Here are 5 stocks that got promoted in the ASX quarterly rebalance, and 5 that got demoted

Nick Sundich Nick Sundich, March 12, 2024

On Monday March 18, the ASX quarterly rebalance will be effective. Stocks will be promoted into new indices, while others will be demoted. This will trigger mandatory institutional buying and selling of such companies, something that can cause an impact on the share price. They also garner attention from investors who may buy the stock in the future.

You can find a full list right here, but we thought we’d highlight a handful of the most noteable stocks to get a promotion or demotion.

 

5 stocks that got promoted in the ASX quarterly rebalance

 

QBE (ASX:QBE) into the ASX 20

QBE may only be up 15% this year, but the ASX 200 is up less than 2% and the ASX 20 is up barely 0.4%. Impressive. QBE is one of the world’s top 20 insurance companies, employing over 14,500 people in 37 countries. It offers both consumer insurance products but also business insurance. We’re not just taking insurance for small coffee shops, we’re talking insurances for companies like big oil rig operators. In uncertain times, you want any certainty you can get and QBE provides this.

The company recently released its CY23 results in which it recorded 8.8% growth in its gross written premium and a 10% jump in net insurance revenue. Pleasingly, it is able to keep its costs under control with its expense ratio only growing from 11.7% to 11.8%, making a profit more than double the year before and almost doubling its Return on Equity from 8.3% to 16%.

 

Red 5 (ASX:RED) into the ASX 200

What’s more attractive to an investor than a gold mining stock right now? A gold mining stock that delivered a >70% jump in sales revenue, gold sales and production. This is just what Red 5, a company with two mines in WA, delivered to investors. Obviously gold prices are strong righty now, although engineering improvements also helped the company’s cause. It may be promoted further if the proposed merger with Silver Lake (ASX:SLR) goes ahead.

 

Monash IVF (ASX:MVF) into the ASX 300

At the bottom of the Corona Crash, this stock was barely at 40c. It has more than tripled since then as customers returned to the clinics, and kept coming even in spite of the cost ofg living crisis. It grew its revenue by 22% and its profit by 19% in 1HY24. It grew cycles by 15% at a time the industry only grew 5%, and now has a 20.9% market share.

 

Propel Funeral Partners (ASX:PFP) into the ASX 300

The only certainties in life are death and taxes, and this company helps with the former. And it aint cheap, with a cost per funeral of over $6,000. In 1HY24, it increased revnues by 23%, funeral volumes by 17% and its profit by 7%. PFP is growing both organically and through M&A, having completed $284m in operations since its IPO in 2017. The company boasts 91.1% growth since then, well ahead of the ASX 300 which only grew 27%.

 

NextGen (ASX:NXG) into the ASX 300 

You know another commodity that is hot right now? Uranium. This company is dual listed on the TSX and has ground in Canada as well. It has 190,000 hectares worth of land in the Athabasca basin in Saskatchewan. Ever since it first came across Arrow a decade or gom it has continued to expand on the project, and has a 30,000-metre drilling campaign prepared for the year ahead.

 

5 that got demoted in the ASX quarterly rebalance

 

Core Lithium (ASX:CXO) from the ASX 200

The lithium explorer’s share price has seen a stark fall from grace over the past 18 months as the commodity began losing the market’s popularity contest as price plunge. It is so bad, that thios company put its NT project into mothballs. Maybe this represents a chance to ‘buy the dip’, although it could not maintain its place in the ASX’s benchmark indice. If its any consolation, at least it has company, and things actually could be worse (As you’ll see with Leo Lithium).

 

Chalice (ASX:CHN) from the ASX 200

Everyone thought Chalice had everything going for it. Its Julimar project is the largest nickel sulphide discovery anywhere in the world in 2 decades and the largest PGE (Platinum Group elements) discovery in Australian history. And it lies just an hours’ drive from Perth.

As of July 2023, it has a resource of 560Mt @ 0.54% nickel or ~1.7g/t palladium equivalent. 55% of this is Measured and Indicated with the balance Inferred. This equates to 16Moz of 3E (Palladium, Platinum and Gold combined), 860kt nickel, 520kt copper and 83kt of cobalt. This is equivalent to 3Mt of nickel equivalent or 30Moz of palladium equivalent.

Trouble is, the company needs $1.6-2.3bn to make this an operating mine ad it may not be in production until 2029. Your guess is probably as good as the company’s – not just the year, but the capex costs.

 

Appen (ASX:APX) from ASX 300

This probably should have happened months ago. Appen sources and sells machine learning data to train AI algorithms. Historically, its client base was concentrated around a handful of big tech companies and predominantly for advertising purposes. Appen has been diversifying its customer base into new clients and markets although investors fear these cash flows won’t be as reliable and as strong as before. This has been showing in its results and in repeated failure to meet its own guidance, let alone consensus estimates.

 

LLL from ASX 300

This year was set to be golden for Leo Lithium and its Goulamina project in Mali. It has a Mineral Resource of 108Mt at 1.45% lithium and an Ore Reserve at 52Mt at 1.51% lithium. The DFS found an NPV of US$2.94bn and a post-tax IRR of 83%! What was not to like?

Well, the lithium price for a start. But also, sovereign risks coming true, with the military regime in Mali raising eyebrows on the project. The company has been in suspension for several months now.

 

Region Group (ASX:RGN) from ASX 100 

You probably haven’t heard of this company before. Actually you have, but just not under its current name – this REIT used to be known as Shopping Centre Australasia (ASX:SCP). It was focused on staple shopping centres in regional areas, a good part of the property market to be in given the surge of people moving to rural areas. Unfortunately, it has not been spared the consequences of negative investor sentiment towards property stocks, shedding over 25% of its value since April 2022.

 

What are the Best ASX Stocks to invest in right now?

Check our buy/sell tips

 

Recent Posts

johns lyng group

Johns Lyng Group (ASX:JLG): One of a few ways to profit from climate change

Johns Lyng Group (ASX:JLG) is a restoration services company, repairing properties after damage by insured events, including weather and other…

hydrogen in australia

Hydrogen in Australia: Can we expect massive adoption in the next 10 years?

When will we see hydrogen in Australia? Not as a fad, not as an idea, but as a widespread energy…

Why is Gina Rinehart buying into Lynas

Why is Gina Rinehart buying into Lynas? She’s accumulated a stake worth over $300m

The big question on many investors’ minds this week is why is Gina Rinehart buying into Lynas? A substantial notice…