AUS
NZ
UK
CA
USA
FRA
GER
ESP
ITA
NLD
PRT
SWE
GRC
IND
POL
BRA
ZAF
RUS
CHN
UAE
The Asia-Pacific (APAC) region holds a dynamic range of opportunities across the ASX 200 index, as highlighted by a selection of stocks from Goldman Sachs' APAC Conviction List – Directors' Cut. This list, designed to showcase key players in the APAC market, includes 20 to 30 stocks that present strong fundamental positions within their respective sectors. Among the most prominent in the ASX 200 index are Lynas Rare Earths Ltd, Qantas Airways Limited, and Xero Ltd, three companies that continue to attract attention in various industries.
Lynas Rare Earths Ltd (ASX:LYC)
Lynas Rare Earths Ltd, a leading rare earths producer, plays a crucial role in the global supply of neodymium (Nd) and praseodymium (Pr), which are essential for producing permanent magnets used in electric vehicles, wind turbines, and other advanced technologies. China dominates the market with approximately 70-80% of NdPr production, making Lynas a vital non-Chinese supplier.
Lynas' Kalgoorlie facility in Australia is currently undergoing commissioning, strengthening its operational capabilities. In addition, the company recently secured a three-year extension to its operating license in Malaysia, enhancing its strategic foothold in the region. As global demand for rare earth elements continues to grow, the long-term outlook for Lynas appears increasingly positive.
The company's expansion into new markets and facilities positions it as a key player in the global rare earths sector, contributing significantly to reducing dependence on Chinese production.
Qantas Airways Limited (ASX:QAN)
Qantas Airways Limited remains a notable name in the airline industry, especially as the company recovers from the challenges of the COVID-19 pandemic. Qantas has successfully executed structural changes that are now reflected in its stronger earnings performance. The company’s cost-out program, which aims to save over A$1 billion, is expected to drive revenue growth in the coming years.
Despite the substantial improvements, Qantas’ current market capitalisation is comparable to pre-COVID levels, but its enterprise value is still below that of the pre-pandemic era. This divergence suggests the market is not fully recognising the airline's enhanced earnings potential. As travel demand continues to recover and operational efficiencies are realised, Qantas is expected to achieve greater profitability moving forward.
Xero Ltd (ASX:XRO)
Xero Ltd, a leading provider of cloud accounting software, stands out for its substantial growth potential in the software-as-a-service (SaaS) industry. Its focus on small and medium-sized businesses (SMBs) globally has positioned the company for significant long-term success. With an expanding footprint in regions such as Australia, New Zealand, the United Kingdom, North America, and Southeast Asia, Xero is well-situated to benefit from the increasing digitalisation of SMB operations.
The global total addressable market (TAM) for SMB cloud accounting software is estimated to be over NZ$100 billion, with more than 100 million SMBs worldwide. As regulatory environments become more favourable and businesses increasingly embrace digital solutions, Xero’s growth trajectory is supported by strong industry trends. Moreover, the company's strategic shift towards profitable growth is expected to accelerate earnings in the coming years.
Xero’s position as a global SaaS player, particularly in the cloud accounting space, cements its place as a key technology stock in the APAC region.
Bottomline
Lynas Rare Earths Ltd (ASX:LYC), Qantas Airways Limited (ASX:QAN), and Xero Ltd (ASX:XRO) represent some of the most promising companies within the ASX 200, each operating in sectors with significant growth potential. The ongoing developments within rare earths, aviation, and cloud software industries underscore the strong fundamental outlook of these businesses. The strategic positioning and operational improvements of these companies highlight the dynamic opportunities available within the APAC market.
