Best 5 ASX Stocks to watch in September 2021

ASX 200 remains in rally mode

As the new month closes in, the ASX 200 has continued to rally softly during August, opening Friday's session at the 7,491 point handle. Around those price levels, the blue-chip benchmark is up close to 12% for the year.

Despite not witnessing any major setbacks during the first 8-months of 2021, the benchmark’s performance has been outpaced by a number of key international indices. In North America, for example, the S&P 500 has run up 20.79% year-to-date, while the UK FTSE 250 index has gained 16.63%.

The largest weights on the ASX 200 – miners and banks – continue to face pressure from macroeconomic forces in the form of weakened commodity prices and historically low interest rates, respectively. These will likely remain key themes traders and investors should monitor over the short-and mid-term.

Even so, sell-side analysts continue to see individual pockets of potential outperformance in the Australian market. To that end, below we highlight five ASX-listed stocks that analysts from Macquarie have Outperform ratings on, including:

• Rio Tinto
• Boral
• Bapcor
• SEEK
• TPG Telecom

You can trade any of the five stocks discussed today – long or short – with an IG Account. Click here to open an account with us here.

Where this article refers to the best or top Australian shares, these are stocks based on the view of other market experts or analysts. Note that we do not give financial advice. Remember, the best stocks for you will always be ones underpinned by your own thorough analysis of both the company and the market.

Rio Tinto share price: -4.82% YTD

The mining giant has seen its share price come under heavy selling pressure in the last month, with the stock down approximately 17% in that period. This comes as iron ore prices tumble, causing traders and investors to rapidly abandon the sector.

Despite that, with Rio Tinto recently announcing it had resumed operations at its South African – Richard Bay Minerals site, analysts from Macquarie took that as a chance to reiterate their Outperform rating and $129 price target on the miner.

Moreover, while the investment bank notes that Rio has yet to provide a guidance update for the Richard Bay operations – which are concerned with mining Titanium Dioxide; Macquarie analysts made the equally important point that across calendar 2018 to 2020, Richards Bay accounted for just 2-3% of group earnings (EBITDA).

‘The restart of operations is encouraging and assuming production is ramped back up to capacity, should enable RIO to maintain a group Titanium Dioxide production rate around 1.0mtpa,’ the investment bank said.

Boral share price: +23.54% YTD

The share price of the construction materials and building products supply company fell after releasing its full-year FY21 results to the market this week. This is framed against a broader slump in Boral’s share price, with the stock down significantly in the last month. This comes as Boral saw its revenue slump 6% for the full-year, while its earnings, before significant items, rose 44% to come in at $251 million. The company did not declare a final dividend.

We examine the highlights from Boral’s FY21 results here.

Ultimately, with the company recently announcing details behind the sale of its North American building products business, much attention around Boral’s future – at least in the short term – has turned to its looming potential ‘surplus capital’. Analysts from Macquarie honed in on that fact, saying:

‘While the recovery is likely to be a slow and gradual one, the attraction of a potential ~$4.4bn (~$4ps) surplus capital base remains. We believe it unlikely that markets could get any worse from here, even though Covid disruption could linger.’

The investment bank has a $7.30 price target and Outperform rating on Boral.

Bapcor share price: -6.14% YTD

A leading provider of aftermarket automotive parts and equipment, Bapcor released an impressive set of full-year figures, reporting double-digit growth across the top and bottom-lines.

Here the company reported revenues of $1.76 billion, implying a year-on-year increase of 20.4%; and a 46% bump in full-year net profits after tax (pro-forma), with profits coming in at $130.1 million. The company also declared a final dividend of 11 cents per share, higher on the prior corresponding period's dividend.

Macquarie analysts were impressed by those numbers, saying Bapcor:

‘Delivered a record year in FY21, and while COVID-19 lockdowns create some 1H22 headwinds, we remain attracted to its many growth drivers medium term and its leading position in an industry that historically has been highly resilient through the cycle.’

The investment bank has an Outperform rating and $8.55 price target on the stock. That price target sits a ways from the stock’s current price, with Bapcor trending some 10% lower in the last month as we head into September.

Seek share price: +8.75% YTD

Arguably Australia’s leading jobs and employment platform, Seek has seen its share price trend higher over the last month, rising a shade over 5% as we head into September.

Looking at Seek’s most recent, full-year report, the company reported good FY21 full-yar results to the market, with revenue edging higher and profits swinging from a steep loss in 2020 to a heady gain of $752 million in 2021.

Seek’s management nonetheless guided for lower FY22 earnings (EBITDA), saying it expected to book EBITDA of between $425 million to $450 million in fiscal 2022; and profits (NPAT) of between $190 million and $200 million in the coming fiscal year.

Analysts from Macquarie remain bullish on the stock, assigning Seek an Outperform rating and $37.00 price target, while also recently saying:

‘Our investment thesis remains predicated on successful execution of the price-to-value strategy, which we believe is not fully captured by the market.’

TPG share price: -13.38% YTD

It’s been a sluggish month for the telco provider, with the TPG share price down close to 2%. This comes after TPG reported a mixed set of interim results to the market in August.

Indeed, while TPG showed that H1 revenues were up an impressive 71%, interim profits (NPAT) fell 8% in the half to come in at $76 million. In addition to that, the telco did declare an 8 cent interim dividend, while management also announced that they were conducting a strategic review into its tower assets.

Macquarie analysts, who have an Outperform rating and $7.70 price target on the stock said:

‘TPG is within 6-12 months of reaching the trough in earnings as NBN and COVID headwinds fade. Monetisation of tower assets would be a positive catalyst given the Telstra precedent.’

We unpack TPG’s interim results in more depth here.

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