If you are looking for some big potential returns, then it could be worth checking out the two S&P/ASX 200 index (ASX: XJO) shares in this article.

That’s because the team at Bell Potter believes they are significantly undervalued and have the potential to deliver market-beating returns over the next 12 months.

Here’s what it is recommending to clients:

Liontown Ltd (ASX: LTR)

Bell Potter thinks that Liontown could be an ASX 200 share with strong potential returns over the next 12 months.

The broker recently put a buy rating and $1.90 price target on the lithium miner’s shares. Based on its current share price of $1.02, this implies potential upside of approximately 85% for investors.

Bell Potter believes the market is undervaluing Liontown’s shares, especially given the significant improvements it has made this year. This includes reducing its net debt and ramping up underground production at Kathleen Valley.

In light of this, the broker thinks now could be a good time to buy:

We still believe that LTR’s EV is lagging the recent recovery in lithium markets and expected tight fundamentals. The last time LTR was trading at its current EV (early December 2025), SC6 prices were US$1,150/t and net debt was $274m. Since this date. Since then, the Kathleen Valley underground ramp-up has been further derisked and spot SC6 prices are above US$2,300/t. 

While we expect lithium markets will be volatile, market fundamentals remain strong. Over FY27, LTR will continue to ramp up and de-risk Kathleen Valley, a highly strategic asset in terms of scale, long project life and location in a tier-one mining jurisdiction

Paladin Energy Ltd (ASX: PDN)

Bell Potter also sees major upside potential in this uranium producer. 

It recently retained its buy rating and $14.50 price target on the ASX 200 share. Based on its current share price of $9.52, this implies potential upside of 52%.

Bell Potter believes Paladin Energy is well-positioned to benefit from increasing demand for uranium thanks to a combination of electrification, energy security and artificial intelligence (AI)-related power requirements. It said:

We retain our Buy recommendation. We have a positive medium- to long-term outlook for the uranium market, supported by barriers to new supply and demand growth linked to electrification, energy security and AI-related power requirements. PDN has ~56% exposure to market prices out to 2030.

Production at LH continues to improve with higher-grade mined ore feeding the processing plant. PDN continues to derisk its key growth project at Paterson Lake South in Canada’s Athabasca Basin.

The post These ASX 200 shares could return 50% to 85% appeared first on The Motley Fool Australia.

More reading

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• Which ASX lithium miners does Macquarie prefer?
• These are the 10 most shorted ASX shares
• Energy shares rose while the ASX 200 slumped last week. Here’s why
• Brokers are confident in the outlook for this uranium stock tipping 34% upside

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.

Shares in both BHP Group Ltd (ASX: BHP) and Rio Tinto Ltd (ASX: RIO) are up strongly over the past 12 months, with both racking up gains of more than 40%.

But while both remain major iron ore producers, they have diversified their other income streams to the point where a different investment case can be made for each.

Major miners both kicking goals

Canaccord Genuity has just released a new research report into the companies, and said when it came to iron ore, it is no longer the majority revenue generator for each company.

The broker commented:

Nearly 60% of each company’s EBITDA came from future-facing commodities over the six months to end-June 2026, with copper central to this transformation. This changes the investment case for BHP and RIO, which both increasingly provide upstream exposure to prominent structural growth thematics including electrification and the AI infrastructure build-out. In our view, their evolving earnings profiles also warrant a different valuation framework, with a greater contribution from copper supporting structurally higher earnings multiples.

Canaccord Genuity said BHP and Rio outperformed the S&P/ASX 200 Index (ASX: XJO) by about 50% over the past 12 months, despite iron ore tracking slightly lower.

The broking house said copper accounted for 57% of earnings at BHP and 36% at Rio, while aluminium accounted for 20% of Rio’s earnings.

Lithium was also emerging as an important commodity for Rio.

 Canaccord Genuity said:

The shifts in both companies’ earnings mixes reflect years of disciplined capital allocation through organic project development and selective M&A, including BHP’s acquisition of OZ Minerals in 2023 and RIO’s acquisition of Arcadium Lithium in 2025, alongside support from commodity price tailwinds.

Canaccord Genuity said copper was the central focus of BHP’s organic growth strategy, with projects under development in South Australia, Chile and Argentina.

The broker said Rio’s growth strategy was broader, “spanning copper, Simandou in iron ore, the Arcadium portfolio in lithium, and aluminium”.

Canaccord Genuity added:

BHP and RIO are targeting broadly comparable copper production growth of ~20–25% by 2030 relative to FY26 levels, supported by brownfield expansions, operational ramp-ups and the development of their respective copper portfolios.

Canaccord Genuity also noted that copper producers generally traded at higher multiples than iron ore companies, reflecting copper’s more attractive long-term fundamentals.

The broker said it preferred BHP to Rio, despite both being compelling propositions, because BHP was the highest-quality diversified miner, with a strong track record of operational delivery.

They also preferred BHP because of the central role of copper.

Canaccord Genuity added:

As the world’s largest copper producer, BHP provides one of the largest and lower-risk ways to gain leverage to our preferred commodity

The post BHP vs Rio Tinto: What’s the better buy? appeared first on The Motley Fool Australia.

More reading

• Why I’d buy and hold BHP shares for 10 years
• How much passive income could I earn from a $650,000 superannuation balance?
• ASX 200 drops again as selling continues
• Vanguard ETFs vs. Betashares ETFs: Who’s coming out on top?
• BHP shares keep falling. Is now the time to buy?

Motley Fool contributor Cameron England 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 BHP Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

After surging a remarkable 30.5% from 18 May to close at $92.96 apiece on 20 July, Wesfarmers Ltd (ASX: WES) shares have come under heavy selling pressure.

On Wednesday afternoon, shares in the S&P/ASX 200 Index (ASX: XJO) conglomerate – whose retail subsidiaries include Bunnings Warehouse, Kmart Australia, Officeworks and Priceline – were changing hands for $72.60 each.

That sees the Wesfarmers share price down 21.9% in four months.

Most of that selling looks to be driven by concerns over the impacts of high inflation and potential further interest rate hikes on consumer sentiment, as well as Wesfarmers’ own cost of doing business.

But with shares having come back to earth from their July highs, is the ASX 200 stock now a good buy for passive income?

What kind of dividend yield does Wesfarmers stock offer?

Wesfarmers paid a fully franked interim dividend of $1.02 a share on 31 March,

The ASX 200 stock will payout the final fully franked dividend of $1.20 a share on 7 October. It’s a bit too late to bank that passive income payout, as Wesfarmers shares traded ex-dividend on 1 September. That payout will go to investors who held the stock at market close on 31 August.

As for the dividend yield, at the recent share price of $72.60, Wesfarmers trades on a fully franked trailing dividend yield of 3.1%.

Which brings us back to our headline question.

Should I buy Wesfarmers shares for passive income?

Shaw and Partners’ James Bills recently analysed the outlook for the ASX 200 stock (courtesy of The Bull).

Wesfarmers remains one of Australia’s premier diversified companies,” he said. “It’s supported by market leading businesses, including Bunnings, Kmart and Officeworks.

Bills added:

The company’s strong balance sheet, disciplined capital allocation and resilient earnings profile continue to underpin shareholder value. While growth opportunities remain available across several divisions, recent share price levels appear to reflect much of this quality.

Connecting the dots, Bills issued a hold recommendation on Wesfarmers shares:

Holding Wesfarmers remains appropriate given the company’s strong market position, dependable cash generation and proven ability to create value over the long term.

What’s the latest from the ASX 200 conglomerate?

Wesfarmers released its FY 2026 results on 27 August.

Highlights included a 3.4% year-on-year increase in revenue to $47.25 billion, excluding significant items.

On the bottom line, Wesfarmers achieved a statutory NPAT of $2.87 billion, up 8.3% from FY 2025.

And with profits up, so too was the passive income on offer.

Wesfarmers managing director Rob Scott commented:

As a result of the increase in underlying profit, the Wesfarmers Board has determined to pay a fully-franked final dividend of $1.20 per share, bringing total fully franked ordinary dividends for the year to $2.22 per share, an increase of 7.8 per cent.

Wesfarmers shares closed down 4.6% on the day of the results release.

The post Down 22%: Are Wesfarmers shares now a good buy for passive income? appeared first on The Motley Fool Australia.

More reading

• Wesfarmers vs Telstra: Which ASX dividend stock comes out on top?
• How much passive income could I earn from a $650,000 superannuation balance?
• How to make $26,000 of passive income from ASX shares
• Buy, hold, sell: Domino’s Pizza, Telix Pharmaceuticals, Westfarmers shares
• How much is needed in superannuation to target a $6,500 monthly passive income?

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 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.