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Date : 20/09/2021

5 Best Performing ASX 200 Stocks To Buy In 2021

Top 5 ASX 200 Stocks To Consider In September 2021

Today, the ASX 200 has reported its worst session since February. The Australian index has fallen to its lowest level in three months after suffering its worst session since February, stoked by yet another collapse in the iron ore price.

The benchmark dipped by 155.5 points, 2.1% to 7,248.2, its lowest level since June. The collapse was led by the mining sector, with the major iron ore miners taking the heaviest hit.

Despite an ongoing correction on the broad market, investors should not be discouraged by the short-term volatility. Hence, in this time of turbulence on the market, opportunities might arise, such as for the four stocks listed below:

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

Pilbara Minerals (ASX: PLS)

Pilbara Minerals experienced a pour trading day today. In the afternoon, the lithium producer’s shares went down by 6.5% to $2.14. PLS even ended the day at a tad above $2, closing by -9.61%. Despite this, Pilbara remains an attractive stock given its 145% return in 2021.

The decline in PLS share price on Monday has been driven by the broad market weakness virtually across all sectors. The lithium sector has been hit particularly hard. We can attribute that to profit-taking after some very strong gains this year.

Today’s decline could present a great opportunity to jump in the lithium bandwagon. Actually, we have quite a positive view of the outlook of the lithium market. Consequently, this could boost PLS shares further. According to the latest release, the company intends to accept the highest bid of US$2,240/DMT for the intended 8,000 DMT of cargo. On a pro-rata lithia basis and inclusive of freight costs. This is approximately equivalent to a price of US$2,500/DMT.

As a result, we could expect PLS earnings to be higher than the consensus estimates, which could propel Pilbara’s share to a higher level.

Wesfarmers (ASX: WES)

Wesfarmers is literally a giant. The company operates various businesses, from supermarkets, liquor, hotels, to home improvement and office supplies. Oh, and we should not forget one of the most important business divisions, the industrial arm. Hence, Wes is also involved in chemicals, energy, and fertilisers to name a few activities.

For now, the group’s revenue derived from the industrial and safety division is just near 5%. But this may be subject to change promptly. Indeed, Wesfarmers since recently has decided to expand further its business to what we all know is the new gold rush, the lithium sector. Thus, to get involved with this lucrative resource of the future, WES has approached the idea of acquisition of key assets. We have seen the firm taking over Kidman Resources in FY19.

With this new acquisition, Wesfarmers is broadening even further its portfolio of business. In our opinion, if you are looking for a stable and reliable company to invest in, do not look any further. WES is a solid and diversified business. Therefore, it is less sensitive to the economic cycle and unsystematic risk.

In fact, with its strong balance sheet and wide range of cash-generative businesses, WES is well-positioned to deal with a range of economic conditions and to continue to expand. Moreover, Wesfarmers has demonstrated its skills in making successful earnings accretive acquisitions, such as recently the lithium business Kidman Resources which can position WES in the upcoming EV industry boom with battery production.

In short, if you want to have exposure in the lithium sector without the volatility risk that comes with any emerging tech stocks, Wesfarmers could be the choice.

Kathmandu Holdings (ASX: KMD)

Kathmandu is a designer, wholesaler of apparel, footwear, and equipment for surfing and the outdoors. The company operates internationally. Though, KMD generates a vast majority of its revenues from its outdoor segment within Australia.

Since mid-August, Kathmandu shares have jumped more than 18% after experiencing a three-month bear market. However, the KMD share price remains 42% below its pre-COVID high level. Nevertheless, we believe it might be a great opportunity to add this quality stock at a discount. Hence, Kathmandu earnings are poised to double over the next three years.

KMD was significantly impacted in early 2020 as the pandemic hit retail stocks. This was due to store closures and falling foot traffic. More recently, the share price decline has been attributed to continued negative pandemic news in Australia, and lately in New Zealand.

The company’s outdoor segment accounted for 61% of FY20 sales. The Surf segment contains the famous Rip Curl brand.

Kathmandu store footprint has grown to ~162 stores currently from 97 stores in FY10. As we said, we expect KMD’s earnings to double in the next three-year period. This growth will be driven by the successful launch of the Kathmandu brand outside of ANZ and solid market share gains for the Rip Curl brand.

Flight Centre Travel Group Ltd (ASX: FLT)

The Flight Centre Travel Group share price has finished the day down 2.5%. It has now been a bit over three weeks since the travel agency has released its FY21 results.

FLT saw a disappointing 70% year-on-year decline in its total revenue, down to $396 million. Furthermore, the company reported a loss before tax of $507 million. On a positive note, FLT ended the financial year with a strong balance sheet. Thus, the travel agency reported a cash balance of $1.36 billion at the end of the period. Accordingly, Flight Centre did not pay any dividends during the financial year.

Despite, a difficult FY21 due to the pandemic, FLT has emerged stronger. Thus, FLT has prioritised cost-cutting at the beginning of the crisis while still developing and implementing its technology. This led to improved productivity and prepare the company for recovery. strategies to drive stronger future returns.

Qantas Airways Ltd (ASX: QAN)

Despite experiencing a 2.71% decline today, Qantas remains a solid stock. Hence, in the last twelve months, the airlines returned 40%. That is twice the performance of the benchmark. So, what recent event weighed on this stock that keeps soaring? Qantas was affected by the news related to the Australian Competition and Consumer Commission, or ACCC. This commission has denied Qantas to collaborate with Japan Airlines. Although, the two airlines planned to work together on routes linking Australia and Japan.

Qantas will begin flying between Brisbane and Launceston 3 times a week in November. The airline’s budget operation, Jetstar, already flies the route. It will be adding another 2 flights each week between the Queensland capital and the northern Tasmanian city.

Qantas is ramping up its domestic operations. Thus, it is the eighth new route the airline has introduced since Australia’s international borders shut. According to the company, demand for flights to and from Tasmania has increased alongside the number of Australians’ seeking out domestic holidays.

The Qantas share price was bolstered last month when it announced its domestic operations were 95% cash-flow positive over FY21.

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