The S&P/ASX 200 Index (ASX: XJO) has performed strongly on the back of a roaring rise of ASX bank shares like Commonwealth Bank of Australia (ASX: CBA). When the economy improves, I think these ASX shares could be good performers in a potential bull market.
Arguably, we're already in a bull market – in the 12 months to 29 February 2024, the MSCI World Index went up 25.6%.
However, there are some stocks where the strength and confidence of the economy significantly influence their earnings. These are three stocks that I think could rise if the economy improves.
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BHP Group Ltd (ASX: BHP)
BHP is the largest mining business in the world, with significant exposure to commodities like iron ore and copper.
When the economy is stronger and businesses and households are more confident, it could lead to more demand for BHP's commodities, increasing the prices of these commodities and boosting profitability.
The iron ore price has weakened to around US$100 per tonne, but a recovery in the global economy could help increase demand from China (which is a major manufacturer of the world's goods).
As for copper, ongoing investments around the world in decarbonisation and electrification could lead to a stronger copper price over time.
As the ASX's biggest company, if there's going to be a bull market for the ASX 200, I think BHP will be an important contributor.
Macquarie Group Ltd (ASX: MQG)
The ASX bank share sector has soared – Macquarie shares have gone up too, up 19% in six months.
The Macquarie Asset Management division is already doing well from the strong asset prices. I think some of the company's divisions are primed to see a recovery in performance. The investment banking division (Macquarie Capital) may benefit if there are more initial public offerings (IPOs) and capital raisings.
Macquarie's commodities and global markets (CGM) division saw a big decline in profitability in its recent result, so an improvement in the economy could be a boost for profit in this segment.
It's one of the biggest companies on the ASX and could become an even larger part of the ASX 200 if it does well and leads a bull market charge.
Corporate Travel Management Ltd (ASX: CTD)
The ASX share has seen a recovery from the bad times of COVID-19 – travel has returned strongly.
However, some companies and governments may be looking to save on costs in the short term amid the inflationary environment. The company referred to a negative $15 million impact to earnings before interest, tax, depreciation and amortisation (EBITDA) in the second quarter of macroeconomic issues.
The Corporate Travel Management share price is down around 20% from 29 January 2024, but I think there's plenty of scope for it to recover, particularly with profit projected to increase in FY25 and FY26.
According to the projection on Commsec, the Corporate Travel Management share price is valued at under 14 times FY26's estimated earnings.
