Some of the ASX 200’s highest-quality shares have been hit hard over the past 12 months.

While this is disappointing, for investors with a long-term mindset, large falls in strong businesses can create buying opportunities.

This is especially true when the market becomes focused on short-term concerns while the company’s long-term position remains attractive.

Here are three ASX 200 shares that are down heavily and could be bargain buys for patient investors.

Cochlear Ltd (ASX: COH)

Cochlear has been one of the biggest underperforming shares in the ASX 200 over the past 12 months.

Its shares are down approximately 62% over this period, leaving the hearing implant company well out of favour with investors.

That is a major move for a business with a long record of innovation, global leadership, and life-changing products.

Cochlear’s devices help people with significant hearing loss reconnect with speech, sound, and daily communication. That gives the company a role that goes well beyond consumer electronics or discretionary healthcare.

The business operates in a specialised market where clinical trust, product reliability, surgeon relationships, and long-term patient support all matter.

Those advantages take years to build.

The recent share price weakness reflects disappointment over its recent performance. However, the long-term need for hearing solutions should continue to grow as populations age and access to treatment improves.

If Cochlear can restore confidence in its earnings trajectory, the selloff could prove to be a major opportunity for buy and hold investors.

REA Group Ltd (ASX: REA)

REA has also been sold down heavily.

Its shares are down approximately 40% over the past 12 months amid concerns about higher interest rates and proposed changes to negative gearing.

These issues have weighed on investor sentiment because REA is closely connected to the housing market. If property activity slows, listing volumes and advertising demand can come under pressure.

But the long-term investment case remains compelling.

REA owns realestate.com.au, one of Australia’s most important property platforms. Buyers go there because the listings are there, agents list there because the audience is there, and vendors want access to the largest possible pool of potential buyers.

That loop gives REA a powerful position in the property ecosystem.

Housing markets move through cycles, and policy changes can affect confidence. But Australians remain deeply engaged with property, and digital marketplaces continue to play a central role in how homes are bought and sold.

A 40% fall may have created an opportunity to buy one of the ASX’s best digital businesses at a far more attractive price.

Xero Ltd (ASX: XRO)

Xero has suffered the sharpest fall of the three ASX 200 shares.

The cloud accounting software company’s shares are down approximately 65% over the past 12 months.

The broader tech selloff has hurt sentiment, and investors have also been weighing concerns about artificial intelligence disruption across software markets.

That has created a difficult backdrop for Xero.

However, the company remains deeply embedded in the financial workflows of small businesses, accountants, and bookkeepers.

Its platform helps users manage invoicing, payroll, bank feeds, reporting, compliance, payments, and adviser relationships. Once a business has built its financial processes around Xero, switching can become inconvenient and disruptive.

Artificial intelligence may also become a useful tool inside the platform over time, helping automate tasks and improve the value customers receive.

The share price fall shows how much expectations have reset. But if Xero keeps expanding internationally, adds more services, and uses technology to deepen its platform, the current weakness could prove to be an attractive entry point into one of the ASX’s strongest software businesses.

The post These ASX 200 shares are down 40% to 65% and could be bargain buys appeared first on The Motley Fool Australia.

More reading

• 5 ASX growth shares I want in my portfolio in FY27
• What’s spooking investors about Xero shares?
• What on earth’s going on with Cochlear shares?
• Xero shares just crashed to COVID-era lows. Is this ASX 200 tech stock broken?
• Buy, hold, sell: Charter Hall, Northern Star, Cochlear shares

Motley Fool contributor James Mickleboro has positions in Cochlear, REA Group, and Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Cochlear and Xero. The Motley Fool Australia has positions in and has recommended Xero. The Motley Fool Australia has recommended Cochlear. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The team at Bell Potter have been consistently bullish on ASX materials stock WA1 Resources Ltd (ASX: WA1) this year. 

WA1 listed on the ASX in February 2022. Since then, it has focused on an aggressive drill-out program at West Arunta, specifically targeting the Luni carbonatite structure. 

Niobium is a niche commodity, primarily micro-alloyed into structural steel to improve strength and reduce weight in applications.

In the last 12 months, this ASX materials stock has been relatively flat.

However a key announcement has led to a strong upgrade from the team at Bell Potter who now see this ASX materials stock as one that could double in the next 12 months. 

What happened?

WA1 has completed larger-scale processing tests on ore from its Luni niobium project. 

The tests showed the company can successfully concentrate the niobium into a high-grade product using a relatively simple flotation process and ordinary site water.

For investors, this is a big positive as one of the biggest risks for any mining project is whether the ore can actually be processed economically.

These results show that:

• The processing method appears to work consistently across different parts of the deposit.
• The quality of the concentrate produced is high enough to be commercially attractive.
• The project’s future processing plant design is becoming more certain.

In mining terms, this “de-risks” the project because investors now have more confidence that the ore can be turned into a saleable product.

Standout results

The best area of the deposit (Composite A), which is expected to be mined first, delivered:

• 46% niobium concentrate grade
• 67% recovery rate.

Recovery rate means 67% of the niobium in the ore was successfully captured during processing.

This was better than previous test results and suggests the project could be more profitable than originally expected.

Because recoveries were stronger than expected, Bell Potter increased its assumption for how much niobium WA1 can extract from the ore.

Big upgrade for ASX materials stock

As a result, Bell Potter has upgraded its price target on this ASX materials stock to $27.20 (previously $24.40). 

This is significant because this ASX materials stock currently trades for around $12.50 per share. 

The new target from Bell Potter indicates an upside potential of 129%. 

The testwork confirms a two-stage flotation regime can produce high-quality niobium concentrates with commercially relevant recoveries across the deposit, using raw site water.

The broker has retained its speculative buy recommendation. 

The post Bell Potter tips 129% upside for this ASX materials stock appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Bell 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.

Of those ASX investors who love buying and investing in Vanguard index funds, there are two real choices if an investor wishes to gain broad exposure to the Australian share market. The preferred choice of many is, of course, the Vanguard Australian Shares Index ETF (ASX: VAS).

This exchange-traded fund (ETF) is, by a large margin, the most popular index fund and ETF in Australia, with more than $26 billion currently under management.

VAS offers investors simple, easy access to our most well-known shares by mirroring the S&P/ASX 300 Index (ASX: XKO). As its name implies, this index tracks the largest 300 stocks listed in Australia. That’s everything from Commonwealth Bank of Australia (ASX: CBA), Telstra Group Ltd (ASX: TLS), and Woolworths Group Ltd (ASX: WOW), to JB Hi-Fi Ltd (ASX: JBH), Ampol Ltd (ASX: ALD), and Metcash Ltd (ASX: MTS).

However, there is another Vanguard index fund that addresses one of investors’ chronic concerns about ASX index funds – that they are too heavy on sluggish bank shares and mining stocks.

That Vanguard ETF is the Vanguard MSCI Australian Small Companies Index ETF (ASX: VSO). Instead of buying 300 of the largest stocks listed on the public markets, VSO only holds about 170. These are all taken from the bottom end of the ASX 300, so no CBAs or Telstras here.

Instead, you’ll find the likes of BlueScope Steel Ltd (ASX: BSL), NextDC Ltd (ASX: NXT), and Orica Ltd (ASX: ORI) amongst its largest holdings. VSO is designed to give extra weight to these smaller, and potentially more nimble and mobile stocks, at the expense of the ASX’s largest blue chips.

That all sounds grand. But today, let’s check out the numbers, and see which ASX ETF has actually delivered the best returns for investors.

VSO or VAS: Which ASX index fund comes out on top?

Let’s start with the Vanguard Australian Shares ETF. As of 31 May, this index fund has delivered a 1.38% return year to date. Over the past 12 months, the number is 7.091%. That stretches to 10.94% per annum over the three years to 31 May, 7.92% over five years, and 9.03% over ten.

These returns account for fees and include both capital growth and dividend distribution returns.

Meanwhile, VSO units have gone backwards by 2.6% in 2026 so far. However, over 12 months, investors have enjoyed a 13.27% return. That morphs into 11.42% per annum over the past three years, 7.02% over five years, and 9.33% over ten years.

As you can see, there isn’t a lot of distance between these two Vanguard ETFs. Both VAS and VSO come out ahead over different periods, but an investor who put all of their eggs in either VAS or VSO five or ten years ago would largely come out level.

It seems, going off the historical data at least, it didn’t matter if investors chose one, the other, or both.

The post VAS vs VSO: Do small-cap stocks beat the ASX 300? appeared first on The Motley Fool Australia.

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• New to ASX ETFs? These 4 products could be a good start

Motley Fool contributor Sebastian Bowen has positions in Vanguard Australian Shares Index ETF and Vanguard Msci Australian Small Companies Index ETF. 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 positions in and has recommended Telstra Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.