Australian Economy

2 ASX shares perfect for the current climate: expert

A woman crosses her fingers as she flicks a coin into a fountain, hoping for good luck.

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Even though interest rates have already risen a whopping 275 basis points in just six months, there is a lag before the impact truly hits.

That’s because it takes time for the rate rises to be enacted by mortgage providers then to flow on to home loan repayments. Some Australians might be on a fixed rate and that term may have temporarily shielded them from the rate hikes.

This lag is visibly seen in the unemployment rate, which still remains low by historical standards.

So with the worst economic times still ahead of Australia, which are the ASX shares best placed for endurance?

Baker Young managed portfolio analyst Toby Grimm had a couple of ideas:

‘We see attractive value’

Gold is traditionally seen as a safe-haven asset in times of economic distress.

But while 2022 has been pretty turbulent, the gold price has stubbornly remained depressed.

If, like Grimm, you think this is due for a turnaround, Silver Lake Resources Limited (ASX: SLR) might be worth considering.

“We see attractive value as we expect an improving operational performance amid potential for a long-awaited rally in the gold price,” Grimm told The Bull.

The Silver Lake share price is down 321% year to date.

He admitted recent results have disappointed, but it was not the be-all and the end-all.

“Gold production of 59,935 ounces in the September quarter marginally missed market expectations due to lower grades and maintenance at its Deflector mine,” said Grimm.

“However, Silver Lake’s other assets performed well and, with higher grades anticipated moving forward, Silver Lake retained full-year guidance.”

According to CMC Markets, four out of six analysts that cover the stock currently recommend it as a strong buy.

Investing for 2024

For a longer term prospect, Macquarie Group Ltd (ASX: MQG) shares are looking ripe for Grimm.

“The company’s diversified business model is appealing,” he said.

“The company’s latest half-year net profit after tax of $2.305 billion to September 30, 2022 was up 13% on the prior corresponding period, but down 13% on the period ending March 31, 2022.”

With the economy slowing down, the current financial year won’t light the world on fire. But for Grimm, Macquarie stocks are for looking beyond that hump.

“The full year will be tough, but we believe the investment bank is positioned for an earnings recovery in 2024.”

After an up-and-down 2022, the Macquarie share price now sits about 15.4% down from where it started the year. The dividend yield is now at 3.64%.

Grimm’s peers are in general agreement with him. CMC Markets shows nine of 14 analysts rate Macquarie as a buy, with eight of those thinking it’s a strong buy right now.

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