It's no secret that inflation has become a top-of-mind concern for ASX investors in 2022. Rising prices weren't an issue for so long that many investors forgot all about inflation. But that was until 2022 brought it back with a vengeance.
Back in October, the Australian Bureau of Statistics revealed that the annual inflation rate in the Australian economy was running at a hot 7.3%. That's the highest level in more than 20 years.
So how do investors use ASX shares to beat inflation? One ASX fund manager has an idea.
Image source: Getty Images
Santos: An ASX 200 oil share to beat inflation?
Blake Henricks of Firetrail Investments recently spoke to Livewire about the challenges of inflation. Henricks named Santos Ltd (ASX: STO) shares as one of the ASX investments he's looking at to beat inflation.
Henricks stated that he believed that energy shares are a great place to look for inflation-beating returns. That's because much of the inflation the world is experiencing this year has been caused by rising energy prices.
Remember, higher oil, gas and coal prices translate into higher transportation and electricity costs, which flow through to every corner of the economy.
Here's some of what Henricks had to say on the ASX oil share:
It would be in the energy sector, I'd pick Santos… So Santos is undertaking two large projects at the moment. Once they're completed, you're going to have 20 years of very stable volumes.
And it's pricing in US$60 a barrel at the moment, current prices are around US$90, so they're generating a lot of free cash flow. And with low multiple, real assets and inflation hedge, Santos would be the one for me.
So there you have it: an inflation-hedged investment priced at a low multiple. Well, that's what this ASX expert reckons anyway.
Santos shares have had a solid year this year. The ASX oil share is up 9.6% year to date in 2022, and up 13.4% over the past 12 months.
At the last Santos share price, this energy share had a dividend yield of 2.7%.
