Down 47%: 2 ASX mining shares that could be on the way back up

When cyclical stocks are discussed, one cannot go past ASX mining shares.

Because of the brutal nature of commodity prices, the resources sector is highly liable to cycle up and down over the years.

That’s why, even if you intend to buy only the highest quality mining companies, grabbing them at a low point is critical.

Some experts this week named two stocks precisely in that position right now:

‘First commodity to bottom and then the first to recover’

Lynas Rare Earths Ltd (ASX: LYC) shares are in some strife.

The minerals stock is 47% down from its April 2022 peak. That’s a halving of value over just 22 months.

According to Catapult Wealth portfolio manager Tim Haselum, the market’s latest worry was the financial figures.

“Revenue of $112.5 million in the second quarter of fiscal year 2024 was down [in] the first quarter in response to lower production levels and weaker rare earths prices,” Haselum told The Bull.

However, all that matters is what happens from here, and Haselum is bullish.

“First feed of material from Mt Weld was introduced to the Kalgoorlie rare earths processing facility.

“The company’s amended operating licence in Malaysia is valid to March 2, 2026.”

He added that in the mining industry, rare earths tended to be “the first commodity to bottom and then the first to recover”.

Haselum is far from the only professional loving Lynas as a bargain buy right now.

CMC Invest shows that 10 out of 12 analysts rate the mining shares as a buy, with nine of them recommending strongly.

13% dividend yield!

New Hope Corporation Ltd (ASX: NHC) shares have had a similar journey to Lynas stocks, diving 28.7% since October 2022.

Even since October, the thermal coal miner has shaved 18.2% from its valuation.

Seneca Financial Solutions investment advisor Tony Langford reckons the numbers look fine from here.

“The company delivered a net profit after tax of $1.087 billion in fiscal year 2023, up 11% on the prior corresponding period. 

“New Hope finished the year with a healthy $731 million in net cash.”

The slump in the New Hope stock price has meant the dividend yield is now at a stunning 13.2%.

“Continuing demand for quality thermal coal makes New Hope particularly attractive for investors searching for yield at value.”

The post Down 47%: 2 ASX mining shares that could be on the way back up appeared first on The Motley Fool Australia.

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More reading

• Lynas shares rise on US merger talks
• 5 things to watch on the ASX 200 on Monday
• Here’s why I’d snap up this 13% yielding ASX 200 dividend stock in a heartbeat!
• Here are the top 10 ASX 200 shares today
• Goldman Sachs says these ASX 200 mining shares can rise 20%+

Motley Fool contributor Tony Yoo 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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