Which ASX 200 stocks have the biggest upside potential in July?
West African Resources, Syrah Resources and Silver Lake have the most upside vs. broker consensus.
Source: iStock
Mentioned
KEY POINTS
- Syrah, Silver Lake and West African Resources have the highest upside vs. broker consensus
- The top 10 stocks with the most upside are down an average 15.3% over the past twelve months
- Most of these stocks have struggled due to company specific or commodity-related headwinds. So the onus is on the company or broader market conditions to stage a turnaround
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
Ticker | Name | Sector | Close Price | Target price | Return | Last Update |
|---|---|---|---|---|---|---|
West African Resources | Materials | $ 0.93 | $ 1.60 | 73.0% | 30/06/23 | |
Syrah Resources | Materials | $ 0.93 | $ 1.43 | 54.6% | 12/07/23 | |
Silver Lake Resources | Materials | $ 1.18 | $ 1.74 | 48.1% | 7/07/23 | |
Link Administration | Industrials | $ 1.62 | $ 2.30 | 42.4% | 7/07/23 | |
Sayona Mining | Materials | $ 0.19 | $ 0.27 | 42.1% | 20/06/23 | |
EVT Limited | Communications | $ 11.74 | $ 16.32 | 39.0% | 26/06/23 | |
The Star Entertainment | Discretionary | $ 1.09 | $ 1.49 | 37.3% | 7/07/23 | |
Karoon Energy | Energy | $ 2.13 | $ 2.88 | 35.2% | 12/07/23 | |
Coronado Global | Materials | $ 1.56 | $ 2.08 | 33.3% | 27/06/23 | |
Johns Lyng Group | Industrials | $ 5.39 | $ 7.13 | 32.3% | 12/07/23 |
'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
Ticker | Name | Sector | Close Price | Target price | Return | Last Update |
|---|---|---|---|---|---|---|
Nickel Industries | Materials | $ 0.91 | $1.20 | 31.9% | 11/07/23 | |
Lynas Rare Earths | Materials | $ 7.10 | $9.31 | 31.1% | 11/07/23 | |
Qantas Airways | Industrials | $ 6.34 | $8.26 | 30.3% | 19/06/23 | |
Elders | Staples | $ 7.17 | $9.31 | 29.8% | 27/06/23 | |
Whitehaven Coal | Energy | $ 6.65 | $8.62 | 29.6% | 6/07/23 | |
Chalice Mining | Materials | $ 6.05 | $7.84 | 29.6% | 6/07/23 | |
New Hope | Energy | $ 4.80 | $6.21 | 29.4% | 6/07/23 | |
Paladin Energy | Energy | $ 0.79 | $1.01 | 28.7% | 12/07/23 | |
Champion Iron | Materials | $ 5.95 | $7.59 | 27.6% | 6/07/23 | |
Premier Investments | Discretionary | $ 21.12 | $26.79 | 26.8% | 6/07/23 |
