Top 5 ASX stocks to watch in September 2023

The Australian economy entered the new financial year under straitened circumstances, after the Reserve Bank of Australia (RBA) rattled markets with a 0.25% hike to its official cash rate in June.

The move brought the target rate to 4.1%, for its highest level in over a decade. Gains in the cost of borrowing have put pressure across the Australian economy, with mortgage borrowers in particular likely to be hard hit as their fixed rate terms come to an end.

Since then, however, the RBA has kept its target cash rate on pause for three consecutive months, refraining from any further hikes from July to September.

On 5 September, the RBA announced that the target rate would remain on hold at 4.1%, after the inflation print for July cooled to 4.9%.

While inflation is still some distance from the RBA's target of 2 - 3%, many leading economists expect inflation to continue to fall throughout 2023 into the next year.

It may still be an opportune period for investment in Australian equities, given that the RBA's eventual suspension of rate hikes could provide share prices with a boost in the not-too-distant future.

Here is a list of five of the top ASX-listed stocks for investors to consider as of September 2023.

1. Northern Star Resources Ltd (ASX: NST)

2. Cyclopharm (ASX: CYC)

3. Domain (ASX: DHG)

4. Xero Limited (ASX: XRO)

5. Lovisa Holdings (ASX: LOV)

1. Northern Star Resources Ltd (ASX: NST)

NST is a gold explorer and producer with operations in both Australia and the US. Its key projects are situated in Northern Territory, Western Australia and Alaska.

NST saw a strong performance in the 2023 financial year, with revenue rising 9% to $4.1 billion, and cash earnings hitting a record $1.2 billion. The company's executives expect gold sales to increase by 2.4% to 12.0% in FY24, while costs hold steady.

As a gold miner, NST could benefit from ongoing gains in the price of the precious metal as the Covid pandemic winds down. Gold has seen a yearly increase of around 12%, with its value now sitting at around US$1,936.10 per ounce.

JP Morgan Chase expects gold to rise even further, with an average gold price target of US$2,175 per ounce for the final quarter of this year.

2. Cyclopharm (ASX: CYC)

NSW drug company CYC is the developer of Technegas, a radiopharmaceutical product that aids in the detection of potential lung diseases.

The radioactive drug permits more accurate visual diagnostics of the respiratory system, by using a gamma camera to record patients after they inhale the substance into their lungs.

While Technegas is already sold in more than 60 counties around the world, until now it's been barred from the US market.

CYC now expects to gain approval for the drug from the US Federal Drug Administration (FDA), however, given support from American physicians and the hiring of former FDA officials to conduct examinations.

3. Domain (ASX: DHG)

First established under the aegis of media giant Fairfax, DHG is the operator of some of Australia's most popular digital property portals, including domain.com.au, commercialrealestate.com.au and allhomes.com.au.

Given its heavy exposure to the Australian property sector, DHG weathered a rough FY23, with profits declining by nearly 30% and revenues just holding flat.

DHG could soon be on the mend, however, given that the housing slump may soon be at an end with expectations of more dovish policy from the RBA and a rise in demand on the back of post-Covid inbound migration.

DHG itself has pointed to early signs of recovery in the form of new 'for sale' listings in the key markets of Sydney and Melbourne.

4. Xero Limited (ASX: XRO)

New Zealand-headquartered Xero is a software company that provides online accounting solutions to over 3.5 million small business subscribers.

The company's online platform enables small businesses to perform a full range of accounting tasks online, including sending invoices, performing bank reconciliation, paying bills, claiming expenses, tracking projects and doing payroll.

Earlier this year Morgans gave XRO an add rating with a target price of $97, stating that rising rates are giving investors 'a rare opportunity to buy a high quality global growth company at a discount to the lifetime value of its current customer base.

Goldman Sachs has a conviction buy rating for XRO with a $147.00 price target, based on the company's total addressable market of 100 million small businesses globally, worth around NZ$76 billion. The stock is currently trading at around $123.00.

5. Lovisa Holdings (ASX: LOV)

Fast fashion jewellery company Lovisa has embarked upon an ambitious expansion plan into overseas markets, bringing its total store count to 715 globally. Its presence in the US is rapidly growing, with 155 stores in the country, as compared to 163 in its home market of Australia.

Lovisa could be well positioned to weather any further inflationary pressure due to the low cost of the goods it sells, as well as its target demographic of fashion-conscious youths whose discretionary spending is less affected by rising interest rates.

Its overseas expansion also effectively diversifies its global market exposure, helping it to deal with any regional economic risk.

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