As Aussies submit their end-of-financial-year (EOFY) tax returns, some may be looking to invest their returns to generate returns.

EOFY is often when investors revisit existing positions and look for opportunities the market may have overlooked.

A new report from VanEck has highlighted a sector that is largely being overlooked – international small-caps.

International small caps remain attractively valued despite improving earnings and manufacturing activity, making them an overlooked EOFY investing opportunity.

Trading below historical averages

According to the report, despite signs that economic conditions are proving more resilient than expected, international small caps remain one of the few areas of global equity markets trading below historical valuation averages.

The recent Federal Reserve meeting reinforced this view, suggesting the backdrop may not be as weak as many investors had anticipated.

For investors reviewing portfolios ahead of EOFY, that disconnect between improving fundamentals and cautious valuations may be worth paying attention to.

Economy remains resilient

VanEck argues that while the US Federal Reserve’s more hawkish stance has led markets to expect interest rates to remain higher for longer, the broader economic backdrop is becoming increasingly supportive for international small-cap companies.

A resilient labour market, improving hiring intentions, and a return to expansion in US manufacturing activity suggest a reflationary environment that has historically supported stronger earnings growth and outperformance among quality small caps.

As economic activity and corporate earnings improve, VanEck believes current small-cap valuations may present an attractive investment opportunity.

While the macro environment may be supportive, the most compelling reason for investing in this space may lie in where valuations are at.

International small caps are one of the few major equity asset classes still trading below their long-term average valuation levels.

Earnings beginning to respond

According to VanEck, one of the more encouraging signs for small-cap investors is that earnings expectations are starting to improve.

Forward earnings forecasts for global small companies have begun accelerating after an extended period of weakness.

Historically, this has been an important signal, with improvements in earnings expectations often accompanied by stronger small-cap performance.

How to gain exposure to quality small-caps

For those looking to turn their tax return into a growth opportunity, one ASX ETF to consider is the VanEck Msci International Small Companies Quality ETF (ASX: QSML).

It provides exposure to 150 of the world’s highest quality international small companies, selected using a disciplined framework focused on high return on equity, earnings stability and low financial leverage.

This approach seeks to capture the growth potential of small companies while maintaining a focus on businesses with stronger fundamentals.

 

 

The post Looking to target high upside shares with your tax return? Here’s where VanEck sees opportunity 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.

ASX 200 healthcare shares are up 23% in just over a month as value investors plough funds into beaten-down stocks like CSL Ltd (ASX: CSL) and Pro Medicus Ltd (ASX: PME).

The healthcare sector appeared to turn on 3 June when the S&P/ASX 200 Health Care Index (ASX: XHJ) hit a 9-year low following a 39% fall over 12 months. 

Many headwinds were at play for the healthcare sector in FY26.

They included the weaker US dollar; cost of living pressures; higher shipping and labour costs, and US regulatory uncertainty for the biotechs. 

Several major players in the healthcare sector lost significant market valuation in FY26.

They included Cochlear Ltd (ASX: COH) shares, down 59%, and CSL shares, down 52%

Resmed CDI (ASX: RMD) shares also fell 27%, and the Sonic Healthcare Ltd (ASX: SHL) share price dropped 22%. 

However, things seemed to have changed on 3 June.

ASX 200 healthcare shares have ripped 23% since then in a rapid rebound that has caught many investors by surprise.

Here are two ASX 200 healthcare shares that Bell Potter has speculative buy ratings on for FY27. 

4DMedical Ltd (ASX: 4DX)

This 4DMedical share price was in a league of its own in FY26, and the best performer of the entire ASX 200 for capital growth.

The ASX 200 healthcare share skyrocketed 1,786% in FY26 to close out the year at $4.53. Since the healthcare sector turned on 3 June, 4DMedical shares have gained 15%. 

The respiratory imaging technology company gained US Food and Drug Administration (FDA) approval for its CT:VQ product in September 2025. 

CT:VQ is the world’s first non‑contrast post‑processing technology that transforms routine chest CTs into quantitative, lobar ventilation (V) and perfusion (Q) maps.

Since approval, the technology has been deployed at several renowned academic hospitals and clinics.

Bell Potter has a speculative buy rating on 4DMedical shares.

Last week, the broker raised its 12-month target price from $4.50 to $6. This suggests more than 35% upside ahead. 

In a note, the broker discussed 4DMedical’s launch of CLEAR (Contrast-free Lung Evaluation for Acute Risk in pulmonary embolism (P/E)).

CLEAR is a clinical evidence program designed to fast-track CT:VQ into the US$2.5 billion acute PE market in the US.

Pulmonary embolism is a major acute cardiovascular condition.

The broker said:

The CLEAR study is essential to accelerate adoption of CTVQ in front line emergency departments and for inpatient use.

The broker added:

4D Medical is not required to seek further FDA approval or a label expansion to the current 510K approval, however, the clinical data from the CLEAR study will provide the necessary evidence to further support broad adoption for diagnosis of PE.

Mesoblast Ltd (ASX: MSB) 

The Mesoblast share price rose by a very respectable 18% in FY26 to finish at $1.96 on 30 June. 

Bell Potter reiterated its speculative buy rating last week with an unchanged target of $4.45. 

This implies the Mesoblast share price could more than double over the next 12 months. 

The broker said: 

The key overhang on the stock remains clinical trial risk with three massive valuation events over the next 18 months being adult GvHD, back pain and the BLA approval for the first indication in HF.

None of these are priced in.

Looking ahead, the broker said:

The recent clinical trial fail by Cynata and its MSC in adult GvHD highlights yet again the risks involved in drug development.

MSB will shortly enrol the first of 180 patients in its randomised, controlled, double blind label expansion study for Ryoncil, also in adult GvHD, albeit with risk of failure mitigated by numerous factors.

These factors include a tried and tested potency assay, more aggressive dose (up to 300% higher than the Cynata product) and a 2nd line patient population that has progressed following steroid therapy.

The post 2 ASX 200 healthcare shares to buy after sector rebounds 23% in a month appeared first on The Motley Fool Australia.

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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 positions in and has recommended CSL and Cochlear. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Pro Medicus. The Motley Fool Australia has recommended CSL, Cochlear, Pro Medicus, and Sonic Healthcare. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Woolworths Group Ltd (ASX: WOW) shares have enjoyed a strong year of outperformance in 2026.

On Monday afternoon, shares in the S&P/ASX 200 Index (ASX: XJO) supermarket giant were swapping hands for $39.16 apiece. That sees the share price up an impressive 33.1% year to date, smashing the 1.1% gains delivered by the benchmark index over this same time.

Atop those capital gains, Woolies stock is also popular with passive income investors for the company’s fully franked dividend payouts.

If you owned Woolworths shares at market close on 24 February, you would have received the fully franked 45 cents per share interim dividend on 16 April. (The stock traded ex-dividend on 25 February.)

But with the ASX 200 stock having surged since plumbing multi-year closing lows in October, is it still a good buy for passive income today?

Should I buy Woolworths shares for passive income?

Shaw and Partners’ James Bills recently ran his slide rule over Woolies stock (courtesy of The Bull). And he expressed concerns over rising costs and competition in the sector.

“Woolworths is facing increasing competitive pressure in the supermarket sector, along with possible margin compression driven by higher operating and supply chain costs,” he said.

“While the share price has made a notable recovery since October 2025, the outlook is challenging given increasing cost of living pressures among price sensitive shoppers,” Bills added.

And following on the strong share price gains, Bills didn’t sound particularly enthusiastic about the stock’s passive income status, with Woolies now trading on a 2.3% fully franked trailing dividend yield.

Summarising his sell recommendation on Woolworths shares, he concluded, “With a relatively modest dividend yield and limited short-term catalysts, it may be prudent to reduce exposure and redeploy capital into opportunities with stronger growth prospects.”

And he offered another ASX passive income share investors may wish to consider instead.

This ASX passive income share has a 6.2% dividend yield

While recommending selling Woolworths shares, Bills issued a buy recommendation on listed investment company (LIC) Hearts and Minds Investments Ltd (ASX: HM1).

“HM1 offers investors access to a concentrated portfolio of high conviction global equity ideas sourced from leading fund managers across the world,” he said.

With the LIC not charging investment fees and instead donating to Australian medical research organisations, Bills added, “The unique structure, combined with its philanthropic component, has attracted some of the industry’s top investors, enhancing the quality of stock selection.”

On the passive income front, he said, “The portfolio is tilted towards innovative, growth-oriented companies with long-term upside potential. It also pays a fully franked dividend.”

At Monday’s intraday share price of $3.01, Hearts and Minds shares trade on a 6.2% fully franked trailing dividend yield.

Summarising his buy recommendation on the ASX dividend share, Bills concluded:

HM1 was recently trading at a discount to net tangible assets. In our view, the company provides an appealing entry point for investors seeking exposure to global growth themes with strong management backing.

The post Up 33%, are Woolworths shares still a good buy for passive income? appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben 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.