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Looking for growth shares to buy? Then you might want to consider one of the ASX shares listed below.

Here’s why they have been tipped as growth shares to buy:

NEXTDC Ltd (ASX: NXT)

The first ASX growth share to look at is this leading data centre operator. NEXTDC has been benefiting greatly from the structural shift to the cloud. While this accelerated during the pandemic, it has been going on for years and still has a long way to go.

In light of this, NEXTDC continues to experience growing demand for data centre capacity. In fact, a significant amount of future capacity is under option, giving the company great visibility on its future earnings.

This could be supported by management’s plan to expand into the Asia market. It has its eyes initially on the Singapore and Tokyo markets, where it would have huge opportunities to grow into in the future.

Goldman Sachs is very positive on the company. It currently has a buy rating and $14.80 price target on its shares.

The broker commented: “We remain high-conviction on the growth profile ahead, forecasting +37MW contract wins across FY22-23E (=65% conversion of options). Combined with recent share price underperformance, this gives an attractive growth adjusted valuation. We reiterate our Buy (on CL) on NXT, the most compelling growth story in our coverage.”

PointsBet Holdings Ltd (ASX: PBH)

Another ASX growth share to look at is PointsBet. It is a leading sports betting company with operations in both the ANZ and US markets.

These operations are currently generating significant revenue thanks to the growing popularity of mobile sports betting and innovative products.

However, despite this, the company is still only scratching at the surface of its massive US market opportunity. For example, Goldman Sachs notes that the US sports betting market is forecast to grow at a compound annual growth rate of 40% out to 2033.

In light of this and its strong market position, Goldman has a buy rating and $17.20 price target on its shares.

Goldman said: “We like PBH due to i) PBH’s leverage to the burgeoning US Sports Betting and iGaming market which we forecast to be a US$53 bn TAM opportunity at maturity, ii) our view that PBH is well-placed to achieve 10% share in states it operates in, iii) upside risk to long-run sustainable margins in Aus and the US which was reaffirmed by the strong margin result in 3Q21.”

The post 2 ASX growth shares analysts rate as buys appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Pointsbet Holdings Ltd. The Motley Fool Australia has recommended Pointsbet Holdings Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The S&P/ASX 200 Index (ASX: XJO) fell by around 0.9% to 7,286 points.

Here are some of the highlights from the ASX:

Telstra Corporation Ltd (ASX: TLS)

The Telstra share price dropped by around 0.3% today. However, this was less than the drop of the ASX 200.

In a response to a story in The Age/Sydney Morning Herald, Telstra confirmed it has been in discussions about a potential deal to make an investment in a telecommunications company, Digicel Pacific in the South Pacific region in partnership with the Australian Government.

Digicel is a leading provider of communications services across Papua New Guinea, Fiji, Nauru, Samoa, Tonga and Vanuatu. In the 2020 calendar year, Digicel Pacific made earnings before interest, tax, depreciation and amortisation (EBITDA) of $235 million.

Telstra said the discussions are incomplete and there is no certainty that a transaction will proceed.

The ASX 200 telco said that it was initially approached by the Australian Government to provide technical advice about Digicel Pacific which is a commercially attractive asset and critical to telecommunications in the region. The company said that if Telstra were to proceed with a transaction it would be with financial and strategic risk management support from the government.

In addition to a significant government funding and support package any investment would also have to be within certain financial parameters with Telstra’s equity investment being the minor portion of the overall transaction.

Altium Limited (ASX: ALU)

The Altium share price dropped by more than 4% today on takeover talk.

In an official ASX release, the ASX 200 electronic PCB software business said that in response to media speculation, it hadn’t received any further offer from Autodesk.

That media reporting, such as by the Australian Financial Review, said that Autodesk had come back to Altium to talk about an offer of $40 per share. But those discussions at $40 per share was still reportedly not enough for Altium to be interested.

The AFR reported that an Altium spokesman said:

We are not commenting on matters with Altium but can confirm that acquisition discussions have ceased at this time.

Nick Scali Limited (ASX: NCK)

The Nick Scali share price went up more than 4% today on speculation news regarding a potential acquisition.

It confirmed that it’s in non-exclusive discussions with Greenlit Brands regarding a potential deal to buy Plush, the furniture business.

Nick Scali pointed out that it’s actively considering acquisition growth opportunities from time to time. Management are thinking about the strategic rationale, available synergies, financial impact and the long-term value created for Nick Scali shareholders.

The company said there is no certainty that these discussions, which are ongoing, will result in a transaction for Plush.

If the deal were to go ahead, Nick Scali said it expects it would fund this deal with a combination of cash on hand and debt.

The post ASX 200 drops, Telstra falls, Altium declines appeared first on The Motley Fool Australia.

More reading

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• Why Altium, Evolution, Oil Search, & SEEK shares are tumbling lower
• Altium (ASX:ALU) share price bounces back after responding to media speculation
• 2 defensive ASX 200 shares that brokers rate as ‘buys’ this Monday
• Why the Nick Scali (ASX:NCK) share price is going gangbusters

Motley Fool contributor Tristan Harrison owns shares of Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Altium. The Motley Fool Australia owns shares of and has recommended Altium and Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Long-term investing usually involves taking advantage of short-term market weakness. Though, sometimes shareholders want to hedge against a possible stock market crash. Considering the S&P/ASX 200 Index (ASX: XJO) finished 0.85% lower to 7,286 points, now might be a good time to discuss how investors can profit during market weakness with an ASX-listed exchange-traded fund (ETF).

Short-term market volatility can wreak havoc on investors who were looking to sell in the near future, or rely on the market for an income. For those reasons and others, an avenue to capitalise on the ASX stock market falling can be appealing.

Let’s look at how BetaShares Australian Equities Bear Hedge (ASX: BEAR) offers this to its investors.

Turn that stock market crash upside down

The BEAR hedge ETF seeks to generate returns that are negatively correlated to the returns of the Australian stock market. Generally, a 1% fall in the market will result in a 0.9% to 1.1% gain in the ETF.

In order to achieve this outcome, BetaShares sells index futures contracts. This act of selling a contract before buying is known as short selling. The objective for investors to make a profit is to buy the contract back at a lower price and pocket the difference.

However, it is important to know that the opposite is true as well. For example, if the Australian stock market rallied, rather than crashed, investors would be losing money.

Another important piece of information is the management fee for this actively managed fund. Investors can expect to incur a 1.38% management cost per annum with the BEAR ETF.

The intended scenario for this investment is a short-term position. For example, between 21 February 2020 and 20 March 2020, investors could have made a 40.18% return during the COVID-19 crash.

Finally, it’s worth keeping in mind that the ASX stock market has always gone up over the long term.

The post How this ASX ETF lets investors cash in on a stock market crash appeared first on The Motley Fool Australia.

More reading

• Why the oOh!Media (ASX:OML) share price has dropped 18% in a month
• How big will the Fortescue (ASX:FMG) dividend be over the next 12 months?
• Down 7% over the week, will Bitcoin find a floor at US$30,000?
• Rarex share price leaps 21% intraday on resource upgrade
• Aeon Metals (ASX:AML) share price drops 11% on placement update

Motley Fool contributor Mitchell Lawler 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 Bruce Jackson.

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The oOh!Media Ltd (ASX: OML) share price is tumbling as the effects of the pandemic on its business are becoming increasingly apparent.

Shares in oOh!Media closed today’s trade at $1.51 – 1.95% lower than Friday’s close.

The oOh!Media share price has also fallen 18.55% in just 30 days.

The significant fall has occurred despite the out-of-home advertising company not releasing any price-sensitive news since May.

Let’s take a look at what might be driving the oOh!Media share price down lately.

COVID-19 taking its toll

As most would assume, as people stay at home while lockdowns rage, less money is put into outdoor advertising. And that’s exactly what’s happened to oOh!Media.

It reported a 34% drop in revenue in its results for the 2020 calendar year. The oOh!Media share price also fell 46% over 2020.

PwC’s Australian Entertainment. & Media Outlook 2021- 2025 found the media and marketing landscape has shifted considerably since the beginning of the pandemic, with out-of-home advertising one of the hardest-hit segments.

However, it reports it’s starting to see “green shoots” from the segment, driven by demand for roadside billboards.

Unfortunately, over the last month, Australia has experienced the greatest number of people in lockdown since early 2020.  

Since this time last month, areas of Queensland, Perth, Western Australia’s Peel region, Darwin, and Alice Springs have had lockdowns imposed and lifted again.

Meanwhile, Sydney has been enduring a 3 week ‘soft’ lockdown and has another 11 days of hard lockdown to get through in an attempt to shake the COVID-19 Delta strain.

Similarly, Victoria entered what was a 5-day lockdown last Thursday. Today, it was extended for an indefinite period.

Additionally, oOh!Media has reportedly decided to sell Junkee Media by the end of the year. The decision may be another weight on the oOh!Media share price lately.

It seems it might get tougher for the oOh!Media share price, Sydney, and Victoria before it gets better.

oOh!Media share price snapshot

The company’s poor performance over the past month has pushed the oOh!Media share price into the ASX red.

It’s currently 8.7% lower than it was at the start of 2021. However, it has gained 81.4% since this time last year.

The company has a market capitalisation of around $906 million, with approximately 598 million shares outstanding.

The post Why the oOh!Media (ASX:OML) share price has dropped 18% in a month appeared first on The Motley Fool Australia.

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Motley Fool contributor Brooke Cooper 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 oOh!Media Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Fortescue Metals Group Limited (ASX: FMG) share price has been a very impressive performer over the last 12 months.

Since this time in 2020, the iron ore producer’s shares have risen by an impressive 55%.

The good news is that despite the strong rise in the Fortescue share price, analysts still believe investors will be rewarded with incredibly generous dividends in the near term.

The Fortescue dividend

One leading broker that believes the Fortescue dividend will be enormous in the near term is Bell Potter.

According to a note out of the broker, its analysts note that the iron ore price has remained stronger than expected. As a result, it has revised its iron ore forecasts upwards and adjusted its earnings and dividend estimates accordingly.

Bell Potter said: “Our FY21 dividend increases 1.3% to A409cps, inclusive of a fully franked final dividend payment of A262cps (from A257cps), a 10.2% yield on its own. Our forecast prospective 12-month dividend payouts lift 5.7% to A460cps (from A435cps) as 1HFY22 captures our higher iron ore price forecast, for an interim payment of A198cps and forecast 17.9% fully franked yield.”

However, despite this sizeable yield, Bell Potter is only recommending Fortescue as a hold with a $24.06 price target.

Is anyone more positive on the Fortescue share price?

One leading broker that is more positive on the Fortescue share price is Macquarie. Its analysts have an outperform rating and $27.00 price target on its shares at present.

The broker is forecasting fully franked dividends of $3.45 per share in FY 2021 and then $2.45 per share in FY 2022.

Based on the latest Fortescue share price of $25.42, this will mean yields of 13.6% and 9.6%, respectively, over the next two years. Macquarie believes current spot iron ore prices pose significant upside risk to earnings and dividend estimates.

The post How big will the Fortescue (ASX:FMG) dividend be over the next 12 months? appeared first on The Motley Fool Australia.

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• These 2 ASX dividend shares are offering trailing yields of 10% today

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 Bruce Jackson.

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The Bitcoin (CRYTPO: BTC) price slid lower again over the past 24 hours, falling 1% to US$31,826 (AU$43,008).

That brings Bitcoin’s losses to 7% since this time last week. And it leaves the world’s biggest crypto with a market cap of US$597 billion, according to data from CoinDesk. That’s still a sizeable figure. But it’s a far cry from the nearly US$1.2 trillion market cap it claimed at its peak in mid-April, when it was trading for a record high US$64,829.

With Bitcoin down 51% since then, some crypto analysts are forecasting it’s approaching strong support.

Will Bitcoin find a floor at US$30,000?

I’d rather try predicting next year’s weather than the price of Bitcoin next week. And I’d probably have more luck at it.

But when it comes to where the digital token is likely to head from here, there are plenty of industry experts toiling away to bring us the answer. And the latest word on the street is that US$30,000 could provide a floor for the sliding Bitcoin price.

Aside from 30,000 being a nice round number (humans like numerals that match evenly with the number of fingers we have), some analysts believe options trading activity can shine the light on what to expect next.

As Bloomberg reports:

In options, $30,000 is the most-sold downside strike price for July and August, signaling confidence among such traders that the level will hold, according to Delta Exchange, a crypto derivatives exchange. It “should provide a strong support to the market,” Chief Executive Officer Pankaj Balani said.

Blockdaemon’s CEO, Konstantin Richter, also isn’t overly concerned with Bitcoin’s recent price falls. “If it goes down fast, it can go up fast. That’s just what crypto is,” he said.

Richter said the price would need to go below US$20,000 before shaking out institutional demand, which helped push Bitcoin back into the limelight over the past year.

The post Down 7% over the week, will Bitcoin find a floor at US$30,000? appeared first on The Motley Fool Australia.

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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Bitcoin. 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 Bruce Jackson.

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The RareX Ltd (ASX: REE) share price has surged into the green during afternoon trading.

RareX shares reached 10.5 cents intraday before closing at 9.2 cents apiece, a 13.58% gain on the day.

Let’s take a look at the tailwinds behind RareX’s share price this Monday.

Quick recap on RareX

RareX is a minerals exploration company that focuses on developing rare earths deposits.

Its major focus is the Cummins Range rare earth project in the East Kimberly region of Western Australia.

The Cummins Range mine contains a high percentage of the rare earth elements Neodymium and Praseodymium.

RareX has a market capitalisation of around $40 million.

Upgrade to Cummins Range resource

In an announcement today, RareX delivered a major resource upgrade at its Cummins Range rare earths project.

It stated the project had realised a 46% increase in deposits in overall tonnes to 18.8 million tonnes, at 1.15% total rare earth oxides (TREO).

The TREO findings included 0.23% Neodymium and Praseodymium, in addition to 0.14% of “potential by-product” niobium pentoxide.

The company also posted a “maiden indicated resource of 11.1 million tonnes at 1.34% TREO and 0.17% niobium pentoxide, with an additional 4.9 million tonnes at 2.11% and 0.23% niobium pentoxide”.

Niobium pentoxide is a precursor for many alloys and is even used as a raw material in the production of glass for spectacles.

The company firmly believes Cummins Range has the potential to expand further in terms of overall size and grade.

In the release, RareX managing director Jeremy Robinson said:

Importantly, we believe that there is enormous scope to grow the resource further, both in overall size and grade. We have seen some very encouraging indications from the recent expansionary drilling and we are really looking forward to seeing what the upcoming diamond drilling will reveal.

RareX also announced a new 6,000 metre reverse circulation (RC) drilling program to expand its Cummins Range resource further.

Investors immediately rewarded the RareX shares following the announcement, driving prices up 21% to the intraday high of 10.5 cents.

RareX share price snapshot

The RareX share price has had a choppy year to date, posting a loss of ~19% since January 1.

Despite this loss, RareX shares have gained 10% over the previous 12 months.

However, both of these returns have lagged the S&P/ASX 200 Index (ASX: XJO)’s return of ~21% over the past year.

The post Rarex share price leaps 21% intraday on resource upgrade appeared first on The Motley Fool Australia.

More reading

• Aeon Metals (ASX:AML) share price drops 11% on placement update
• Why the Treasury Wine (ASX:TWE) share price has soared 24% in 2021
• What these 5 outperforming ASX shares have in common
• Top broker still thinks the Qantas (ASX:QAN) share price is great value
• Is the BOQ (ASX:BOQ) share price a buy for dividends?

The author Zach Bristow 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 Bruce Jackson.

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The Aeon Metals Ltd (ASX: AML) share price came out of a trading halt today following a successful placement.

The mineral exploration company’s shares closed the day at 6.5 cents, down 10.96%.

What drove the Aeon Metals share price lower?

A catalyst for today’s fall in Aeon Metals shares is that investors may be concerned about an impending share dilution.

According to its release, Aeon Metals advised that it has successfully received commitments to raise $9.5 million (before costs). The placement gathered support from sophisticated and professional investors, including the company’s major shareholder OCP Asia. This comes after the 24-month OCP loan facility maturity extension announced last week.

In total OCP Asia subscribed for $4.4 million in the placement, representing almost half of the entire offer. Adding to the mix, all members of the Aeon board also submitted their interest, applying for $100,000 worth of shares.

The participation from OCP Asia and Aeon Metals board members is subject to shareholder approval at an upcoming general meeting.

Aeon Metals listed the issue price for its new ordinary shares at 5.8 cents apiece. This reflects a 20.6% discount to the last closing price of Aeon Metals shares on 14 July (at 7.3 cents).

The shares will be split across two separate tranches, with the first portion coming under the company’s listing rule 7.1 and 7.1A. This allows them to issue approximately 86.2 million shares without shareholder approval.

The second portion of shares (roughly 77.5 million) will be subject to shareholder approval at a meeting in August.

Aeon will allocate the proceeds of the placement to a number of initiatives:

• Ongoing Pre-Feasibility Study (PFS) activities on the Walford Creek Cu/Co Project (PFS scheduled for completion in Q1 CY2022)
• Ongoing extensional and infill resource drilling at Walford Creek
• New regional copper exploration activities
• General working capital
• Costs of the placement and SPP

Furthermore, the company will offer a share purchase plan (SPP) to retail investors to raise an additional $3 million. The SPP will be offered at the same price as the placement. The closing date of the SPP is 18 August.

What did the head of Aeon Metals say?

Managing director and CEO of Aeon Metals Dr Fred Hess commented:

Aeon is currently advancing both its site drilling campaign and metallurgical testwork to support the Walford Creek PFS, which is expected to be completed during Q1 CY2022.

We also intend to move quickly to commence a regional exploration program, primarily focused on our substantial tenement package to the east of Walford Creek, the Basin Edge Project, and our tenements to the west of Mt Isa, prospective for IOCG and sedimentary copper style targets.

About the Aeon Metals share price

It’s been a tough ride for Aeon Metals shareholders, with the company’s shares falling by more than 45% year to date. Looking at a longer time frame, the Aeon Metals share price is down more than 27% since this time last year.

Based on today’s price, Aeon Metals presides a market capitalisation of around $49.46 million, with 677 million shares outstanding.

The post Aeon Metals (ASX:AML) share price drops 11% on placement update appeared first on The Motley Fool Australia.

More reading

• Rarex share price leaps 21% intraday on resource upgrade
• Why the Treasury Wine (ASX:TWE) share price has soared 24% in 2021
• What these 5 outperforming ASX shares have in common
• Top broker still thinks the Qantas (ASX:QAN) share price is great value
• Is the BOQ (ASX:BOQ) share price a buy for dividends?

Motley Fool contributor Aaron Teboneras 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 Bruce Jackson.

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The Treasury Wine Estates Ltd (ASX: TWE) share price has gotten off to a flyer in 2021. While the S&P/ASX 200 Index (ASX: XJO) has gained 9.1%, Treasury Wines has soared 24.4% higher this year.

So, what’s helping the Aussie wine business’ shares outperform this year?

Why the Treasury Wine share price has soared in 2021

It always pays to look at recent announcements when analysing share price performance. For Treasury Wine, it’s been a busy start to the year.

There has been quite a bit of volatility in the Treasury Wine share price in the last 12 months or so. One of the biggest factors was the threat of increased tariffs from China.

China is a major purchaser of Aussie wines and Treasury Wine shares sank in March after China slapped a 175% tariff on the company’s Australian country of origin wine in containers of two litres or less for the next 5 years.

However, the Treasury Wine share price isn’t up 24% this year for nothing. In fact, since that March 29 announcement, shares in the wine group are up more than 12%.

A strong strategic & financial update has certainly helped. The Treasury Wine share price shot 11.5% in the space of 5 trading days after its 2021 Investor Day announcements on May 12.

Treasury Wines flagged a 33% jump in second half earnings before interest, tax, the agricultural accounting standard SGARA and material items (EBITS). The group expects FY21 EBITS of $495 million to $515 million, which was above then-market expectations.

Strong EBITS margins across key portfolios like Penfolds (40-45% target) and Treasury Americas (25% target), combined with plans to slash its cost base, had investors buying in.

That helped propel the Treasury Wine share price to climb higher in May. That momentum has been continued in June and July despite no further announcements from the Aussie group.

Treasury Wine isn’t the only Aussie wine share on the move right now. The Digital Wine Ventures Ltd (ASX: DW8) share price slumped 12% lower on Monday after announcing a strategic acquisition.

The Aussie online wine seller will acquire Parton Wine Group after raising $7.5 million from its investors. Investors sold down on the news with the Digital Wine share price slumping lower.

Foolish takeaway

The Treasury Wine share price has been outperforming so far this year. Beaten down on the China tariff news, strong earnings and cost-cutting have helped fuel the Aussie wine group’s valuation in 2021.

Investors will be watching the company’s 19 August results release closely for further indications of growth.

The post Why the Treasury Wine (ASX:TWE) share price has soared 24% in 2021 appeared first on The Motley Fool Australia.

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• Are the 10 highest paid ASX 200 CEOs worth their paypackets?

Motley Fool contributor Ken Hall 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 owns shares of and has recommended Treasury Wine Estates Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The rising tensions between Canberra and Beijing have thrown up a headwind for many ASX shares.

But those same tensions have also boosted demand for select goods, services and commodities produced outside of China. And that’s helped other ASX shares post some strongly outperforming gains over the past 12 months.

The 5 ASX shares we’ll look at here have all gained between 2 and 9 times as much as the All Ordinaries Index (ASX: XAO) over the last full year. And this is over a year where the All Ords gained 24%.

What these 5 outperforming ASX shares have in common

The ASX shares we’ve put under the spotlight today are:

• Australian Strategic Materials Ltd (ASX: ASM)
• Iluka Resources Ltd (ASX: ILU)
• Dreadnought Resources Ltd (ASX: DRE)
• Hastings Technology Metals Ltd‘s (ASX: HAS)
• Lynas Rare Earths Ltd (ASX: LYC)

To see what they have in common you need only look at Lynas’ full company name.

That’s right. They’re all involved (to varying extents) in exploring for, or producing, rare earth elements.

What are rare earth elements?

In a nutshell, there are 15 different rare earth elements. And they’re not really rare in terms of their abundance in the earth. What makes them rare is they’re usually found with very limited concentrations. That means you need to dig up and process a lot of rock to get to the few useful bits.

While many people can’t name a single rare earth element, they’re used across a growing range of modern technologies. They include powerful magnets which you’ll find in wind turbines and electric motors. Other rare earth elements are crucial in making your smartphone smart, and several are increasingly important to national defence in aircraft, vessels, and high-tech ground vehicles.

How China is boosting demand for Australia’s rare earth elements

Depending on the source you’re using, you’ll find China produces somewhere in the range of 70-90% of the global supply of rare earth elements.

But that’s a statistic the West, driven by efforts from the United States, aims to change.

With tensions between China and the West rising, nations are looking beyond the Middle Kingdom to ensure a secure supply. And with Australia home to the 6th largest deposits of economically viable rare earth elements on Earth, according to CSIRO’s Critical Energy Minerals Roadmap, ASX shares involved in this niche sector have been garnering increased investor attention.

According to Jeffrey Wilson, research director at the Perth USAsia Centre (quoted by msn.com):

China’s monopoly over these minerals that are critical for technologies gives it a really powerful economic weapon. And indeed it has cut off supply of rare earths in the past to Japan in 2010. Of late, there have been a number of threats made that it might cut off supply to the United States in the future.

So, as China’s relationships with a number of countries — Australia, Japan, the US, and Europe — has steadily gotten worse over the past 12 months, there’s a present threat that China may use its monopoly to deploy the rare earths weapon to punish others if they fall into diplomatic disagreements.

When the world’s 2 biggest economies get into a tug of war over a group of elements critical to their military and technological ambitions, investors tend to take note.

You can see this by looking at the performance of today’s 5 ASX shares involved in the rare earth elements game.

How have these ASX shares been moving?

Beginning with the biggest of our rare earths ASX shares, with a market cap of roughly $5.6 billion, Lynas has gained 201% over the past 12 months. Lynas is the world’s second largest producer of rare earths and currently remains the only “significant producer” outside China. The company’s Mt Weld mine in Western Australia is amongst the highest grade rare earths mines in the world.

International mineral sands company Iluka has also strongly outperformed the benchmark over the 12 months. Iluka’s rare earths projects include Eneabba in Western Australia and Wimmera in western Victoria. The Iluka share price is up 85% since this time last year.

In the small-cap space, we have Dreadnought Resources and Hastings Technology Metals.

The Dreadnought share price is up 360% over the last 12 months. And it’s rocketing today, up 18% after reporting the presence of high-grade rare earths elements at its Western Australian Yin Prospect.

Meanwhile, Hastings, whose Yangibana rare earths project is under construction in West Australia, has seen its share price gain 50% in 12 months.

Leaving off with our biggest share price gainer, we have Australian Strategic Materials, up 429% year-on-year.

This ASX share is in a trading halt today pending an announcement on its Dubbo project in New South Wales. The company indicated it plans to develop Dubbo to “supply globally significant quantities of zirconium and rare earth metals, as well as contribute to the niobium and emerging hafnium industries”.

The post What these 5 outperforming ASX shares have in common appeared first on The Motley Fool Australia.

More reading

• Why the Dreadnought Resources (ASX:DRE) share price is charging 8% higher
• Australian Strategic Materials (ASX:ASM) share price stilled by trading halt
• Why the Iluka (ASX:ILU) share price is down today
• 5 best ASX 200 mining and resource shares of financial year 2021
• Shares in Australian Strategic Materials (ASX:ASM) end their miraculous run

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 Bruce Jackson.

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