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Best 3 ASX 200 stocks to watch in June

We examine three ASX-listed stocks that some of Australia’s top investment banks currently have Buy or Outperform ratings on.

ASX 200 trades off lows, though faces turbulence

With the ASX 200 trading well off the lows it recorded in March – investors, market commentators and analysts look to be growing increasingly bullish over the outlook for Australian equities.

This comes as optimism around the re-opening of Australia’s economy increases, the Australian dollar surges, and iron ore, arguably the country’s most important commodity – trades over US$100 per tonne.

Mind you, bouts of volatility remain, with the ASX 200 falling 2.13%, to 6,017 points, in the first few hours of trade, on 11 June.

With all this considered, below we look at three ASX-listed stocks that analysts currently favour or have generally been the focus of significant news flow in recent times.

GrainCorp share price: an improving outlook

Though GrainCorp (GNC) has seen its share price trade flatly over the last five years, Credit Suisse analysts currently have an optimistic view on the stock, recently retaining their Outperform rating on the stock.

As part of the company's H1, which reflected a 'significant repositioning of the Group's portfolio', GrainCorp reported underlying earnings (EBITDA) of $183 million and underlying earnings (NPAT) of $55 million.

Importantly and reflecting on the current environment, GrainCorp's CEO, Robert Spurway made the point that:

'While COVID-19 presents challenges, we are pleased that Food & Agriculture has been classified an essential service and we have shown resilience through the ongoing crisis by continuing to deliver for our customers.'

Overall, when describing their GrainCorp investment thesis, Credit Suisse analysts said:

‘An improving crop outlook, cost structure that has been reset materially lower post the demerger of UMG, no debt (ex-trading inventory), and an uncorrelated exposure to the macro makes GNC an interesting proposition.’

Credit Suisse analysts currently have a 12-month price target of $4.72 per share on GNC, implying some upside from current price levels.

Harvey Norman share price: the game of growth

Almost paradoxically, the coronavirus and the lockdowns it created proved to be incredibly beneficial for certain parts of Australian retail. For example, the likes of Harvey Norman, Wesfarmers, JB Hi-Fi and Kogan have all recorded strong sales growth during the coronavirus period – as the demand for tech products, or those required for working at home activities, rises significantly.

On Wednesday, Harvey Norman (HVN) provided the market with a sales update, noting that during 2H20 to date, total Australian franchise sales increased an impressive 17.5%, while also announcing a special dividend of 6 cents per share.

Summarising all this, Citi analysts said ‘The COVID-19 trading period continues to surprise, with the acceleration in sales momentum likely peaking for Australian Franchisees in April and May at ~35%. The strength of this trading supports a 6cps special dividend.’

In response to this, Citi analysts maintained their Buy rating on HVN while upgrading their 12-month price target from $3.70 to $4.50 per share, as well as upgrading their earnings outlook for the retailer across FY20 and FY21.

CSL share price: why Credit Suisse still sees upside

Australia’s largest listed company – CSL – has faced moderate selling pressure since February, falling around 16% since then.

Even so, a number of analysts remains bullish on the biotech giant, with Credit Suisse analysts this week reiterating their Outperform rating on the stock.

Here, Credit Suisse analysts said that while the coronavirus (Covid-19) has seen CSL's costs rise, overall the company's fundamentals remain strong. 'While margins are clearly being pressured by rising collection costs, demand for CSL’s products, particularly IG, remains strong.’

Credit Suisse currently has a $323 price target on CSL, implying some potential upside from current price levels.

How to trade ASX-listed stocks

What do you think: do you see bullish or bearish opportunities in the markets right now? Trade accordingly. For example, you can trade the stocks we have discussed today – both LONG and SHORT – through IG’s world-class trading platform now.

To buy (long) or sell (short) CSL with CFDs, follow these simple steps:

  1. Create an IG Trading Account or log in to your existing account
  2. Enter ‘CSL' in the search bar and select it
  3. Choose your position size
  4. Click on ‘buy’ or ‘sell’ in the deal ticket
  5. Confirm the trade

This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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