Which ASX 200 stocks have the biggest upside potential in July?

The Monthly Broker Consensus scan identifies ASX 200 stocks with the most potential upside based on consensus target prices.

The Top 10 ASX 200 Stocks

'Last Update' column refers to the latest broker coverage of the stock. Stocks with 'Last Update' dating back two or more months are not included in the table. 'Target price' is an aggregate of all target prices under Refinitiv's database. Close price based on Friday, 14 July 2023. (Table: Market Index | Source: Refinitiv)

Catching a Falling Knife

The average 12-month return for the ten stocks above is -15.3% (based on Friday, 14 July close ). The weakness is led by The Star Entertainment (-59.9%), Link Administration (-59.4%) and Johns Lyng (-25.8%).

There are only two stocks that are positive: Sayona (+35.7%) and Karoon Energy (+35.2%).

While brokers might have a bullish target price. These companies have a lot of work cut out for them. Take Link Administration for example:

• In September 2022, the proposed $3.3bn takeover by Dye & Durham collapsed, which triggered a sharp 20.1% selloff on the day of the announcement

• On 30 June 2023, Link said it that it would not be renewing its contract with HESTA. The partnership represents approximately 4% of estimated FY23 revenue

Syrah is another example of a company that has struggled against headwinds such as weak graphite prices and higher-than-expected costs.

• On 27 April 2023, Syrah said it will moderate production at its Balama graphite operation until "sales orders at economic prices warrant higher capacity utilisation."

• "The Company will also review and evaluate the potential for more dynamic Balama operating scenarios at lower capacity utilisation, to match periods of volatile customer demand and lower sales ordering, with the objective of achieving acceptable unit operating cost and cash flow outcomes," the company said in a statement

More broadly speaking, the onus is on the company to turn things around or for broader market conditions/commodity prices to stage a turnaround.

Honorable Mentions

The ASX 200 stocks ranked 11-20 for most upside. Some interesting observations

• The average stock is up 12.3% over the past twelve months

• 7 out of 10 of them are from the Energy and Materials sector

• Most of which reflect weakening commodity prices, including rare earths, coal and nickel