The team at Goldman Sachs has an investment list that highlights a selection of fundamental buy-rated Asia-Pacific (APAC) stocks across its Global Investment Research department.
This list, which is named the APAC Conviction List – Directors' Cut, is designed to provide investors with a curated and active list of 20-30 stocks that the broker believes to be differentiated fundamental buy ideas across its APAC coverage.
Among the list this month are two ASX 200 shares. Here's why Goldman rates them among the best of the best in the APAC region right now:
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Iluka Resources Ltd (ASX: ILU)
A new addition to the list this month is mineral sands and rare earths company Iluka Resources.
Goldman has put a conviction buy rating and $7.70 price target on the ASX 200 share. Based on its current share price of $5.19, this implies potential upside of 48% for investors over the next 12 months.
The broker likes the company due to its exposure to zircon and its rare earths plans. It commented:
Zircon (used in ceramics and chemicals) is one of the best structural supply side stories in commodities, in Paul Young's view. Paul sees Iluka as a major beneficiary given its world leading market share of 30%.
In addition, the company is commencing construction on a rare earth refinery, a strategic asset considering it will only be the western world's 5th refinery outside of China. Overall, Paul forecasts the company's EBITDA to double by 2028E.
Worley Ltd (ASX: WOR)
Another ASX 200 share that has been added to the APAC Conviction List is Worley. It is an engineering and professional services company which provides consulting and project delivery expertise to the resources and energy sectors.
Goldman has put a conviction buy rating and $18.00 price target on its shares. Based on its current share price of $13.83, this implies potential upside of 30% for investors.
Commenting on its addition to the list, the broker said:
Niraj Shah believes Worley is well positioned to play a role in enabling the ongoing transition from fossil fuels to a more sustainable energy mix, and to benefit from traditional/conventional spend in periods of heightened focus on energy security of regionalization of supply chains.
The stock has lagged due to reduced customer investment momentum (economic & geopolitical uncertainty) but Niraj expects delivery of guided earnings growth (low double-digit in FY25E) and improved backlog momentum should drive an improved share price performance.
