The top 5 ASX stocks to watch in May 2024

The outlook for ASX stocks

The outlook for ASX stocks could be on the upswing, as signs increase that the Reserve Bank of Australia (RBA) is fast approaching a shift in its monetary policy settings.

As of the start of May the RBA has refrained from making any adjustments to interest rate levels since November last year, holding the cash rate target steady at 4.35% for close to six months.

While the target rate still stands at its highest level in over a decade, putting heavy stress on borrowers and variable-rate mortgagors in particular, analysts continue to see cause for guarded optimism.

The RBA can't leave interest rates unchanged indefinitely, lest the high cost of borrowing tip Australia into recession and trigger a rise in the unemployment rate.

Leading economists are anticipates cuts to interest rates by the end of 2024, including analysts at all of Australia's big four banks.

Any decline in interest rates will provide a boost to ASX-listed equities, by reducing the cost of borrowing as well as raising the present value of their future income streams.

The top five ASX stocks to watch

Here is a list of the top 5 ASX-listed stocks for investors to consider in the month of March, 2024.

1. BHP (ASX: BHP)

2. Newmont Corporation (ASX: NEM)

3. CSL Limited (ASX: CSL)

4. Woolworths Group Ltd (ASX: WOW)

5. Champion Iron Ltd (ASX: CIA)

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BHP (ASX: BHP)

As one of the world's leading diversified mining companies, BHP Group Limited (ASX) could prosper in 2024 if commodity prices rise on the back of an eventual dovish shift amongst the world's leading central banks.

While the performance of iron ore prices has been inconsistent, demand could rise in months to come if China follows through with talk of stimulus plans to keep its ailing real estate market from capsizing completely.

Goldman Sachs currently has a buy rating for BHP with a $49.20 price target, forecasting robust dividends from the mining giant in the near term. Analysts from the bulge bracket investment bank expect fully franked dividends of around $2.19 per share in FY24, and $1.95 per share in FY25.

BHP's share price could be affected by Anglo American's (LSE: AAL) decision to reject its AUD$60 billion acquisition proposal.

Newmont Corporation (ASX: NEM)

Resources giant Newmont Corp is the world's largest gold mining corporation, with gold assets scattered across the globe in countries and regions including Australia, Argentina, Ghana, Nevada, Colorado, Ontario, Quebec, Mexico and Suriname. The Colorado-based company was first incorporated over a century ago in 1921, and is the only gold company on the S&P 500's market index.

As a gold miner whose value hinges on the price of bullion, Newmont stands to benefit from both the inflationary pressures that central banks around the globe still seek to tame via high interest rates, as well as any cuts to rates that will boost asset values across the board.

For this reason Newmont's share price could hold up irrespective of which way the world's central banks and monetary authorities decide to head in 2024.

Gold prices have also recently seen gains, rising to nearly USD$2,350 an ounce on reports that official data indicates US inflation is in line with expectations.

CSL Limited (ASX: CSL)

CSL Ltd is another ASX-listed medical technology company with the potential to perform strongly in the near-future.

While the large cap company already commands an enormous market with its blood plasma treatments and influenza vaccines, analysts point out it still has further room for growth as the demographic structure of advanced economies continues to shift towards older, more long-lived citizens.

As the elderly demographic expands, this will increase demand for the types of products that CSL specialises in researching and developing. These include new treatments for kidney and iron deficiency, which could emerge as significent drivers of revenue growth in future.

The company has also seen an improved performance since the winding down of the Covid pandemic. Half year results for the 2024 fiscal year point to an 11% rise in revenues and a 17% increase in net profits.

Woolworths Group Ltd (ASX: WOW)

In addition to being one of the most iconic supermarket brands in Australia, Woolworths Group Limited also owns the Big W retail store brand and has made forays into the pet care sector.

Woolworths' share price has recently endured tough times amidst heavy inflation, falling more than 11% over the past year to $32.7.

Some analysts are upbeat about the future performance of Woolworths stocks, however, given that the drop in its share price translates into a dividend yield of more than 3%. Goldman currently has Woolworths on its conviction list with a buy rating, and a price target of $40.40.

Champion Iron Ltd (ASX: CIA)

Champion Iron Ltd - (AU) is an iron ore miner and explorer based in the Canadian province of Quebec. Its flagship asset is the Bloom Lake Mine in Fermont, Quebec, whose Phase II achieved commercial production in December 2022.

Champion has recently faces challenges in the form of lagging railway services and maintenance activities on both port facilities and the railroad. The iron ore miner could receive a boost later this year, however, should demand rise on the back of any stimulus policies coming out of China.

Goldman Sachs is upbeat about Champion Iron, considering shares to be cheap at current levels following the release of the miner's latest quarterly results. Analysts from Goldman have given the company a buy rating with a $9.30 price target.

They expect efforts to boost Bloom Lake Phase II production to 15Mtpa to drive growth in Champion's EBITDA by more than 50%, as well as the doubling of operating cash flow by 2025.

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