Round figures mean nothing in the share market; but the users of the share market are (mostly) human, and we attach psychological importance to round-number levels. In that light, here are three stocks that I think are poised to smash through the $20 level in share price – in the cases of Orica and Northern Star, heading back above $20.
- NEXTDC (NXT, $13.65)
Market capitalisation: $8.7 billion
12-month total return: –23.9%
3-year total return: 10.5% a year
Estimated FY26 dividend yield: no dividend expected
Estimated FY26 price/earnings (P/E) ratio: n/a (loss-maker)
Analysts’ consensus valuation: $19.30 (Stock Doctor/Refinitiv, 15 analysts); $19.50 (FN Arena, six analysts)
Australia’s largest independent data centre operator, NEXTDC operates a nationwide network of Tier III and Tier IV facilities in the Australian market, offering world-class colocation services to Australian and international organisations. (“Colocation” is the housing a company’s IT equipment in a third-party data centre, such as NEXTDC; this involves renting space, power, and cooling in a facility that provides these resources, rather than a company managing its own data centre. Tier 1 is the simplest data centre infrastructure, while Tier 4 is the most complex; each tier includes the required components of all the tiers below it.) NEXTDC delivers critical power, security, and connectivity for global cloud platform providers, enterprise, and government markets.
NEXTDC’s local network comprises 23 data centres, seven in Sydney, four in Melbourne, one in Geelong, two in Brisbane, two in Perth, one in Adelaide, one in Canberra, two on the Sunshine Coast, one in Port Hedland, one in the Pilbara and one in Darwin. Its international properties consist of two data centres in Japan, one in Malaysia, one in New Zealand. NEXTDC’s premium data centres are carrier-neutral, providing direct access to cable landing stations for the shortest routes, and for the fastest data connections to Asia from the east and west coast of Australia and the most direct connectivity between Perth and Sydney. (Up to 99% of the world’s data travels via subsea cables.)
NXT’s partner ecosystem comprises the country’s largest specialised information and communication technology (ICT) community of more than 750 clouds, networks and IT service providers. The power of its network-rich ecosystem enables NEXTDC’s customers to source and connect with cloud platforms, service providers and vendors to build integrated ‘’hybrid cloud” deployments and scale their IT infrastructure and services. (A hybrid cloud combines public and private cloud resources, enabling organizations to leverage the benefits of both.)
At its half-year results, NXT reported that net revenue grew 13% year-on-year, to $167.8 million; contracted utilisation increased by 18%, to 176 megawatts (MW); and underlying earnings before interest, tax, depreciation and amortisation (EBITDA) advanced by 3%, to $105.4 million. The net loss was $42.7 million, analysts are comfortable with NXT’s progress toward net profit, but that is not seen before FY28 at least.
At the half-year, NXT said its forward order book of 83 MW would “deliver strong growth in net revenue through to FY29 as contracts convert to billing.” To put that figure in context, in FY22, NXT had a forward order book of just 20 MW.
Subsequently, in an operational update earlier this month, NEXTDC reported that after recent customer contract wins, new contract wins had increased its pro forma forward order book at 31 March by 54%, or to 127 MW, which represents a record result for the company. Again, it will take a while before revenue flows from these new contracts, but these were better-than-expected contract wins.
The company increased its full-year FY25 capital expenditure guidance by $100 million, to a range of $1.4 billion to $1.6 billion, to reflect its task of building and deploy capacity for the new customer contract wins. CEO Craig Scroggie said in the update that the rise of artificial intelligence and high-performance computing is “reshaping the data centre industry at speed.” In particular, he said, hyperscale customers are “scaling AI-native infrastructure at unprecedented levels.”
The tailwinds behind NXT are blowing strongly, as the demand for business digitisation (colocation), cloud computing, and generative AI flows through to demand for data centres. NXT’s hybrid colocation business model brings together all three of these drivers, creating economies of scale and significant barriers to entry. That might sound like a one-way story, but interestingly, NXT has been heavily short-sold recently as short-sellers looked to target investor fatigue with the data-centre story – the stock is down 9.1% so far in 2025. But the May update and the new contract wins appear to have changed this view, and NXT has rebounded from an April low of $10.04.
Analysts are bullish on NEXTDC, with Macquarie the most positive, with a price target of $21.20.
- Orica (ORI, $18.65)
Market capitalisation: $9.1 billion
12-month total return: 1.8%
3-year total return: 7.1% a year
Estimated FY26 dividend yield: 3.4%, unfranked
Estimated FY26 price/earnings (P/E) ratio: 15.2 times earnings
Analysts’ consensus valuation: $21.70 (Stock Doctor/Refinitiv, 13 analysts); $21.805 (FN Arena, six analysts)
Orica is one of the Australian share market’s true global leaders. It is the world’s largest manufacturer and supplier of commercial explosives and blasting systems to the mining, quarrying, oil and gas and construction markets, and also the world’s largest producer of sodium cyanide, used for gold extraction. Orica is the global leader in geotechnical and structural monitoring in mining and civil infrastructure. The company has operations in more than 100 countries, with most of its manufacturing assets located in Australia.
Orica divides its business into the following units: Australia Pacific & Asia (APA), North America, Europe, Middle East & Africa (EMEA), Latin America and Digital Solutions. The APA business is the biggest contributor to earnings, generating 53% of the total, with North America the nest largest, on 16%. In terms of commodity exposure, 24% of the revenue comes from gold mining, 21% from copper, 14% from thermal (electricity) coal, 12% from quarrying and construction (Q&C), 9% from metallurgical (steelmaking) coal, 7% from iron ore, and the remainder from other commodities, digital solutions and future-facing commodities, which includes nickel, lithium, lead and zinc.
The company is the only true global player in the explosives industry: as broker Morgans puts it, this is a competitive advantage that is hard to replicate given the industry is highly regulated and capital-intensive. Morgans says Orica is the industry’s first integrated solutions provider, from mine to mill, and also leads the industry in technology and innovation; importantly, this area is high-growth and high-margin work. That helps to position Orica as set to deliver solid earnings growth over coming years reflecting strong demand, recontracting benefits, further mix/margin benefits and strong growth from Digital Solutions and Specialty Mining Chemicals, says Morgans.
Earlier this month, Orica reported a net loss of $89 million in the first half of the financial year, but that was caused by $339 million worth of impairment costs it had to take on its Latin American Blasting Solutions business. Despite this problem, the company posted a 40% rise in net profit, to $251 million, showing strong growth across all business segments. Sales revenue increased 7.7% to $3.94 billion, and earnings before interest and tax (EBIT) surged 34% to $472 million—the company’s strongest half-year result in more than ten years. Orica declared an unfranked interim dividend of 25 cents per share, up from 19 cents the prior year.
Analysts liked the result, with Orica’s earnings before interest and tax (EBIT) margin rising to 12% from 9.7%, despite a 2.7% fall in ammonium nitrate (AN) volumes, a key earnings driver for the company. Chief executive officer Sanjeev Gandhi said the company was well positioned to navigate the current trade and geopolitical uncertainties and maintain growth; but he also said that a global explosives’ shortage, intensified by the war in Ukraine, was pushing Orica into direct competition with governments and defence contractors for TNT, a crucial input for its mining and infrastructure operations.
Orica looks to be attractive buying, trading on an estimated (analysts’ consensus) price-to-earnings (P/E) ratio for FY26 PE of 15.2 times earnings, compared to a five-year average P/E of 18.1 times earnings. Analysts see the stock surging past $20 with ease, heading for $22.
- Northern Star Resources (NST, $18.53)
Market capitalisation: $21.2 billion
12-month total return: 27.9%
3-year total return: 32.5% a year
Estimated FY26 dividend yield: 3.2% unfranked
Estimated FY26 price/earnings (P/E) ratio: 11.4 times earnings
Analysts’ consensus valuation: $23.00 (Stock Doctor/Refinitiv, 17 analysts); $22.886 (FN Arena, seven analysts)
Gold heavyweight Northern Star Resources operates three mining centres, two in Western Australia (Kalgoorlie and Yandal) and one in Alaska, with the portfolio containing high-quality, high-margin underground and open pit gold mines. The Kalgoorlie operations include Kalgoorlie Consolidated Gold Mines (KCGM), which operates the famous Super Pit (the Fimiston open-pit mine, one of Australia’s largest open-pit gold mines), the Fimiston and Mt Charlotte underground mines and the Fimiston and Gidji processing plants, the Kanowna Belle and South Kalgoorlie underground mines, and the Carosue Dam and Porphyry open pit and underground projects; the Yandal operations comprise Jundee (the Jundee and Ramone underground mines and the Julius open pit), Thunderbox (the Thunderbox underground mine, the D Zone and Otto Bore open-pit mines, plus the Thunderbox processing centre and the new Wonder underground mine) and Bronzewing (the Orelia open pit). The Alaskan operations consist of the Pogo underground mine.
Earlier this month, Northern Star Resources officially completed its $5 billion all-share acquisition of De Grey Mining, which brings with it one of the world’s largest undeveloped gold projects, the Hemi deposit in the Pilbara region of Western Australia. Hemi will be a low-cost, long-life and large-scale gold mine: it is forecast to produce 530,000 ounces of gold a year over its first 10 years. It currently hosts a resource of 11.2 million ounces.
In the 2023-24 financial year, Northern Star sold 1.62 million ounces of gold, at an all-in sustaining cost (AISC) of $1,853 an ounce, or about US$1,320 an ounce. (The AISC represents the effective break-even point for a miner: the figure incorporates not only the “cash cost” of production but all the costs that allow production to be sustained.) With gold trading above US$3,242 ($5,055.88) an ounce, that still makes Northern Star a very low-cost miner for its size.
The company has a five-year strategy to grow production to two million ounces a year by FY26, with an active exploration program crucial to increasing both the resources and the reserves (the reserve is the portion of the resource that is economically viable to mine at the time of assessment).
For the half-year ended 31 December 2024, Northern Star reported revenue of $2.87 billion, up 28% from the previous year, while net profit surged 155% to $506.4 million, on the back of higher gold prices flowing into stronger earnings. However, last month the company reported third-quarter production of 388,400 ounces, which fell short of consensus estimates by 6.5%, mainly because of operational challenges at the biggest asset, KCGM, which affected mining of higher-grade ore in the KCGM open pit.
These problems have seen FY25 guidance downgraded, with projected gold sales cut by more than 6% to a range of 1,63 million–1,66 million ounces, and the AISC was raised by almost 15%, to a range of $2,100–$2,200 an ounce, which indicates that NST expects ongoing operational challenges. But analysts still expect very strong profit growth in the next couple of years: more than double last-year’s profit in FY25, and growth of about 50% in FY26. And the shares are still cheap, at 11.4 times expected FY26 earnings.
