Author: openjargon

One ASX lithium stock is catching the eye with a very strong gain on Friday.

In early trade, the Delta Lithium Ltd (ASX: DLI) share price is up a whopping 37% to 31.5 cents.

This is despite the rest of the lithium industry looking like a sea of red at the time of writing.

Why is this ASX lithium stock rocketing?

Investors have been scrambling to buy Delta Lithium’s shares today thanks to a golden announcement.

According to the release, the lithium explorer could be sitting atop a very lucrative gold deposit.

This follows Delta Lithium’s recent exploration activities at its 100% owned Mt Ida Project, which is a shovel ready lithium and gold project in the Eastern Goldfields Province of Western Australia.

The release reveals that its recent mineral resource estimate has significantly increased the contained gold at Mt Ida, demonstrating the presence of a large gold system.

Pleasingly, all mineral resources at the Mt Ida Project are located on granted mining leases. This would allow the company to start mining immediately if studies support this outcome.

The upgrade represents an 82% increase in contained gold for the Baldock Deposit to 4.8Mt @ 4.4g/t gold for 674,000 ounces. In addition, the maiden mineral resource estimate for the Golden Vale Prospect is 27,000 ounces @ 1.7g/t Au.

Overall, the ASX lithium stock revealed that the mineral resource estimate for gold at Mt Ida (inferred and indicated) is now 6.6Mt @ 3.5 g/t Au for 752,000 ounces.

As a reminder, the current spot gold price is US$2,338.3 an ounce. This means it has potentially discovered a very valuable deposit.

‘A wonderful result’

The ASX lithium stock’s managing director, James Croser, was very pleased with the news. He said:

This is a wonderful result for Delta shareholders, reaffirming our long-held belief that the gold system at Mt Ida has significant scale and upside. The Baldock is fast becoming one of very few, large high-grade undeveloped gold deposits in WA in excess of 500koz. The commencement of open pit mining has been approved, and the underground approval with the Department is submitted and pending.

We are investigating the best options for Delta shareholders to crystalise value from our gold, which can then be applied to further developing our core lithium business. The efforts of Delta’s Geology team have been tireless and driven toward this success. We have already started follow up gold drilling at Mt Ida to target resource growth beyond 1Moz.

The post Guess which ASX lithium stock is rocketing 37% on a golden announcement appeared first on The Motley Fool Australia.

More reading

• IAG shares jump 7% after cutting a deal with Warren Buffett’s Berkshire
• ANZ shares higher on ‘significant’ $4.9b Suncorp Bank acquisition approval
• Bell Potter names the best ASX real estate shares to buy in FY25
• Do Telstra shares have a strong outlook for FY25?
• Why this ASX ETF is one of the best ways to invest in artificial intelligence (AI)

Motley Fool contributor James Mickleboro 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.

ANZ Group Holdings Ltd (ASX: ANZ) shares are pushing higher on Friday morning.

At the time of writing, the banking giant’s shares are up 0.5% to $28.42.

Why are ANZ shares rising?

The big four bank’s shares are rising on Friday after its proposed acquisition of the Suncorp Group Ltd (ASX: SUN) banking operations took a giant step towards completion.

This morning, ANZ announced that the Federal Treasurer’s has approved the proposed acquisition of Suncorp Bank under the Financial Sector (Shareholdings) Act 1998 (FSSA). This is subject to a number of conditions, which are normal for FSSA approvals for bank acquisitions.

One is that ANZ will maintain its and Suncorp Bank’s regional branch numbers throughout Australia for three years.

There will also be no net job losses in Australia as a direct result of the acquisition for three years. ANZ notes that these conditions are consistent with its plans for integrating Suncorp Bank and its customers.

It must also continue its ongoing best efforts to reach an agreement with Australia Post, on a commercial basis, to offer Bank@Post services to its customers.

Management notes that these conditions are not anticipated to impact the benefits expected to flow from the acquisition. Furthermore, ANZ has worked with Suncorp to agree to contribute towards the impact of additional approval related imposts. This has seen Suncorp Group agree to waive its brand licensing fee and contribute to some additional integration costs.

‘A significant milestone’

ANZ’s CEO, Shayne Elliott, was very pleased with the Federal Treasurer’s approval. He said:

This is a significant milestone in our plans to expand our presence in Queensland and bring the best of ANZ to Suncorp Bank customers. Queensland is thriving. With strong economic growth, high workforce participation and more interstate migration than any other state or territory, we’re excited about the opportunities Queensland presents for ANZ and our customers.

We are another step closer to welcoming Suncorp Bank customers into the ANZ Group. Suncorp Bank customers will continue to receive the same great service, from the same exceptional Suncorp Bank staff. Over time, we’ll make available to them ANZ’s leading technology, giving them access to the very latest in banking services.

Today’s approval follows the decision of the Australian Competition Tribunal to authorise the proposed acquisition on 20 February 2024, and passage of the State Financial Institutions and Metway Merger Amendment Bill in the Queensland Parliament on 14 June 2024.

Completion of the acquisition remains subject to the commencement of the Queensland State Financial Institutions and Metway Merger Amendment Act. If all goes to plan, ANZ expects the acquisition to complete at the end of July.

ANZ shares are up more than 20% over the last 12 months.

The post ANZ shares higher on ‘significant’ $4.9b Suncorp Bank acquisition approval appeared first on The Motley Fool Australia.

More reading

• 4 ASX 200 dividend giants to buy in July
• Which ASX shares to buy if interest rates rise (and which to avoid)
• Here’s when CBA and these ASX 200 bank stocks are paying their dividends
• Beat the ASX with these cash-gushing dividend stocks
• Own ANZ shares? You need to know these important dates

Motley Fool contributor James Mickleboro 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.

Investors that are looking for exposure to the real estate sector through the share market, may want to check out the ASX shares in this article.

That’s because they have been tipped as top buys in FY 2025 by analysts at Bell Potter.

What is the broker saying about ASX real estate shares?

Bell Potter believes that there is “significant value” in the real estate investment trust (REIT) sector right now. It explains:

After bond rates fell materially in November 2023, into EOY CY23, the REIT sector has since recalibrated with negative newsflow (valuation, cap trans wise). While this might be seen as a false start, we do think the REITs sector is presenting significant value from a historic valuation metric perspective with material discounts to NTA (c.20% discount for passive REITs), high dividend yields (6.1% sector WAV) and undemanding PE ratios (14.3x sector WAV).

With that in mind, let’s take a look at three ASX real estate shares that have been named as buys by Bell Potter.

Dexus Convenience Retail REIT (ASX: DXC)

Bell Potter likes the Dexus Convenience Retail REIT. It is a convenience retail/service station REIT with a network of over 100 assets across the country. These are predominantly leased to institutional and strong covenant tenants including Chevron, Viva Energy (ASX: VEA), EG, Mobil and 7-Eleven.

The broker currently has a buy rating and $3.00 price target on its shares. It said:

DXC trades at a circa 34% discount to stated NTA which we think is overly punitive for a sub-sector where there is clear price discovery.

Bell Potter is expecting dividend yields of approximately 7.5% in FY 2024 and FY 2025.

GDI Property Group Ltd (ASX: GDI)

The broker is also a fan of this property company. It has a buy rating and 75 cents price target on its shares. It commented:

We think GDI requires patience, but ultimately see strong value trading at a -49% discount to NTA, with a ‘free’ operating business on the side.

Its analysts are expecting huge dividend yield of 8.8% each year through to FY 2026.

Healthco Healthcare and Wellness REIT (ASX: HCW)

This healthcare and wellness focused property company is a buy according to Bell Potter. It has a $1.50 price target on its shares. It said:

Healthcare real estate is highly fragmented and has a long runway domestically in Australia.

Bell Potter expects this to underpin dividend yields of 7.4% in FY 2024 and 7.7% in FY 2025.

The post Bell Potter names the best ASX real estate shares to buy in FY25 appeared first on The Motley Fool Australia.

More reading

• Coles and these ASX dividend stocks could offer huge returns
• 2 ASX penny stocks that pay dividends
• Analysts name 3 ASX income stocks to buy now
• The best Australian REITs to invest in this month
• 4 ASX income stocks for Aussie investors to buy now

Motley Fool contributor James Mickleboro 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.

The Telstra Group Ltd (ASX: TLS) share price has dropped by 16% over the past year. Some investors may be considering whether this is a good time to invest, so I recommend evaluating the FY25 outlook (and beyond) before making a decision.

Telstra may be one of the more defensive ASX shares. Given how integral having an internet connection is these days, it may be a surprise to some investors that Telstra shares have dropped as much as they have.

The ASX telco share‘s enterprise division has been struggling in recent times, though Telstra recently revealed plans to try to turn this segment around.

Let’s consider how the business may perform in FY25.

FY25 targets

When Telstra announced its initiatives to improve the enterprise segment, it also gave some early FY25 guidance.

It’s expecting to deliver underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of between $8.2 billion and $8.3 billion. For FY25, the business has delivered guidance for underlying EBITDA of between $8.4 billion and $8.7 billion, so there could be growth of at least $100 million next financial year.

The company also reaffirmed its commitment to delivering its T25 compound annual growth rate (CAGR) ambitions for underlying EBITDA, earnings per share (EPS) and return on invested capital (ROIC) growth. However, the telco has said it’s not going to raise prices for subscribers in line with inflation.

Between FY21 to FY25, Telstra aims to grow underlying EBITDA at a CAGR in the mid-single digits and underlying EPS at a high-teen CAGR.

The ASX telco share’s management said it has confidence it can keep growing mobile revenue and EBITDA.

Analyst expectations for Telstra shares

The broker UBS is expecting Telstra to generate $2.05 billion of net profit after tax (NPAT) and pay a dividend per share of 18 cents in FY24.

UBS then expects Telstra to deliver slight growth in FY25 for revenue, earnings before interest and tax (EBIT), NPAT and dividend per share.

In FY25, UBS predicts Telstra could make $2.06 billion of NPAT and pay a dividend per share of 19 cents. That would mean Telstra shares have a grossed-up dividend yield of 7.5%. The broker also suggests the company’s net debt could slightly improve to $12.6 billion.  

UBS currently has a price target of $4.40 on Telstra shares, which implies a possible rise of around 20% in the next 12 months.

The post Do Telstra shares have a strong outlook for FY25? appeared first on The Motley Fool Australia.

More reading

• 4 ASX 200 dividend giants to buy in July
• Here are 3 ASX retirement shares to buy in July
• Buy Telstra and these ASX dividend stocks in July
• ASX expert: Time to buy Telstra shares
• 2 ASX 200 retirement shares to buy in July

Motley Fool contributor Tristan Harrison 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 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.

The ASX-listed exchange-traded fund (ETF) Global X Fang+ ETF (ASX: FANG) could be one of the most effective ways for Aussies to get exposure to the artificial intelligence (AI) investment theme.

Australia’s stock market is known for industries like ASX bank shares and ASX mining shares. For Aussies wanting to get exposure to AI, ASX ETFs can enable us to indirectly invest in global businesses that are listed in other countries.

Which global shares are involved in AI?

There are a growing number of businesses that are developing and offering AI services, while many more are talking about utilising AI in their operations. Not every company is going to do well out of the technology shift, but there are a few businesses that have significant exposure to artificial intelligence growth.

For example, Nvidia offers graphic processing units (GPUs) that are key to the current boom of AI infrastructure. Nvidia’s products are important in places like data centres, while Nvidia’s software is being used by developers to program GPU chips.

Microsoft has introduced a number of AI features across its various products, including Copilot. It has a significant stake in OpenAI, the business behind ChatGPT and its various versions. Azure, Microsoft’s cloud computing platform, is being used by clients to create AI applications.

Alphabet has its own AI offering called Gemini after changing its name from Bard earlier this year. The self-driving robotaxi service Waymo, owned by Alphabet, was recently expanded to everyone in San Francisco and Phoenix.

Apple recently announced its devices would include AI.

Broadcom has a number of hardware items needed for AI, including networking chips, GPUs and processors.

Why the FANG ETF can provide strong exposure to AI

The FANG ETF only invests in ten different US stocks, which are some of America’s strongest and technologically-focused companies. It owns a stake in some of the companies I just mentioned.

Each of the positions has a weighting of around 10% within the ASX ETF:

• Alphabet (10.7% of the portfolio)
• Meta Platforms (10.4%)
• Amazon (10.3%)
• Tesla (10.3%)
• Microsoft (10.25%)
• Netflix (10%)
• Snowflake (9.9%)
• Apple (9.9%)
• Nvidia (9.4%)
• Broadcom (8.9%)

While AI shares aren’t the only stocks worth investigating, this is certainly an area that is generating significant revenue growth and attracting investor attention.

The ASX ETF has a reasonable management fee of 0.35%, which isn’t bad considering the high level of exposure to these tech stocks we can get.

Past performance is not a reliable indicator of future performance and certainly not a guarantee. The FANG ETF has delivered an average annual return of 21% over the past three years. If AI keeps generating revenue growth for these companies, it’s possible they could keep performing as long as their valuations don’t become overstretched.

The post Why this ASX ETF is one of the best ways to invest in artificial intelligence (AI) appeared first on The Motley Fool Australia.

More reading

• 3 things about the Global X FANG+ ETF (FANG) every smart investor knows

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Tristan Harrison 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 Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Netflix, Nvidia, Snowflake, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has recommended Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Netflix, and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

There are a growing number of exchange-traded funds (ETFs) to choose from on the Australian share market.

This means that whether you are a growth investor or an income-focused investor, there is likely to be an ETF out there for you.

With that in mind, let’s now take a look at three ASX ETFs that could be top options for income investors in July. They are as follows:

BetaShares S&P 500 Yield Maximiser (ASX: UMAX)

The BetaShares S&P 500 Yield Maximiser could be an ASX ETF to buy for passive income.

This fund has been created to give investors access to the top 500 companies listed on Wall Street. This includes many of the largest companies in the world such as Apple, Exxon Mobil, Johnson & Johnson, and Walmart.

And while the S&P 500 index itself only has a very modest average dividend yield, this ETF’s actively managed covered call strategy means it has been able to pay out significantly more.

For example, its units currently trade with a trailing 4.7% distribution yield.

Vanguard Australian Shares High Yield ETF (ASX: VHY)

A more traditional option for income investors to look at is the Vanguard Australian Shares High Yield ETF.

This popular ETF gathers together a group of ASX dividend shares that brokers are forecasting to provide big dividend yields. Importantly, it does this with diversity in mind and doesn’t just load up on banks and miners. Vanguard limits how much it invests in any particular industry or company.

Among its ~70 holdings are dividend payers such as BHP Group Ltd (ASX: BHP), Coles Group Ltd (ASX: COL), Commonwealth Bank of Australia (ASX: CBA), Transurban Group (ASX: TCL), and Wesfarmers Ltd (ASX: WES).

The Vanguard Australian Shares High Yield ETF currently trades with a dividend yield of 4.9%.

Vanguard Australian Shares Index ETF (ASX: VAS)

A third ASX ETF that could be a good source of passive income is the Vanguard Australian Shares Index ETF.

This ETF has been designed to track the local ASX 300 index. This means that you will be owning a slice of Australia’s leading 300 listed companies.

And while not all these companies are dividend payers, there are plenty in the fund that are. Among this diverse group of shares are companies such as Lovisa Holdings Ltd (ASX: LOV), Macquarie Group Ltd (ASX: MQG), and Woodside Energy Group Ltd (ASX: WDS).

At present, this ETF trades with an attractive dividend yield of 3.7%.

The post Buy these ASX ETFs in July for passive income appeared first on The Motley Fool Australia.

More reading

• Is the FY25 outlook compelling for the Vanguard Australian Shares Index ETF (VAS)?
• 3 top ASX ETFs to buy in July
• What kind of return could I expect by investing $200 monthly into ASX shares?
• What is the average return of the Vanguard Australian Shares Index ETF (VAS)?
• Top ASX passive income shares to buy before June 30

Motley Fool contributor James Mickleboro has positions in Lovisa and Woodside Energy Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Apple, Lovisa, Macquarie Group, Transurban Group, Walmart, and Wesfarmers. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Johnson & Johnson. The Motley Fool Australia has positions in and has recommended BetaShares S&P 500 Yield Maximiser Fund, Coles Group, Macquarie Group, and Wesfarmers. The Motley Fool Australia has recommended Apple, Lovisa, and Vanguard Australian Shares High Yield ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Coles Group Ltd (ASX: COL) shares are a popular option for investors.

Unfortunately, though, the supermarket giant hasn’t been a great investment over the last 12 months.

During this time, the Coles share price has lost approximately 7% of its value.

This compares unfavourably to an 8% gain by the ASX 200 index over the same period.

But could things be different over the next 12 months? Let’s see what a $10,000 investment in the company’s shares could become.

$10,000 invested in Coles shares

With the Coles share price currently fetching $17.20, if you were to invest $10,000 (and a further $10.40), you would end up owning 582 units.

According to a recent note out of Morgans, its analysts think these units could be worth a lot more than you paid for them.

The broker currently has an add rating and $18.95 price target on Coles’ shares, which implies potential upside of 10.2% from current levels.

This means that if your shares were to rise to this level, they would have a market value of $11,028.90.

Commenting on its bullish view on the stock, the broker said:

In our view, the ongoing scrutiny on the supermarkets has affected short term sentiment in the sector, which we believe creates a good buying opportunity in COL. While Liquor sales remain soft, we expect the core Supermarkets division (~92% of earnings) to continue to be supported by further improvement in product availability, reduction in total loss, greater in-home consumption due to cost-of-living pressures, and population growth.

Don’t forget the dividends

The supermarket giant shares a decent portion of its profits each with its shareholders in the form of dividends. Morgans expects this trend to continue for the foreseeable future.

The broker is forecasting fully franked dividends of 66 cents per share in FY 2024 and then 69 cents per share in FY 2025. Based on its current share price, this will mean dividend yields of 3.8% and 4%, respectively, for investors.

If you assume this means a final dividend of 30 cents per share for FY 2024 and an interim dividend of 38 cents per share for FY 2025, this will lead to total dividends of 68 cents per share over the next 12 months.

This means that your 582 Coles shares will pay out fully franked dividends of $395.76 if Morgans’ estimates prove accurate.

Combined with its capital gains, this boosts the value of your investment to $11,424.66, which represents a total return of approximately 14.1%.

The post How much could $10,000 invested in Coles shares be worth in a year? appeared first on The Motley Fool Australia.

More reading

• Here are 3 ASX retirement shares to buy in July
• Coles and these ASX dividend stocks could offer huge returns
• For a shot at $1,320 a year in passive income, buy 2,000 shares of this ASX stock
• Can Coles shares outperform the ASX 200 Index from here?
• 4 ASX income stocks for Aussie investors to buy now

Motley Fool contributor James Mickleboro 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 positions in and has recommended Coles Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

If you’re wanting to strengthen your income portfolio in July with some new additions, then it could be worth looking at the ASX 200 dividend giants listed below that brokers rate as buys.

Here’s what you need to know about them:

BHP Group Ltd (ASX: BHP)

If you are not opposed to investing in the mining sector, then BHP could be worth considering.

That’s the view of analysts at Goldman Sachs, which think the Big Australian’s shares are in the buy zone right now.

They are forecasting fully franked dividends of approximately ~$2.14 per share in FY 2024 and then ~$1.90 per share in FY 2025. Based on the current BHP share price of $43.15, this equates to dividend yields of 5% and 4.4%, respectively.

Goldman has a buy rating and $49.00 price target on them.

Suncorp Group Ltd (ASX: SUN)

Goldman Sachs also thinks that insurance giant Suncorp could be a top option for income investors. It has a buy rating and $17.54 price target on the insurance giant’s shares.

The broker highlights that it is “favourably disposed to Suncorp, noting in large part the tailwinds that exist in the general insurance market.”

Goldman expects this to underpin fully franked dividends per share of 78 cents in FY 2024 and then 83 cents in FY 2025. Based on the Suncorp share price of $16.80, this will mean yields of 4.6% and 4.95%, respectively.

Telstra Group Ltd (ASX: TLS)

A third ASX 200 dividend giant that Goldman Sachs is positive on is telco giant Telstra. The broker currently has a buy and $4.25 price target on its shares.

Its analysts like the company’s low risk earnings and dividend growth over the coming years.

They are forecasting fully franked dividends of 18 cents per share in FY 2024 and then 18.5 cents per share in FY 2025. Based on the current Telstra share price of $3.61, this equates to fully franked yields of 5% and 5.1%, respectively.

Woodside Energy Group Ltd (ASX: WDS)

Finally, over at Morgans, its analysts are tipping energy giant Woodside as an ASX 200 dividend giant to buy. The broker has an add rating and $36.00 price target on its shares.

As for dividends, Morgans is forecasting fully franked dividends of $1.25 per share in FY 2024 and $1.57 per share in FY 2025. Based on the current Woodside share price of $28.25, this equates to 4.4% and 5.5% dividend yields, respectively.

The post 4 ASX 200 dividend giants to buy in July appeared first on The Motley Fool Australia.

More reading

• Here are 3 ASX retirement shares to buy in July
• Coles and these ASX dividend stocks could offer huge returns
• Buy Telstra and these ASX dividend stocks in July
• 5 things to watch on the ASX 200 on Thursday
• What is the outlook for Woodside shares in FY25?

Motley Fool contributor James Mickleboro has positions in Woodside Energy Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. 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.

Now could be the time to jump on Lynas Rare Earths Ltd (ASX: LYC) shares according to one leading broker.

That’s because it is tipping the ASX 200 mining stock to rally significantly higher from current levels over the next 12 months.

What is the broker saying about this ASX 200 mining stock?

Bell Potter was pleased to see that Lynas is expanding its product range.

As covered here, the Lynas Malaysia business is targeting the first production of two separated heavy rare earths (HRE) products in 2025. A new process will produce separated dysprosium (Dy) and terbium (Tb) at Lynas Malaysia for the first time and will complement Lynas’ existing light rare earths product range.

Dy and Tb are both essential to the high-performance rare earth permanent magnets used in electric vehicles and high-tech applications such as micro-capacitors which are essential to all electronic devices.

Commenting on the news, the broker said:

The additional capacity is anticipated to come online in the middle of CY25 and cost ~$25m to achieve, which is within the previously announced LAMP upgrade budget. LYC currently produces a SEG (samarium, europium, gadolinium) composite, which is sold into China for separation. This additional product suite should provide a value uplift to pricing as LYC captures greater margin from the higher value Dy+Tb products.

Time to buy?

Bell Potter believes that now could be a great time to invest in the ASX 200 mining stock.

Its analysts have responded to the update by retaining their buy rating and lifting their price target to $7.80 (from $7.55).

Based on the current Lynas share price of $5.95, this implies potential upside of 31% for investors over the next 12 months.

To put that into context, a $10,000 investment would be worth approximately $13,100 if Bell Potter is on the money with its recommendation.

While the broker has reduced its earnings estimates this year to reflect weaker than expected rare earth prices, it has boosted its outer year estimates. In addition, it believes the risks are now to the upside for rare earths. The broker concludes:

We have updated our model ahead of the quarterly result, and our target price lifts slightly to $7.80/sh (previously $7.55) as our EV/EBITDA valuation increases with the rolling forward of earnings. EPS estimates reduce by 17% in FY24, 2% in FY25 and 1% in FY26. With risks mounting to the upside for rare earths we retain our Buy outlook.

The post Guess which top ASX 200 mining stock has 30%+ upside appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Friday
• Lynas shares outperform on ‘exciting development’
• Down 40% in under 3 years, is the Lynas share price due a bounce?
• Buy Rio Tinto and these 4 ASX mining stocks in June

Motley Fool contributor James Mickleboro 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.