To The Moon

In 2025, Australian equities followed a stop-start macro narrative shaped by shifting policy signals and sharp sector rotations. The Reserve Bank of Australia delivered three rate cuts, lowering the cash rate from 4.35% to 3.60%. The lithium carbonate market traced a pronounced V-shaped reversal, and setting new highs.

Take a look at the Top 10 Most-Watched Australian Stocks.

1. $COMMONWEALTH BANK OF AUSTRALIA(CBA.AU)$: “Safe Yield” Bank Faces Margin Reality

In 2025, Commonwealth Bank of Australia delivered what most global banks would envy: record profits, record dividends, strong loan growth, and pristine asset quality.

Yet the share price told a very different story. After peaking near A$192 in late June, CBA entered a controlled but sharp de-rating, falling more than 20% by early December as investors reassessed how much they were willing to pay for earnings that now appear closer to cyclical peak.

The November Q1 FY26 update crystallized this shift: not because profits disappointed, but because margin compression, rising costs, and slowing operating leverage exposed the limits of valuation perfection.

2. $BHP GROUP LTD(BHP.AU)$ Scale Wins When Cycles Turn: BHP Reasserts Itself

As copper prices hover near record highs on tight mine supply, this year’s backdrop has been shaped by choppy China demand, tighter capital discipline across the mining sector, and a growing preference for producers that can deliver reliable volumes.

The market has come to view BHP Group less as a pure commodity trade and more as a cash-flow anchor, though investors still disagree on whether today’s elevated copper prices will cool or signal a longer-lasting supply squeeze. The story is gradually shifting from chasing price swings to backing balance-sheet strength, meaning the stock will likely move with commodity headlines while attention stays on costs, spending discipline, and the durability of returns to shareholders.

3. $CSL LIMITED(CSL.AU)$ Reality Check: Near Lows, Buyback Support

CSL’s 2025 has underscored that even “defensive” healthcare leaders can see highly cyclical share price behavior. A large on-market buyback, already mostly executed, has helped anchor downside expectations and signal confidence in long-run cash generation.

Broker views remain polarized: cautious voices question FY26 visibility, while bullish camps see China albumin pressure as temporary and plasma economics as the dominant driver. With the stock trading near its 52-week lows, CSL is widely viewed as a valuation debate rather than a business-in-distress story, leaving timing—not fundamentals—as the market’s core uncertainty.

4. $Rio Tinto Ltd(RIO.AU)$ Earnings Beta Meets A Discipline Premium

This year markets have leaned into capital discipline and supply constraints while treating China-sensitive demand as choppy, pushing investors to separate operational consistency from pure commodity exposure.

Rio has been repriced with a higher penalty for volume disruptions but a premium for balance-sheet strength and dividends, with disagreement centered on whether iron ore retains structural pricing power.

The narrative is shifting from “commodity supercycle confidence” to “execution and returns,” so expect sharper reactions to shipment prints and focus on cost curves, sustaining capex, and payout sustainability.

5. Lithium’s Reset Tests Conviction: $PLS Group Ltd(PLS.AU)$’s Cost Curve Becomes The Story

This year the dominant driver has been the normalization of battery-material pricing after capacity ramp-ups, pushing investors to reward low-cost producers and punish balance sheets built for peak prices.

PLS has been repriced from growth darling to cash-generation test case, and the market divides on whether demand re-accelerates fast enough to absorb supply without further price pressure.

The narrative is moving from “volume growth” to “survival and optionality,” implying headline-driven volatility and a need to track unit costs, inventory discipline, and contracting terms closely.

6. $Zip Co Ltd(ZIP.AU)$’s Hard Year: Profitability Improves, Confidence Lags

Zip shares were up just 5% year-to-date as of 19 December, underperforming broader risk assets and slipping below A$3 after the AGM, despite management reiterating confidence in meeting FY26 profitability and growth targets.

Strategic progress in FY25—most notably disciplined scaling in the US and deeper ANZ integration via Xero—delivered record profitability and operational leverage, yet the absence of near-term dividends reinforced the perception that cash will remain reinvested rather than returned.

Following a pullback after 1Q FY26 results, the stock has reopened a familiar debate: whether Zip’s transition from growth experiment to earnings business is enough to rerate the multiple, or whether the market demands longer proof—despite supportive buy-side views such as Macquarie’s A$4.85 target.

7. $DRONESHIELD LTD(DRO.AU)$: Order-Led Hypergrowth

A series of large, mostly repeat orders—culminating in major European military deliveries—drove explosive revenue growth, validating the commercial adoption of counter-drone technologies and suggesting a shift toward larger, more normalized contract sizes rather than one-off wins. Importantly, repeat customers signaled growing institutional comfort with integrating counter-drone systems into long-term security protocols.

While the balance sheet remains exceptionally strong—cash-rich, debt-free, and capable of supporting aggressive manufacturing expansion, valuation is no longer cheap and revenue still concentrated in hardware rather than recurring software.

8. Strategic Materials: $LYNAS RARE EARTHS LTD(LYC.AU)$ Repriced on Policy Optics

This year, the strategic premium on critical minerals intensified as supply-chain security returned to the policy agenda, amplified by renewed expectations around Donald Trump’s stance on rare earth self-sufficiency and a sharp rally across US-listed rare earth and defense-linked equities.

Lynas has been repriced as a geopolitical hedge with elevated policy optionality rather than a pure pricing story, but the central debate remains whether long-term offtake contracts and downstream integration can dampen near-term price volatility enough to stabilize earnings visibility.

9. From Euphoria To Normalized Competition: $QANTAS AIRWAYS LIMITED(QAN.AU)$ Re-enters Reality

This year the travel market has been defined by normalization of capacity, more price-sensitive consumers, and operational reliability becoming the differentiator as the industry shifts from scarcity to choice.

Qantas has been repriced from peak yields to mid-cycle profitability, and investors diverge on whether premium positioning can defend margins as competition and cost pressures rebuild.

The narrative is moving from “pricing power” to “service and efficiency,” so volatility will track load factors and fuel sensitivity while attention centers on unit costs, fleet utilization, and balance-sheet flexibility.

10. $WOOLWORTHS GROUP LTD(WOW.AU)$’s Tough Year: Margin Pressure Exposes A Competitive Gap

Woolworths’ FY25 marked one of its most challenging operational years in recent cycles, with underlying NPAT down 17% as cost inflation, industrial disruption, and price investment weighed heavily on supermarket EBIT, which fell 11% on a normalized basis.

Performance lagged its key competitor, Coles, across both sales growth and margin trajectory, a gap that management now implicitly concedes is likely to persist into FY26, triggering a sharp 15% share price sell-off following a muted outlook.

Looking ahead, FY26 EBIT is now expected to recover modestly but remains structurally weaker than prior expectations, as price cuts aimed at restoring customer value perception continue to pressure gross margins while sales growth stays soft. While near-term forecasts have been downgraded, Woolworths’ long-term earnings power remains intact. Customer price trust emerges as the key variable to watch through late FY26.