Why this top Australian stock could rise 30% in 12 months

Bell Potter thinks this stock is dirt cheap at current levels.

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The Australian share market has historically provided investors with an average annual return of approximately 10%.

While this return is excellent, you don't have to settle for that.

Not when there is one top Australian stock that has been tipped to triple this return over the next 12 months.

And that doesn't even include its attractive dividend yield.

Which Australian stock?

The stock in question is Elders Ltd (ASX: ELD). It is an agribusiness company and leading supplier of fertiliser, agricultural chemicals, and animal health products to rural and regional Australia, with strong agency positions in livestock, wool, and real estate.

According to a note out of Bell Potter, its analysts have been looking over recent industry data to get an idea of how the company is performing.

The broker highlights that first quarter drivers are looking stronger than a year ago. It said:

Our indexed value of industry livestock turnoff was up +68% YOY through 1Q25 and remains elevated through 2Q25 (+24% QTD). Comparisons in 2H25 become more difficult, but we would expect rainfall in the south could be a major cattle price driver, with the EYCI-US90CL discount at a historically high level. Wool activity has been softer, with volume down -10% YOY and the EMI down -1% YOY.

Commenting on crop protection and crop inputs, Bell Potter adds:

Active ingredient values have remained fairly static over 4Q24-2Q25 and a highlight of the US reporting season has been a recovery in 1Q25 formulator and distributor margins to historical levels. In addition, we note domestic formulators (DGL, RDX) have reported reasonably strong demand from the agricultural sector. Crop nutrient values (urea/DAP) have also been tracking ahead of our expectations, with forward rates implying a +8-13% YOY gains in DAP and urea.

Big return potential

In light of the above, the broker has retained its buy rating on the Australian stock with a slightly trimmed price target of $9.40 (from $9.45).

Based on its current share price of $7.03, this implies potential upside of 34% for investors over the next 12 months.

In addition, the broker is forecasting a partially franked dividend of 36 cents per share in FY 2025 and then a fully franked dividend of 43 cents per share in FY 2026. This equates to dividend yields of 5.1% and 6.1%, respectively, which boosts the total potential return to almost 40%.

Bell Potter concludes:

Our Buy rating is unchanged. We would expect many of the issues that plagued 1Q24 have largely unwound in 1Q25 and as such would anticipate a more normal phasing in earnings in FY25e. We remain of the view that the Delta-Elders overlap is limited and manageable (we note the ACCC's final Supermarkets review is also overdue) and would see this a catalyst for momentum to return.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Elders. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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