Author: openjargon

Global demand for critical minerals has increased in recent years due to electric vehicles (EVs), renewable energy, defence technology etc.

It’s hard to argue the relevance of this sector for investors. 

However, the challenge has been to time the market based on the changing landscape of supply, demand, and global geopolitics.

A new report from Betashares has outlined the importance of critical minerals in the age of AI and tariffs.

What are critical minerals?

According to the Australian Government, a critical mineral is a metallic or non-metallic element that has two characteristics:

• It is essential for the functioning of our modern technologies, economies, or national security
• There is a risk that its supply chains could be disrupted

Critical minerals are used in the manufacturing of advanced technologies like:

• Mobile phones
• Computers
• Fibre-optic cables
• Semi-conductors
• Banknotes
• Defence, aerospace, and medical applications

Many critical minerals are also used in low-emission technologies such as electric vehicles, wind turbines, solar panels, and rechargeable batteries. 

Common critical minerals include: 

• Lithium: batteries for electric vehicles and energy storage
• Rare earths elements (e.g. neodymium, praseodymium, dysprosium): EV motors, wind turbines, defence systems
• Nickel: high-energy-density batteries and stainless steel
• Cobalt: battery cathodes and aerospace alloys
• Graphite: battery anodes and industrial applications
• Copper: electrification, renewable energy, and grid infrastructure

Where do investors fit into this equation?

Investors may choose to target critical minerals because demand is structurally rising from emerging themes like electric vehicles, renewable energy, defence, and advanced manufacturing.

Demand gives these commodities strategic value, policy support, and the potential for outsized returns when supply tightens.

According to Betashares, the convergence of AI expansion and the green transition may produce a historic ‘supercycle’ in critical minerals, reshaping industries worldwide and testing supply chains already stressed by renewable energy and electric vehicle (EV) growth.

Vinnay Cchoda, Manager – Responsible Investments at Betashares, Ex Ellerston Capital and Venture Insights said: 

For investors, the structural demand story remains compelling. But the means of capturing that value has shifted. The path to monetising this megatrend now runs through policy, geopolitics, supply chain diversification and industrial strategy as much as through geology.

What’s perhaps even more prudent for investors is grasping the current Australian repositioning from a raw-materials exporter to a strategic partner.

By using public finance, policy support, and alliances – particularly with the US – Australia is positioning to build processing, refining, and downstream manufacturing capability in critical minerals. 

How to gain exposure

Like many thematic classes, investors have plenty of individual companies that will provide exposure to critical minerals. 

Some of the most recognisable ASX-listed companies include: 

• PLS Ltd (ASX: PLS) – lithium and battery minerals producer
• IGO Ltd (ASX: IGO) – diversified battery metals miner with lithium and nickel exposure
• Liontown Resources Ltd (ASX: LTR) — lithium exploration and development company

Another option is to invest in a basket of these companies using an ASX ETF.

Two options to consider for ASX ETFs featuring critical minerals companies are: 

• Betashares Energy Transition Metals ETF (ASX: XMET) – provides exposure to global producers of copper, lithium, nickel, cobalt, graphite, manganese, silver, and rare earths elements.
• Global X Green Metal Miners ETF (ASX: GMTL) – provides exposure to global companies that produce critical metals for clean energy infrastructure and technologies, including lithium, copper, nickel, and cobalt.

The post The growing case for critical minerals – Expert appeared first on The Motley Fool Australia.

More reading

• Are ASX lithium shares running out of steam?
• Liontown shares: After a year of outperformance, is it still a buy?
• Here are the top 10 ASX 200 shares today
• Top brokers name 3 ASX shares to buy next week
• Buy, hold, sell: Life360, Liontown, and Mineral Resources shares

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.

The Xero Ltd (ASX: XRO) share price is in focus today as the company showcases its progress in global AI and US payments, with over two million subscribers now using its AI features and key advances following the Melio integration.

What did Xero report?

• Over two million Xero subscribers now benefitting from AI features, with 300,000 using new GenAI tools.
• Melio’s US payments functionality successfully integrated, strengthening Xero’s presence stateside.
• Xero reiterates FY26 guidance: operating expenses expected at around 70.5% of revenue (including Melio).
• Melio expected to reach Adjusted-EBITDA breakeven in H2 FY28 (on a run-rate basis).
• More than four million customers now using Xero’s platform globally.

What else do investors need to know?

Xero is focusing squarely on driving the adoption and value of AI features in its products, aiming to make small business accounting smarter and easier. Its AI strategy rests on four main goals: helping customers get assistance quickly, saving them time, supporting smarter business decisions, and unlocking new growth.

In the US, the combination with Melio is already delivering benefits, with unified teams and improved payments integration enabling Xero to target higher revenue per customer and stronger unit economics. Xero has also started reporting more detailed US business metrics, covering payment volumes and customer profitability.

What did Xero management say?

CEO Sukhinder Singh Cassidy commented:

We are deeply focused on capturing the global AI and US accounting plus payments TAM. Xero is well positioned to shepherd SMBs into the AI era and take advantage of this technology. We are already a trusted system of record and are now orchestrating multiple agents to evolve into the key system of action and decision making for our customers. Combined with our deep domain knowledge, unique data platform and go-to-market strengths, we have a clear AI strategy that supports our long-term growth opportunity.

What’s next for Xero?

Looking ahead, Xero plans to accelerate its AI rollout, deepen product adoption, and begin monetising new AI-powered features during FY27. The company will also move to an Adjusted-EBITDA framework for forward guidance, aiming to give investors a clearer picture of ongoing profitability.

Xero’s FY28 goal is ambitious—more than doubling FY25 group revenue and delivering Rule of 40 outcomes at group level, supported by US growth and efficiencies from the Melio acquisition.

Xero share price snapshot

Over the past 12 months, Xero shares have declined 49%,  trailing the S&P/ASX 200 Index (ASX: XJO) which has risen 5% over the same period.

View Original Announcement

The post Xero highlights AI progress and Melio momentum in US market update appeared first on The Motley Fool Australia.

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Motley Fool contributor Laura Stewart 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 Xero. The Motley Fool Australia has positions in and has recommended Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial summary of the company announcement. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.

If you’re trying to beat the S&P/ASX 200 Index (ASX: XJO), it helps to be honest about the playing field.

Australia’s largest companies like Commonwealth Bank of Australia (ASX: CBA) and BHP (ASX: BHP) are heavily researched, widely owned, and constantly scrutinised by analysts and institutions. By the time an opportunity becomes obvious in the top 200, it is often already reflected in the share price.

That doesn’t mean outperformance is impossible. It just means investors looking for stronger returns may need to broaden their search. For many, that search leads to ASX small-caps.

Why small caps can offer more opportunity

The ASX small-cap universe is far larger and more diverse than the headline indices suggest. It includes emerging leaders, niche operators, turnaround stories, and businesses still flying under the radar.

This part of the market is also less efficiently priced. Many small companies are followed by few analysts, and institutional ownership is often limited. As a result, share prices can lag behind fundamentals — creating potential opportunities for patient investors.

Small-caps also tend to respond more dramatically to changes in earnings expectations, sentiment, or economic conditions. While that volatility can be unsettling, it is also what creates the possibility of outsized gains.

Rotation can leave quality businesses behind

Markets move in cycles. Capital rotates between sectors, styles, and company sizes as conditions evolve.

When investors crowd into popular themes, other areas of the market can be left behind. ASX small-caps often feel this effect more acutely, with entire segments sold down regardless of individual company performance.

At times, this can result in high-quality businesses trading at prices that reflect pessimism rather than reality. For investors willing to look past short-term noise, rotation can open the door to opportunities that are harder to find in larger, more stable stocks.

Depressed valuations can support future returns

After several years of lagging large caps, parts of the small-cap market have been trading on noticeably lower valuations.

That does not guarantee a rebound. Markets can stay out of favour longer than expected. Still, when expectations are already low, companies often need less “good news” to surprise on the upside.

If earnings stabilise or improve, valuations can recover alongside profits. Over time, that combination has the potential to support stronger returns than those available in more fully priced parts of the market.

Small companies can change faster

Large companies can grow, but their size often limits how quickly they can transform.

Small-caps, by contrast, can materially change their trajectory in a short period. That might involve reaching profitability, expanding into new markets, securing a major contract, or strengthening the balance sheet.

These inflection points tend to have a greater impact on smaller businesses, which is why returns across the small cap universe are far more dispersed. Some companies struggle. Others go on to deliver substantial gains as their prospects improve.

M&A activity can act as a tailwind

Another factor supporting interest in ASX small caps is mergers and acquisitions.

When organic growth is hard to find, larger companies often look to acquisitions to expand earnings. Smaller, well-run businesses can become attractive targets — particularly when valuations are reasonable and growth elsewhere is scarce. Just look at some of 2025’s small cap takeover winners like RPM Global (ASX: RUL).

Foolish takeaway

ASX small-caps are not without risk.

They can be more volatile, less liquid, and more sensitive to economic shocks than large caps. That is the price investors pay for the potential upside.

For many, the question isn’t whether small-caps are better than large-caps. It’s whether small-caps can play a role in a diversified portfolio — particularly for investors seeking opportunities beyond the most crowded parts of the market.

For investors willing to think long term and accept volatility, ASX small-caps could be where the next wave of returns comes from.

The post ASX small-caps could be where the next wave of returns comes from appeared first on The Motley Fool Australia.

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Motley Fool contributor Leigh Gant 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 RPMGlobal. The Motley Fool Australia has recommended BHP Group and RPMGlobal. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

4DMedical Ltd (ASX: 4DX) shares have been among the best performers on the Australian share market over the past 12 months.

Since this time last year, this ASX tech stock has risen just over 500%.

To put that into context, a $2,500 investment a year ago would now be worth $15,000.

Is it too late to invest? Bell Potter doesn’t believe it is and is recommending the health imaging platform provider to clients with a high tolerance for risk.

What is the broker saying about this ASX tech stock?

Following a capital raising last month, Bell Potter believes 4DMedical is “recapitalised and set to conquer.” Commenting on the cash injection, the broker said:

The removal of any perceived over-hang on the stock related to its funding requirement has been a material driver of renewed investor interest in 4DX. The $150m cap raise in mid January 2026 has helped position the company for a sustained period of business development and revenue growth over the next two to five years.

4DX has never been better positioned to make major inroads into the US market by virtue of its re-capitalised balance sheet, 5 years of business development experience, the introduction of its ground-breaking CT:VQ exam along with an extensive list of new business opportunities arising from the recent RSNA conference – all with interest in acquiring CT:VQ. There are now 430 sites globally with access to the 4DX technology producing in excess of 300K scans annually.

Is it too late to invest?

Bell Potter believes there’s still potential for further big returns in 2026.

According to the note, the broker has reaffirmed its speculative buy rating with an improved price target of $4.50 (from $2.50).

Based on its current share price of $3.21, this implies potential upside of 40% for investors over the next 12 months.

Commenting on its bullish view of this ASX tech stock, the broker concludes:

4DX is now transitioning from an emerging technology provider to a full scale commercial enterprise. We expect this will manifest in revenue growth over the next two to five years as clinicians harness the full benefit of the product portfolio, particularly in areas which include surgery planning, monitoring of patient response to therapy and a host of other pulmonary conditions for which conventional imaging is sub-optimal. Our valuation is raised to $4.50 and we maintain our Buy (Speculative) rating. Catalysts include further client announcements for CT:VQ.

The post Why this incredible ASX tech stock could be ‘set to conquer’ appeared first on The Motley Fool Australia.

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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.

ASX small-caps are often viewed as higher risk investments – and rightly so. 

These stocks often come with increased volatility as many of these companies are pre-profit, awaiting private or government funding, or still developing a product. 

These factors can increase the ups and downs of their stock price. 

However it’s also true that some small-cap companies will grow exponentially and become blue-chip stocks down the track. 

So if you are looking for ASX small-caps to add to your watch list this February, here are two with exciting upside thanks to flagship products.

Medical Developments International Ltd (ASX: MVP)

Medical Developments International is a specialist healthcare company with two key operating segments in analgesia and respiratory devices. 

The flagship product, Penthrox (‘Green Whistle’), is a self-administered, rapid acting non-opioid analgesic which has been used primarily in the pre-hospital care and emergency setting. 

It is currently used in Australia, Asia and Europe which is an important region for further growth (UK / Ireland, France, Nordic regions and rest of Europe). 

In respiratory devices the core product is the Space Chamber which optimises administration of inhalers in asthma and COPD.

Last week the company released its quarterly activities report. 

Highlights from the report included: 

• MVP reported positive operating cash flow (OCF) of $1.1m ($1.9m PcP) and $0.3m for 1H26 ($0.8m PcP)
• Cash receipts in 2Q26 were $10.5m, up 5% on the PcP
• Cash increased to $16.9, up $0.8m on 1Q26.

In a new report from Bell Potter, the broker said Penthrox continues to be the key driver for the company, with 1H26 volume growth of 26% in Australian hospitals, and 10% in the European market. 

The broker has a price target of $0.84 on this ASX small-cap. 

This indicates an upside of approximately 78%.

Adveritas Ltd (ASX: AV1) 

Adveritas is another exciting small-cap stock to watch this month. 

The company develops software solutions designed to assist with digital advertising. 

It also owns TrafficGuard, which focuses on fraud prevention and campaign optimisation.

Late last month, it released its quarterly update, which included annualised recurring revenue (ARR) ahead of expectations.

Analysis from Bell Potter pointed out that ARR grew $2.1m in Q2 which was similar to the $1.7m in Q1 and $2.6m in Q4 of FY25. 

This marks three consecutive quarters of approximately $2m growth.

This prompted a speculative buy rating from Bell Potter along with a price target of $0.22. 

From yesterday’s closing price of $0.12 per share, this indicates an upside of approximately 83%. 

The post 2 ASX small-caps with big upside to target in February 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 positions in and has recommended Medical Developments International. 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.

Buying ASX shares when they’re trading at an undervalued price can lead to market-beating performance.

If we’re going to beat the market, we need to own shares in a different way to the market average. That doesn’t necessarily need to be through owning businesses that are trading cheaply, it can be done by buying high-quality companies for the long-term.

I’m going to talk about two ASX shares that I think are trading at very cheap price/earnings (P/E) ratios.

Adairs Ltd (ASX: ADH)

Adairs sells homewares and furniture through three different businesses – Adairs, Mocka and Focus on Furniture.

I wouldn’t say this business has the strongest economic moat on the ASX and it’s quite heavily exposed to changes in consumer sentiment. But, those cyclical changes in customer demand and investor confidence can prove to be buying opportunities.

At the time of writing, the ASX share is down by 37% since 19 September 2025, making it seem much cheaper.

While trading conditions may be tough, the business is now trading at a very low level. Analysts from UBS currently predict that the business could generate earnings per share (EPS) of 20 cents in FY26. That means it’s valued at just 9x FY26’s estimated earnings.

That looks particularly cheap with the fact that the business is projected to steadily increase its net profit every year to the end of FY30. By FY30, UBS forecasts its EPS could rise to 29 cents.

Centuria Industrial REIT (ASX: CIP)

This is a real estate investment trust (REIT) that owns a portfolio of industrial properties around Australia. Its real estate is located in metropolitan locations that are in-demand by tenants and the vacancy rate is very low. This is a strong support for the rental earnings of the business.

Industrial properties are benefiting from strong demand tailwinds including e-commerce, logistics, data centres, refrigerated space and more.

The fund manager of the ASX share, Grant Nichols, said at the end of October:

CIP continues to achieve strong outcomes across its portfolio relating to leasing, capital transactions and value add initiatives. The ability to deliver these results is credited to CIP’s portfolio being concentrated in Australia’s urban infill markets where tenant demand is strongest, vacancy is low and supply is constrained. These urban infill assets provides multiple future opportunities for alternative, higher-use developments such as data centres and residential schemes.

At the end of FY25, it reported net tangible assets (NTA) of $3.92 per unit, so it’s trading at a discount of more than 18%, which I think makes it very cheap.

In FY26, the business is expecting to generate funds from operations (FFO – rental profit) – between 18.2 cents to 18.5 cents per unit, funding a distribution per unit of 16.8 cents. That translates into a forward distribution yield of 5.25%.

The post 2 ASX shares that are absurdly cheap right now appeared first on The Motley Fool Australia.

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

CSL Ltd (ASX: CSL) shares have been well and truly out of form over the past 12 months.

During this time, the biotechnology giant’s shares have lost over a third of their value.

While most brokers believe this has created a compelling buying opportunity for investors, not everyone agrees.

Let’s see why one leading broker thinks investors should be keeping their powder dry for the time being.

Hold rating

According to a note out of Bell Potter, its analysts have reaffirmed their hold rating and $195.00 price target on CSL’s shares.

Based on its current share price of $177.08, this implies potential upside of 10% for investors over the next 12 months.

It also expects a dividend yield in the region of 1.8%, which boosts the total potential return closer to 12%.

What is the broker saying?

Bell Potter is feeling cautious ahead of the release of the company’s half-year results this month.

It is expecting CSL to deliver a result below consensus estimates, with revenue and net profit expected to fall 2% and 5%, respectively, over the prior corresponding period (pcp). It said:

Key points for the upcoming result include: (1) we expect a 2% decline in revenue and 5% decline in NPATA compared to the pcp; and (2) we are ~2% below consensus at revenue and NPATA. Additionally, for the full-year FY26 result, we remain slightly below the NPATA guidance range of 4-7% (BPe 3.3%).

Overall, we remain cautious as the uncertainties surrounding CSL’s organic growth profile are likely to persist in the near-term. Several headwinds have been flagged as impacting the 1H result to varying degrees, including lower US vaccination rates for Seqirus, along with Part D reforms, UK Ig tender loss and reduced albumin demand in China for Behring.

Aren’t CSL shares cheap?

Bell Potter acknowledges that CSL shares are trading at significantly lower than normal earnings multiples. However, it feels this is justified given its challenging outlook. It concludes:

We continue to apply a 17x PE multiple, now to the average of FY26/27 earnings. There is no change to our $195 PT as a result of these changes, hence we maintain our Hold recommendation. At 17x PE, CSL trades at a significant discount to its historical average and below domestic peers, however we consider this to be justified considering the low organic growth outlook, earnings growth below peers, and blows to credibility following the Seqirus de-merger pivot and recent downgrades to long-term guidance.

The post Are CSL shares as a buy, hold, or sell ahead of its results? appeared first on The Motley Fool Australia.

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

This battered ASX media stock may finally be turning the page. After months of asset sales, cost cuts, and strategic resets, Nine Entertainment Co. Holdings Ltd (ASX: NEC) sparked fresh optimism on Friday and Monday.

The media group’s shares posted their strongest jump in months. It followed a decisive portfolio shake-up built around a major acquisition and a clean break from legacy assets.

The ASX media stock gained another 6.55% on Monday to finish the day at $1.22. Nine Entertainment is still 29% down over the last 6 months, though, trailing the S&P/ASX 200 Index (ASX: XJO), which is up 1.33% over the same period.

Slowing advertising, capital concerns

The ASX media stock has been under heavy pressure for much of the past year, sliding around 30% from mid-2025 levels. Slowing TV advertising, structural shifts in media consumption, and capital management concerns have weighed on sentiment of the Nine Entertainment share.

Despite cost discipline and occasional earnings resilience, Nine’s share price remained anchored well below its highs, reflecting deep caution toward traditional broadcasters.

That caution cracked when the ASX media stock unveiled plans to acquire QMS Media for roughly $850 million while exiting radio and reshaping its regional television footprint. QMS is expected to generate about $105 million in EBITDA in calendar year 2026, which would be a double-digit increase over the previous year, Nine said.

The merger should also deliver about $20 million in annual cost savings by FY29, according to the board of Nine Entertainment.

The market responded swiftly, pushing the stock sharply higher as investors reassessed the company’s direction.

Clear shift outdoor advertising

The QMS deal signals a clear pivot away from legacy broadcasting toward a broader, digitally driven advertising platform. Outdoor advertising — one of the faster-growing segments of the ad market — adds scale and diversification to Nine’s existing TV, streaming, and publishing assets.

Nine Entertainment thinks the takeover strengthens its “sofa-to-street” reach. Management of the ASX media stock expects digital-led businesses to generate more than 60% of revenue by FY27, underscoring the urgency of the transformation.

Exit radio, digital focus

Risks remain. Higher leverage, integration challenges, and pressure on dividend franking credits temper enthusiasm, while free-to-air advertising continues to face long-term headwinds. Still, the exit from radio and renewed focus on scalable digital assets highlight how aggressively Nine is repositioning itself.

For long-suffering shareholders, the recent rally offered something rare. It could be evidence that the ASX media share’s multi-year reset may finally be translating into market confidence, even if the hard work is far from over.

Most brokers continue to rate the media stock a buy following its sharp decline in the past 6 months. The average 12-month price target sits at $1.27, suggesting potential upside of 4%.

Nine was valued at $1.93 billion at the close of trade on Monday.

The post Is this battered ASX media stock turning the page after bold move? appeared first on The Motley Fool Australia.

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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 no position in any of the stocks mentioned. The Motley Fool Australia has recommended Nine Entertainment. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

A new report from the team at Bell Potter has a mixed outlook for ASX 200 company SGH Ltd (ASX: SGH), but an optimistic price target. 

SGH is an Australian diversified operating and investment Group with market leading businesses and investments in Industrial Services, Energy and Media sectors.

This ASX 200 stock is well within Australia’s largest 50 companies by market capitalisation, but has faced some volatility over the last 12 months. 

Its stock price has fluctuated between $43 and $55 over the past year.

For context, the S&P/ASX 200 Index (ASX: XJO) is up 4.76% in that same period. 

The ASX 200 stock closed yesterday at $45.78. 

The waiting game

A new report from Bell Potter yesterday has identified key cyclical drivers in the company’s mining and construction sectors. 

The broker said the read-through for WesTrac from OEM Dec’25 quarterly updates was generally positive. 

The WesTrac segment of the company provides heavy equipment sales and support to customers. 

Bell Potter said it remains constructive on the near-term outlook for WesTrac’s Product Support division. 

We anticipate greater demand for aftermarket services as iron ore Majors continue to deliver quarterly production records and as gold production lifts by a +12% CAGR over FY25-27 (Aus. Gov. estimate). 

The broker said execution of re-commissioning plans of idled hard rock lithium production would be a positive for WesTrac’s services and parts demand.

However, for the construction sector, Bell Potter said overall activity remains mixed. 

Roading work done fell -5% YoY in the Sep’25 quarter across the East Coast, with NSW and QLD suffering a -15% YoY decline while VIC grew 10% YoY. 

While booming infrastructure sub-sectors like electrical generation and transmission are anticipated to provide some demand reprieve, the lower consumption intensity of aggregates and concrete compared with Roading would not be a like-for-like demand replacement for Boral.

Ongoing inflationary trends in Concrete, Cement and Aggregate indices suggest normalising demand from construction markets and a deceleration in price-led EBIT margin expansion.

The report did note that positively, Australia Residential building approvals (R3M basis) continue to trend higher, breaking a 4-year high in Nov’25. Australia non-residential building approval value grew 20% YoY in Nov’25, the 13th consecutive month of positive growth. 

Short term headwinds for this ASX 200 stock

Based on this guidance, the broker has maintained its hold recommendation, and has an updated price target of $51.80. 

From yesterday’s closing price of $45.78, that indicates an upside of 13.16%. 

SGH is facing short-term cyclical headwinds in construction markets, offsetting generally healthy operating conditions in the mining sector. SGH will cycle tough comps in FY26 given strong margin expansion at Boral and robust Product Sales growth at WesTrac in FY25.

The post Bell Potter tips 13% upside for this ASX 200 industrials 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.

Graincorp Ltd (ASX: GNC) shares are in focus this week after the stock plummeted 14% on Monday. 

It was a tumultuous start to the earnings season yesterday as the S&P/ASX 200 Index (ASX: XJO) lost more than 1%. 

Graincorp was heavily sold off after the company issued low FY26 earnings guidance. 

What did the company report?

Overall, the company released its FY26 earnings guidance, forecasting underlying EBITDA of $200–240 million and underlying NPAT between $20–50 million. 

These were both below the FY25 result.

Additionally, the company reported: 

• Export volumes expected: 5.5–6.5 million tonnes (FY25: 7.0mmt)
• Receival volumes anticipated: 11.0–12.0 million tonnes (FY25: 13.3mmt)
• Nutrition and Energy average crush margins steady with FY25
• Agri energy contribution expected to be lower due to US biofuels uncertainty

Investors react strongly

In yesterday’s report, management said that FY26 earnings will be under pressure due to lower margins across the business. 

This reflects ongoing oversupply in global grain markets and continued pressure on export spreads.

These headwinds identified by the company led Graincorp shares to fall more than 14% yesterday. 

In the last 12 months, Graincorp shares are down almost 17%. 

Bell Potter’s view on Graincorp shares

Following yesterday’s trade, the team at Bell Potter provided updated analysis on Graincorp shares. 

The broker downgraded its near-term outlook. 

Following the update we have downgraded FY26e NPAT by -58% in FY26e, -10% in FY27e and -4% in FY28e. Changes in outward years reflect lower carryout assumptions, with lower trading margins the main driver of changes in FY26e.

The broker said Graincorp does particularly well when east coast grain crops are large, global grain crops are small and EU/Canada oilseed planting are soft. 

For the last two seasons only one of these dynamics has been at play.

Bell Potter also cautioned the latest update for GNC, probably highlights how dependent GNC returns are to global grain fundamentals. 

With improved cropping conditions in the EU and North America and record crops in Brazil, Bell Potter said it is unlikely that the headwinds being seen are likely to ease over FY26e.

Price target adjustment

Based on this guidance, Bell Potter has reduced its price target on Graincorp shares to A$6.80 (prev. A$7.60). 

Graincorp shares closed yesterday at $6.19 per share after the big sell-off. 

Based on this analysis, it indicates that Graincorp shares are trading roughly 9.85% below fair value. 

The broker maintained its hold recommendation. 

The post Top broker weighs in after Graincorp shares plummet 14% appeared first on The Motley Fool Australia.

More reading

• Why Appen, Brightstar, Graincorp, and Northern Star shares are sinking today
• GrainCorp shares slide nearly 15%. Is this ASX 200 stock now oversold?
• GrainCorp shares: FY26 earnings guidance forecasts lower profits

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.