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Date : 01/02/2022

5 ASX 200 Stocks That May Make The Biggest Moves In 2022

Top 5 ASX 200 Stocks To Consider In 2022

The ASX 200 finished 16.50 points or 0.24% lower at $6,971.60 on Monday, extending losses of 2.6% last week. Furthermore, the benchmark is trading at 9-month lows. The financial stocks fell whilst technology companies lifted ahead of the RBA’s upcoming rate decision. The RBA statement is set to be released on Tuesday.

Our List of top ASX 200 stocks to Buy in September 2021

Wesfarmers Limited (ASX: WES)

The Wesfarmers Ltd (ASX: WES) share price remains flat at the time of writing after struggling for the last five days. Shares in the conglomerate remain capped today after trending up last week amid reports mentioning the group is in the process of hiring new recruits to potentially establish a new healthcare fund.

With the group’s recent acquisition of Australian Pharmaceutical Industries (ASX: API) for circa $760 million, Wesfarmers has already embarked on its first escapade in the sector.

Many wonder what the group’s next acquisition might be and whether there is any link to the recent hiring events and its next moves.

Apart from WES new venture into healthcare, owners of Wesfarmers shares have something to celebrate this week. Hence, two of the retail conglomerate’s businesses were named Australia’s three strongest brands.

Bunnings is crowned Australia’s strongest brand, while Officeworks is third.

Wesfarmers comes in with a value of $59 billion by market cap. The company won the acquisition race to purchase API against its rival Woolworths (ASX: WOW).

There are talks of Wesfarmers setting up a healthcare fund to potentially target a big fish within the healthcare space with the momentum in place.

It is understood that Wesfarmers is targeting top executives in the health insurance space to build out its new venture. Hence, API would provide the basis of a new Healthcare division of Wesfarmers and a platform to invest and develop capabilities in this growing sector.

The drift into healthcare would not be a maiden venture for Wesfarmers. Thus, it has thought of investing in several healthcare assets over the years and sold off its underwriting business to Insurance Australia Group (ASX: IAG) back in 2013.

With the API acquisition completed, investors are undoubtedly keen to understand where the company will deploy capital over the coming years. With a trailing twelve-month cash flow of $413 million and a net profit of $2.3 billion, the company certainly has the credentials to make it happen.

At the time of writing, the Wesfarmers share price is $52.71.

Lynas Rare Earths Ltd (ASX: LYC)

The Lynas Rare Earths (ASX: LYC) share price is slipping today despite the miner announcing record sales revenue in its latest quarterly report. After a morning of ups and downs, the Lynas share price has stabilised in afternoon trade and is currently up 0.34%, trading at $8.95.

Lynas is the largest producer of separated rare earth minerals outside of China. This includes neodymium and praseodymium (NdPr). The company’s product is needed to power clean energy batteries such as electric vehicles. Lynas produces its raw material in Western Australia at its Mt Weld mine. Resources are then transported to its Malaysian plant for offshore processing.

Lynas has recently released its company results for the December quarter, reporting excessive production and a record sales revenue of $202.7 million. This compares to $121.6 million in sales revenue for the same trading period in FY21.

The miner reported high consumer appetite and enthusiastic market conditions, which the company anticipated would continue into the next quarter. NdPr was in steady demand, with the market price hitting US$100 per kilogramme in November for the first time in 10 years. Production of the material reached 1,359 tonnes. Whilst the Chinese domestic price for NdPr was slightly higher, customers were concerned about securing their supply in this current climate.

Lynas has completed its mining campaign 4-1 drilling during the period. The company’s chemical assay results are now pending.

Lynas has still been affected by the COVID-related challenges despite good progress. Hence, shipping delays and disruptions doubled the transportation time on its Fremantle to Kuantan, Malaysia route. Although, the company took necessary measures to ensure consistency of supply by chartering a ship instead of using regular commercial options. Lynas will continue to combine these two shipping options in the future.

Pilbara Minerals Ltd (ASX: PLS)

The Pilbara Minerals (ASX: PLS) share price is starting the week strongly following its second-quarter update. At the time of writing, the lithium miner’s share price remained capped at around $3.20.

For the three months ended the 31st of December, Pilbara Minerals reported production of 83,476 dry metric tonnes (DMT) of spodumene concentrate. This was down 2.7% quarter-on-quarter and fell short of the downgraded guidance range of 85,000 to 95,000 DMT. Pilbara advised that this was due to the extended outages. Hence, operational disruptions happened at both the Ngungaju and Pilgan plants in the latter part of December. The company also experienced delays in sourcing additional labour and equipment for plant shutdowns and repairs.

Pilbara Minerals shipped 78,679 DMT of spodumene concentrate during the quarter, down 14% quarter on quarter. Accordingly, Pilbara has warned that it is reviewing its FY22 guidance to produce 400,000 to 450,000 DMT.

Finally, concerning costs, Pilbara reported a unit operating cost of US$587 per DMT at the Pilgan operation. While this is a higher quarter on quarter, it is largely due to higher royalties linked to significantly higher selling prices.

Judging by the Pilbara Minerals share price performance today, this news appears to have offset the disappointment of potential production and shipments downgrade for the next month.

BHP Group

It’s a big day on the ASX for the “Big Australian”. Hence, today, BHP Group (ASX: BHP) has claimed its place as the largest ASX company on the share market. BHP was always a heavy hitter in terms of ASX market capitalisation. But because of BHP’s dual-listing structure, its size was split between the ASX listing and its listing on the London Stock Exchange.

Although, last year, BHP announced that it would be ending the twenty-year status quo that was initially triggered by BHP buying the London-listed Billiton back in 2001. Today is the culmination of this integration process. BHP is ditching its London listing. This means that the company now only lists primarily on the ASX. However, there will still be a secondary listing of the company in London, New York and Johannesburg.

Today is the first day that all BHP shares trade on the ASX. This morning, the company released an ASX announcement confirming this process. BHP told investors that anyone who held the London-listed BHP shares would have them transferred to the new BHP shares on the ASX. These will trade on a deferred settlement basis until the 2nd of February. Until then, the replacement shares will trade under the ticker code BHPN. Finally, after the 2nd of February, all BHP shares on the ASX will revert to the standard BHP ticker.

At the time of writing, BHP is trading at $46.35 per share.

Fortescue Metals Group Ltd (ASX: FMG)

The Fortescue Metals (ASX: FMG) share price has risen by more than 40% over the past three months.

Fortescue is one of the biggest miners in Australia. The company has rapidly recovered a lot of its lost market capitalisation. The Fortescue share price fell to around $14 in October. Today, FMG shares are trading at $19.87 apiece.

What is driving Fortescue’s recent upside momentum? Well, thanks to Chinese demand, the iron ore price was exceptionally high in the middle of 2021. However, as Fortescue reached the final quarter of the 2021 calendar year, the iron ore price fell. Whilst the iron ore price fell to around US$80 per tonne in November, and it has since come roaring back to around US$140 per tonne.

For Fortescue, extracting the iron ore from the ground largely costs the same whether the iron ore price is US$100 or US$150 per tonne. So, a higher iron ore price largely adds to the net profit apart from paying more money to the government as well.

We expect the iron ore price to drop to around US$90 or US$80 per tonne this year. We believe that iron ore would see a recovery back above US$130 per tonne in the next couple of months. This will support Fortescue share price rebound back to early CY21 levels.

Investors Also Asked These Questions

1. What stocks make up the ASX 200?

The ASX 200 is Australia’s primary stock market index. The index comprises the 200 largest ASX listed stocks by market capitalisation and acts as the benchmark for Australian equity performance.

2. Does the ASX 200 pay dividends?

The ASX 200 does not pay dividends itself. However, many ASX listed companies pay dividends twice each year, usually interim and final dividends. Companies are not limited to paying twice a year and may pay more or less frequently. A company may also pay a “special” dividend related to a particular event.

3. Is now a good time to invest in Metal Stocks?

The mining sector is the centre of attraction because of the burgeoning demand for metals in the renewable energy sector. Various ASX-listed miners have recorded record-breaking earnings for the last two years due to a solid economic recovery after COVID19. Therefore, it could be a good time to consider metal stocks for your portfolio.

Are You Looking To Buy The Best Stocks In 2022?

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Top 5 ASX Stocks
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