The ASX 200 stock that could get second time lucky

These shares have failed to impress in 2024, but many experts believe it's a bargain buy.

| More on:
female in hard hat crosses fingers

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

Can lightning hit twice in the same spot?

The old cliche suggests it doesn't, but scientifically lightning certainly can and does strike twice in the same place.

If you're on the scientists' side, it might be time to consider buying Santos Ltd (ASX: STO).

Curious? Read on.

The ASX 200 marriage that never was

Late last year, the oil and gas giant explored whether it would merge with its larger S&P/ASX 200 Index (ASX: XJO) rival Woodside Energy Group Ltd (ASX: WDS).

The Santos share price had been stagnant for the past half-decade, and this deal was meant to be the light at the end of the tunnel for its long-suffering shareholders.

The price-to-earnings (P/E) ratio sits at half of Woodside's.

Unfortunately, last month the merger talks were terminated. Neither side has publicly revealed the reasons the deal fell over.

The Santos share price immediately sank 8% when that news came.

Then just to rub salt into the wound, the shares plunged again after its 2023 full year result failed to impress investors.

Both underlying net profit after tax (NPAT) and free cash flow from operations headed 42% for the year.

Ouch.

Could the romance be rekindled?

Despite these events, Shaw and Partners senior investment advisor Jed Richards right now thinks Santos is the far stronger buy than Woodside.

"The future growth prospects pipeline is far stronger for Santos than Woodside Energy, in my view," Richards told The Bull.

And he reckons the Woodside marriage story is not over yet.

"Santos has positioned itself well over the past few years to be an attractive addition for Woodside.

"Although the last round of negotiations hasn't resulted in a merger, I expect this strategy will be addressed again in the future."

It seems Richards is not the only professional keen on Santos right now.

According to broking platform CMC Invest, 13 out of 17 analysts currently rate the energy stock as a buy.

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.

More on Investing Strategies

A woman in hammock with headphones on enjoying life which symbolises passive income.
Dividend Investing

Invest $20,000 in ANZ shares and get $1,200 in passive income

Can investors rely on ANZ for a 6% yield in their cash?

Read more »

Senior man wearing glasses and a leather jacket works on his laptop in a cafe.
Dividend Investing

Why your retirement income may take a hit — and what to do about it

Lower dividend payments doesn’t need to mean disaster.

Read more »

Australian dollar notes inside the pocket on jeans, symbolising dividends.
Dividend Investing

3 ASX dividend shares to buy with 5% to 7% yields

Analysts expect big yields from these buy-rated shares.

Read more »

Two excited woman pointing out a bargain opportunity on a laptop.
Dividend Investing

With 8%+ dividends, how long can these ASX 200 passive income shares stay cheap?

I think ASX 200 investors looking for ‘cheap’ passive income shares will want to check these out.

Read more »

A smiling woman puts fuel into her car at a petrol pump.
Dividend Investing

Where I'd invest $5,000 in ASX shares now for $1,000 of dividend income

The ASX offers a rich hunting ground for dividend income.

Read more »

a woman holds a facebook like thumbs up sign high above her head. She has a very happy smile on her face.
Dividend Investing

Bell Potter names the best ASX 300 dividend shares to buy

The broker has good things to say about these shares.

Read more »

A young woman holds her hand to her mouth in surprise as she reads something on her laptop.
Growth Shares

These mid-cap ASX shares could rise 20% to 50%

Goldman Sachs is tipping these stocks as buys.

Read more »

Middle age caucasian man smiling confident drinking coffee at home.
Dividend Investing

Buy these ASX dividend stocks for passive income

Analysts expect attractive dividend yields from these shares.

Read more »