Wesfarmers Ltd (ASX: WES) shares continue to flex their muscles.

The retail heavyweight gained a modest 0.3% to $90.48 during Thursday afternoon trade, but don’t let that fool you. The stock is still edging closer to its all-time high of around $95.

It’s been a cracking run. Wesfarmers shares have climbed roughly 12% over the past month and are now up 11% in 2026. That’s comfortably ahead of the S&P/ASX 200 Index (ASX: XJO), which has gained around 1% over the past month and is barely positive for the year.

The obvious question now is whether the market has got carried away, or whether Wesfarmers still has room to climb.

Why are Wesfarmers shares rallying?

A few things have fallen into place for Wesfarmers shares. For starters, Australian consumers have proved tougher than many expected. Household spending rose 1.3% last month, comfortably beating forecasts and easing fears that higher living costs were crushing retail demand.

Interest rate expectations have also helped. Markets increasingly expect the Reserve Bank of Australia to keep rates on hold at its next meeting, reducing concerns that households could face another squeeze from higher mortgage repayments.

That’s been music to the ears of retail investors.

Retail royalty

Wesfarmers isn’t just another retailer. It owns some of Australia’s best-known brands, including Bunnings, Kmart Australia, and Officeworks.

Bunnings remains the undisputed king of home improvement, while Kmart has quietly become one of the country’s most successful discount retailers. Both businesses thrive by offering value, scale, and convenience.

Ironically, if consumer spending does soften during FY27, Wesfarmers shares could actually benefit as shoppers trade down and hunt for bargains.

Being the low-cost leader isn’t a bad place to be.

There’s more than retail under the bonnet

Wesfarmers also continues to find new ways to grow. Its Anko expansion is gathering momentum, with stores opening across the Philippines and more planned before the end of FY27.

Meanwhile, Bunnings keeps moving into new product categories, including pet supplies and automotive accessories. Kmart is experimenting with larger K Home stores, potentially opening another growth avenue beyond its traditional discount retail business.

The company also maintains exposure to lithium through its mining interests, giving shareholders another potential long-term earnings driver if battery materials regain momentum.

The secret sauce

One reason Wesfarmers shares command such a premium valuation is simple: the company generates outstanding returns. During the first half of FY26, Bunnings produced a return on capital approaching 71%, while Kmart wasn’t far behind at almost 70%.

Across the broader business, return on equity reached 32.7%.

Those are elite numbers. Very few mature ASX companies consistently generate that level of profitability while continuing to reinvest for future growth.

What do brokers think?

Here’s where things get interesting.

According to TradingView data, analysts are far less enthusiastic than the market.

Of the 14 brokers covering Wesfarmers shares, seven recommend holding the shares, six rate them as either a sell or strong sell, and only one has a buy recommendation.

The average 12-month price target sits at $76.91, implying a downside of around 15% from current levels.

Even the most optimistic analyst doesn’t expect the shares to move meaningfully above today’s price, while the most bearish forecast suggests downside of roughly 28%.

Foolish takeaway

After a stellar run, investors appear willing to pay almost any price for Wesfarmers’ strengths. Brokers, however, aren’t so convinced.

For long-term shareholders, Wesfarmers shares still look like they’re worth owning. New investors may simply need to decide whether they’re comfortable paying a premium for one of the ASX’s best operators.

The post Wesfarmers shares are closing in on record highs. Buy, hold or sell? appeared first on The Motley Fool Australia.

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• 5 things to watch on the ASX 200 on Thursday

Motley Fool contributor Marc Van Dinther has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Wesfarmers. The Motley Fool Australia has recommended Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The S&P/ASX 200 Index (ASX: XJO) is back in the red on Thursday as investors react to another jump in oil prices.

At the time of writing, the ASX 200 is down 0.53% to 8,738 points.

The move has the benchmark index on track for its third straight decline, with weakness across the big miners and banks weighing on the market.

At the latest check, 113 stocks are lower, 80 are higher, and 7 are unchanged.

Here’s a closer look at today’s fall.

Oil is back on the agenda

Oil prices are giving investors something else to worry about today.

According to Trading Economics, Brent crude rose to around US$78.80 a barrel after fresh US strikes on Iran, while WTI crude was trading near US$74.26 a barrel.

The move is helping parts of the energy sector, but it is not doing much for the broader mood across the ASX 200.

With inflation, rates, and global growth already weighing on the market, higher oil prices have only added to the pressure.

Miners and banks weigh on the market

Most of the damage is coming from the big miners and banks.

BHP Group Ltd (ASX: BHP) shares are down 1.93% to $56.40, while Rio Tinto Ltd (ASX: RIO) has fallen 3.98% to $157.33.

The major banks are also softer.

Commonwealth Bank of Australia (ASX: CBA) shares are down 0.42% to $167.47, National Australia Bank Ltd (ASX: NAB) has slipped 1.21% to $39.11, and ANZ Group Holdings Ltd (ASX: ANZ) is 1.23% lower at $35.43.

Westpac Banking Corp (ASX: WBC) is holding up better, edging 0.06% lower to $36.23.

Energy and defensives offer support

There is still some support around, which is stopping the ASX 200 from falling further.

Woodside Energy Group Ltd (ASX: WDS) shares are up 1.8% to $29.39, while Santos Ltd (ASX: STO) has added 1.67% to $7.625.

CSL Ltd (ASX: CSL) is also doing some work, rising 1.86% to $126.61.

The supermarkets are helping as well. Woolworths Group Ltd (ASX: WOW) shares are up 0.46% to $40.085, while Coles Group Ltd (ASX: COL) has lifted 0.96% to $23.635.

But even with those gains, the ASX 200 is still struggling to get back on the front foot.

Can the ASX 200 recover today?

The ASX 200 still has time to recover, but it needs more help from the usual heavyweights.

Energy stocks and defensives are doing their bit, but the weakness in miners and banks is making it hard for the index to turn positive.

A lot may depend on whether BHP, Rio Tinto, and the major banks can steady into the afternoon session.

If they do, the ASX 200 could claw back some of today’s losses.

The post Is the ASX 200 heading for a third straight fall as oil prices jump? appeared first on The Motley Fool Australia.

More reading

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• 5 things to watch on the ASX 200 on Thursday
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• Why the ASX 200 is sliding towards a 4-week low today

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL. The Motley Fool Australia has recommended BHP Group and CSL. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Australia is in the midst of a new mining boom, largely driven by the green energy transition and the artificial intelligence (AI) build-out.

This is generating significantly higher demand for critical minerals, such as lithium, and batteries to power new infrastructure and EVs.

Lithium prices slumped in 2023-2025 due to an oversupply, but supply/demand finally rebalanced at the start of FY26.  

Lithium went on to top the charts of best-performing commodities in FY26 by a long way.

The lithium spodumene price rose about 280%, and carbonate soared 160% in FY26. 

So, it’s no surprise that ASX 200 lithium shares did well in terms of capital growth last year.

In fact, they shot the lights out.

Here are the top five of FY26.

1. Elevra Lithium Ltd (ASX: ELV)

This ASX 200 lithium share roared 327% higher to $9.60 apiece in FY26.

Elevra has a diversified portfolio of mines and development projects across Québec, North Carolina, Ghana, and Western Australia.

Formed through the merger of Piedmont Lithium and Sayona Mining, Elevra’s flagship is the North American Lithium Project (NAL). 

In 3Q FY26, NAL generated record revenue of US$81 million, up 22% on 2Q FY26.

Year-to-date revenue was US$167 million, up 68% on the prior corresponding period.

Elevra is undertaking an accelerated expansion at NAL to bring additional production online earlier than planned.

2. PLS Group Ltd (ASX: PLS)

Formerly known as Pilbara Minerals, PLS Group shares rocketed 275% to finish FY26 at $5.02. 

PLS Group is the largest lithium miner on the ASX 200 by market capitalisation. 

The company’s flagship is the Pilgangoora Operation, the world’s largest independent hard-rock lithium mine. 

PLS reported record quarterly production of 232.4kt in 3Q FY26, along with an 11% decline in unit operating costs.

The average estimated realised price for its lithium spodumene increased 61% over the quarter.

Management said the result reflected strong execution, improved plant reliability, increased run times, and consistently high lithium recovery.

3. Mineral Resources Ltd (ASX: MIN)

The Mineral Resources share price recovered 188% to finish the year at $62.65.

Value investors returned to Mineral Resources after corporate governance issues and financial concerns plagued the company in FY25. 

Founder Chris Ellison faced board-imposed financial penalties of $8.8 million and loss of remuneration of up to $9.6 million for reputational damage to the company.

The board decided to stop paying dividends in order to improve the balance sheet, and the company delivered its strongest half-year result ever in 1H FY26.

The miner reported record revenue of $3.1 billion and earnings before interest, taxes, depreciation, and amortisation (EBITDA) of $1.2 billion.

Soaring lithium commodity prices and the ramp-up of MinRes’s Onslow iron ore project contributed to the result. 

4. Liontown Ltd (ASX: LTR)

The Liontown share price jumped 197% to $1.58 in FY26.

Liontown owns one of Australia’s newest lithium operations, the Kathleen Valley Project, which only began production in early FY25. 

The company sought to ramp up production in FY26, and achieved a 70% increase in 1H FY26.

This, along with soaring lithium commodity prices, resulted in a doubling of revenue year over year to $207.5 million.

In 3Q FY26, Liontown became cash flow positive and achieved its 1.5Mtpa annualised underground run-rate early.

5. IGO Ltd (ASX: IGO)

This ASX 200 lithium share ascended 77% in FY26 to close out the year at $7.37.

The highlights of FY26 for IGO included a material improvement at the Kwinana Lithium Hydroxide Refinery.

Prroduction increased to 3,047t in 3Q FY26 vs. 2,120t in 2Q FY26, representing 51% of nameplate capacity.

Also in 3Q, nickel production at Nova increased 11% and the mine generated $52 million of free cash flow.

Greenbushes delivered a 75% EBITDA margin in the quarter.

For 3Q FY26, the lithium and nickel producer reported group underlying EBITDA of $119 million, up from $30 million in 2Q FY26.

Net cash increased to $327 million as at 31 March.

The post Top 5 ASX 200 lithium shares of FY26 appeared first on The Motley Fool Australia.

More reading

• Why are PLS shares still falling? Here’s what’s behind the sell-off
• 13 ASX 200 shares that doubled in value in FY26
• Sell alert! Why these experts are calling time on Endeavour and PLS shares
• Buy, hold, sell: BHP, Woodside, PLS Group shares
• Why did ASX 200 lithium stocks like PLS, Liontown and Mineral Resources shares get smashed in June?

Motley Fool contributor Bronwyn Allen 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.