Broker says South32 share price is great value and one of the ‘best’ options for investors

Miner on his tablet next to a mine site.

Miner on his tablet next to a mine site.

The South32 Ltd (ASX: S32) share price continued its slide on Wednesday.

The mining giant’s shares ended the day over 1% lower at $4.41.

This means the South32 share price is now down 19% from the record-high of $5.44 it reached in March.

Is the South32 share price good value now?

While the recent pullback in the South32 share price is disappointing for shareholders, it could be a buying opportunity for non-shareholders.

In fact, the team at Morgans recently rated the company as one of its “best ideas” on the Australian share market.

According to the note, the broker has an add rating and $6.10 price target on the company’s shares.

Based on the current South32 share price, this implies potential upside of 38% for investors over the next 12 months.

In addition, the broker expects big dividends from the mining giant. It has forecast fully franked dividends per share of 25.8 cents in FY 2022 and 35.3 cents in FY 2023. This represents yields of 5.8% and 8%, respectively, over the next couple of years.

What did the broker say?

Morgans is a fan of the company due to its diverse production and exposure to ESG-friendly commodities.

It explained:

S32 has transformed its portfolio divesting South African thermal coal and acquiring an interest in Chile copper, substantially boosting group earnings quality, as well as S32’s risk and ESG profile.

Unlike its peers amongst ASX-listed large-cap miners, S32 is not exposed to iron ore. Instead offering a highly diversified portfolio of base metals and metallurgical coal (with most of these metals enjoying solid price strength).

We see attractive long-term value potential in S32 from de-risking of its growth portfolio, the potential for further portfolio changes, and an earnings-linked dividend policy.

The post Broker says South32 share price is great value and one of the ‘best’ options for investors appeared first on The Motley Fool Australia.

Should you invest $1,000 in South32 right now?

Before you consider South32, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and South32 wasn’t one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of January 13th 2022

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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 no position in any of the stocks mentioned. 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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