Calls for tighter Russian sanctions following alleged war crimes in Bucha could give some ASX shares a second boost.
Our market has already been outperforming since Russia invaded Ukraine. The conflict is driving up commodity prices and a new round of global sanctions could give commodities another leg up.
This puts resource-rich ASX shares in the driver's seat even as inflation and economic growth risks weigh on the broader market.
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ASX coal shares among the sanction winners
If you are wondering which shares on our bourse are best placed to outperform, Datt Capital's managing director Emanuel Datt has picked five to watch in an article on Livewire.
Whitehaven Coal Ltd (ASX: WHC) and New Hope Corporation Limited (ASX: NHC) are on Datt's list.
Whitehaven sells thermal coal to Japanese and Korean customers, while New Hope produces thermal coal from its majority-owned Bengalla mine located in NSW.
ASX shares looking cheap in this climate
"Whitehaven trades at just over 1x expected [earnings before interest, tax, depreciation and amortisation] EBITDA at current thermal coal spot prices and is currently buying back 10% of its shares on market," said Datt.
"New Hope trades at just over 1x expected EBITDA at current thermal coal spot prices and is due to pay an interim fully franked dividend of 30c a share (equating to over 12% yield grossed up).
"The company has one of the highest franking credit balances of any company on the ASX and we expect the board to release this embedded value to shareholders in a timely manner."
Another ASX mining share in the commodities box seat
Another ASX share to watch is South32 Ltd (ASX: S32). The diversified miner is a significant producer of base metals, aluminium, and coking coal.
"S32 is highly capital disciplined and has been buying back its shares on-market since 2017 and this continues today," Datt explained.
"These repurchases have been highly value-accretive to shareholders and the company trades at approximately 2x EBITDA at current spot prices."
Two ASX shares shining bright
The BlueScope Steel Limited (ASX: BSL) share price also looks cheap in this environment. The steel producer is buying back around 10% of its shares on-market and trades at circa 2x EBITDA. That's arguably too low given its strong fundamentals and positive outlook for steel prices and demand, added Datt.
The tailwinds behind the BlueScope share price should also benefit the Vulcan Steel Ltd (ASX: VSL) share price.
Recently listed on the ASX, Vulcan is a steel distribution business operating in the ANZ region.
Is this ASX share set to double in price?
"Vulcan is experiencing excellent tailwinds from these inflationary markets with reported EBITDA per tonne of steel sold doubling in HY22 relative to FY2022," said Datt.
"The business has several attractive qualitative factors which make the present value quite compelling and we value the business around 50% higher than present market prices."
