Do you have $2,000 burning a hole in your pocket?
If you do, it could be worth putting it to work in the share market. Especially after recent market volatility dragged ASX shares down to very attractive levels.
But which shares would be top picks right now? Let's take a look at two that analysts rate as buys and are tipping to deliver big returns. They are as follows:
Image source: Getty Images
Pilbara Minerals Ltd (ASX: PLS)
Lithium stocks have been hammered in recent months due to falling spot prices. However, one positive is that Pilbara Minerals continues to demonstrate operational strength and a rock-solid balance sheet.
And with its low costs and demand for battery metals expected to rise materially over the long term, the lithium miner could benefit significantly from any recovery in lithium pricing. Which may not be too far away, with some analysts believing that a lithium shortfall could be on the horizon.
It is for this reason that Bell Potter is feeling very bullish about this ASX share. It recently said:
PLS operates a low-cost asset in a tier one jurisdiction, is diversifying through the lithium value chain, and provides a clean exposure to global lithium fundamentals and sentiment. While we expect lithium prices to remain volatile, we hold a robust EV-demand driven long-term market outlook. We believe higher prices are required to incentivise new sources of supply to moderate our forecast market shortfalls from 2026-27.
Bell Potter has a buy rating and $3.00 price target on its shares. This suggests that upside of approximately 60% is possible from current levels.
Xero Limited (ASX: XRO)
Another ASX share that could generate big returns according to analysts is Xero. It has been one of the standout tech performers on the ASX in recent years.
This has been driven by the cloud accounting platform provider continuing to grow its subscriber base across Australia, New Zealand, and the UK and USA, while also driving operational leverage.
And although trading at a premium, Xero's recurring revenue model, sticky customer base, and expanding margins justify this according to analysts at Goldman Sachs. Especially given its huge total addressable market (TAM). The broker said:
We see Xero as very well-placed to take advantage of the digitisation of SMBs globally, driven by compelling efficiency benefits and regulatory tailwinds, with >100mn SMBs worldwide representing a >NZ$100bn TAM. Given the company's pivot to profitable growth and corresponding faster earnings ramp, we see an attractive entry point into a global growth story with Xero our preferred large-cap technology name in ANZ – the stock is Buy rated.
The broker has a buy rating and $201.00 price target on Xero's shares. This implies potential upside of almost 30% for investors over the next 12 months.
