The team at Morgans regularly picks out its best ASX share ideas.
These are the ASX stocks that the broker thinks offer the highest risk-adjusted returns over a 12-month timeframe and are supported by a higher-than-average level of confidence.
Among its best ideas for the month of June are the two top ASX 200 stocks listed below. Here's what the broker is saying about them:
Mineral Resources Ltd (ASX: MIN)
Morgans sees a huge amount of value in this ASX 200 stock. Its analysts currently have an add rating and $93.00 price target on the mining and mining services company's shares. This implies potential upside of approximately 33% for investors from current levels.
The broker likes Mineral Resources due largely to its organic growth potential, which it expects to offset any potential volatility in commodity prices. It explains:
MIN is a founder-led business and top tier miner and crusher that has grown consistently despite barely issuing a share over the last decade. Also helping our investment view is that MIN's diversification leaves it far more capable of tolerating volatility in lithium markets than its peers in the sector. We see MIN's lithium / iron ore market exposures as an ideal combination to benefit from the China re-opening increase in demand during 1H'CY23. We also see MIN as well placed to grow into its valuation, even if we see unexpected metal price volatility, given the magnitude of organic growth in the pipeline.
Westpac Banking Corp (ASX: WBC)
While the banking sector may have fallen out of favour with the investors recently, Morgans thinks it is worth sticking with Westpac. In fact, it believes huge returns could be on offer for investors picking up shares at current levels.
The broker currently has an add rating and $24.22 price target on the ASX 200 stock. This implies potential upside of 20% for investors before dividends and over 27% including them.
Morgans likes Westpac partly due to its return on equity improvement potential. It said:
We view WBC as having the greatest potential for return on equity improvement amongst the major banks if its business transformation initiatives prove successful. The sources of this improvement include improved loan origination and processing capability, cost reductions (including from divestments and cost-out), rapid leverage to higher rates environment, and reduced regulatory credit risk intensity of non-home loan book. Yield including franking is attractive for income-oriented investors, while the ROE improvement should deliver share price growth.
