Mutual is turning to big reliable businesses.

"As we head into 2022, we believe share markets will be primarily influenced by the direction of interest rates as central banks continue to mull over whether current inflationary trends are [transitory] or becoming embedded," an IML memo to clients read. 

"We continue to steer away from the riskier parts of the sharemarket and remain focused on identifying and holding what we assess to be good quality companies, …which can do well over the next 3 to 5 years."

Here are 2 such examples currently held in IML's Concentrated Australian Share Fund:

A recent loser ready to rejuvenate

Giant biotech company CSL Limited (ASX: CSL) has been a frustrating stock to own the past couple of years.

The share price is still about 19% down on its pre-COVID high, despite good prospects for the years to come.

Late last year it even pulled off a $17.2 billion acquisition of Swiss firm Vifor Pharma. But the market punished CSL even further, sending the shares down 14% since late November.

For IML, all this means is that CSL is a bargain right now.

"The acquisition is forecast to be double-digit accretive to CSL's earnings as well as provide them with a strong distribution channel to sell their kidney-related drugs currently in phase III development," the IML memo read.

"CSL continues to look attractively priced, considering the quality of the business and the large number of potential products they have in phase III trials, including CSL 112 and a number of transplant drugs."

CSL shares closed Wednesday at $270.91 and remain the largest holding in the fund.

A recent winner set to rocket further

Unlike CSL, telecommunications provider Telstra Corporation Ltd (ASX: TLS) has had a nice run of late.

The share price is up 35% over the past 12 months, while giving out a handy 2.36% dividend yield.

But the IML team certainly doesn't think it's done yet.

"The company.. Announced at its investor day in November that it has finalised the separation of the company's fixed line infrastructure into InfraCo Fixed, paving the way to unlock further value through a potential partial sale of that asset," the memo read.

"This follows the sale of a 49% stake in the company's tower assets (Amplitel) to the Future Fund earlier in 2021 for a higher than expected price, highlighting the strong valuations currently being achieved for infrastructure-type assets in the current environment."

The team also loved Telstra's buyout of Digicell Pacific.

That deal saw the telco only have to pay about 20% of the acquisition cost, while the Australian government footed the rest of the bill as a foreign policy move.

IML analysts don't think the business from South Pacific islands will make a huge difference in the bottom line of a $50 billion company like Telstra.

But they liked the non-monetary message behind the deal.

"While not overly material from a financial perspective, the deal cements a stronger relationship between Telstra and the government — since highlighted by a 5-year $1 billion contract with the Department of Defence."

Telstra shares closed Wednesday on $4.18.

Motley Fool contributor Tony Yoo owns CSL Ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended CSL Ltd. The Motley Fool Australia owns and has recommended Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Broker Notes

Woman in celebratory fist move looking at phone
Broker Notes

Top brokers name 3 ASX shares to buy next week

Brokers gave buy ratings to these ASX shares last week. Why are they bullish?

Read more »

A young man pointing up looking amazed, indicating a surging share price movement for an ASX company
Broker Notes

These ASX 200 shares could rise 20% to almost 30%

Analysts are tipping these shares to deliver big returns over the next 12 months.

Read more »

Two people tired and resting after sports race.
Broker Notes

Fundie rates 2 ASX 200 stocks in short-term pain but with long-term gain potential

Blackwattle Investment Partners sees these 2 ASX 200 stocks as worthy of a buy and hold strategy.

Read more »

Two smiling work colleagues discuss an investment or business plan at their office.
Broker Notes

Brokers name 3 ASX shares to buy today

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A man has a surprised and relieved expression on his face. as he raises his hands up to his face in response to the high fluctuations in the Galileo share price today
Broker Notes

Guess which beaten down ASX share is rocketing 11% today

Why are investors buying this beaten down stock? Let's find out.

Read more »

Broker working with share prices on computers.
Broker Notes

These 3 ASX All Ords stocks just got sizeable broker upgrades

Top brokers expect strong performance from these ASX All Ords stocks.

Read more »

Man pointing an upward line on a bar graph symbolising a rising share price.
Broker Notes

Morgans says these ASX 200 stocks can rise 30%

Big returns could be on the cards for buyers of these shares.

Read more »

Successful group of people applauding in a business meeting and looking very happy.
Broker Notes

Top brokers name 3 ASX shares to buy today

Here's what brokers are recommending as buys this week.

Read more »