Why we just bought these 3 ASX shares: fund

If you’re having trouble figuring out which stocks to buy at the moment, perhaps it’s worth taking a look at this trio.

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It’s a confusing time to be an ASX shares investor right now.

With inflation raging, interest rates rising and the economy heading downwards, which are the stocks that are value buys rather than value traps

Perhaps it would help to see which ASX shares a professionally-managed fund has bought recently.

Alphinity Investment Management, in a memo to clients, revealed three stocks that its team just bought.

A win-win deal in a winning sector

For Alphinity analysts, the “positive earnings revisions” continue to be identified in the energy and resource sectors.

And two ASX shares in particular piqued their interest.

“We have recently added to our positions in Woodside Energy Group Ltd (ASX: WDS) and BHP Group Ltd (ASX: BHP) following the acquisition by Woodside of BHP’s energy division.”

The Alphinity team believes the deal allows both sides to “pursue attractive growth projects”.

“Strong cash flow generation will also provide capital management opportunities,” read the memo.

“This is particularly the case for BHP but Woodside also should start its new era with an ungeared balance sheet.”

Woodside shares are up more than 45% year to date, while paying out a 5.86% dividend yield. 

The BHP share price is up 11% so far this year, and on top of that is rewarding shareholders with a handsome 11.7% dividend yield.

Global competitors removed from market

The third ASX share that the Alphinity team has added to their fund is chemicals maker Orica Ltd (ASX: ORI).

“Orica has had a few lean years due to excess supply of its key product, explosives-grade ammonium nitrate, especially in Australia, but still managed to deliver a strong interim result in May.”

Current geopolitics, with Russia out of the picture and China’s restricted manufacturing capability, is also having a bearing.

“Market growth and restricted supply out of both China and Russia, has tightened the market, tipping the scales in price negotiations with its customers in Orica’s favour.”

Orica shares have risen more than 13.7% year to date, while providing a 1.54% dividend yield.

Earlier this year, Investors Mutual also identified Orica as a top-shelf stock to hold in 2022.

“Investors begin to appreciate real cash flows generated by companies in the next two to three years, as opposed to hoped-for cash flows in 10 or 20 years’ time,” said director Anton Tagliaferro.

“With interest rates rising, these stocks suddenly don’t look so boring or dull as things normalise.”

Motley Fool contributor Tony Yoo has no position 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 Scott Phillips.

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