The Hawsons Iron Ltd (ASX: HIO) share price is on a tear on Monday, up 18.28% in morning trade.

The ASX iron ore stock closed on Friday trading for 9.3 cents per share and is currently changing hands for 11 cents per share.

Here’s what driving ASX investor interest today.

What are ASX investors considering?

The Hawsons Iron share price is rocketing following a non-price sensitive release announcing non-binding Letters of Intent (LOIs).

The LOIs are for the offtake of up to 58 million tonnes per annum (Mtpa) of high-grade Hawsons Supergrade concentrate. The miner said this reflects increasing pressure on the global steel industry to decarbonise production.

The current list of 18 potential off-takers include 12 steel mill operators and six commodity trading houses.

The Hawsons Iron share price may also be getting a lift from the report on demand from mining companies for offtake discussions once a Bankable Feasibility Study (BFS) is complete.

Commenting on the progress, Hawsons’ managing director, Bryan Granzien said:

This level of investment interest in the project and robust offtake demand is clearly a strong demonstration that making the transition to producing zero-emission ‘Green Steel’ is front and centre on the global steel industry’s planning horizon and that Australia is a preferred supplier of high-grade magnetite concentrate.

The miner indicated that there’s plenty of demand to scale up its Iron Project.

“The LOIs we now have in hand provide additional confidence that there is more than sufficient market demand to support a modular expansion plan to 20 Mtpa,” Granzien said.

Hawsons said it couldn’t name the interested parties at this time due to commercial-in-confidence considerations.

Hawsons Iron share price snapshot

The Hawsons Iron share price notched up fresh five years highs in April this year but has since retraced. With today’s big intraday boost factored in, the ASX iron ore miner is trading right where it was 12 months ago.

The All Ordinaries Index (ASX: XAO) is also flat over the full year.

The post Why is the Hawsons Iron share price rocketing 18% on Monday? appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben 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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The Lake Resources N.L. (ASX: LKE) share price is falling on Monday.

In morning trade, the lithium developer’s shares are down 1% to $1.02.

Why is the Lake Resources share price under pressure?

Today’s decline may have been driven by the release of another short seller report on the company this weekend.

According to a note out of J Capital, its analysts believe that the direct lithium extraction (DLE) technology the company is looking to use could be “dramatically” underperforming expectations.

This technology is the key to making the lithium developer’s Kachi project in Argentina a success, so its failure would be a big blow to the company’s aspirations.

J Capital alleges that Lake Resources’ new CEO, David Dickson, has been contacting other DLE providers due to the underperformance of the current technology, which is being developed by its partner Lilac Solutions.

It commented:

One of the first actions of Lake Resources’ (Lake) new CEO, David Dickson, was to contact Chinese-listed Sunresin (3000487 SZSE) to ask if Lake could explore the use of their direct lithium extraction (DLE) technology. We have confirmed this with multiple sources, including Sunresin. If Lake is reaching out to alternative technology suppliers and going back to the drawing board for its technological solution for DLE, then investors deserve to know about it. Lake should advise investors if Kachi brine will be evaluated by alternative DLE technology partners for the extraction of lithium.

What else?

J Capital also highlights that after 600 hours of operation, the DLE technology has produced 80% less lithium carbonate equivalent (LCE) than was expected.

Lake Resources was aiming to produce 2,500kg of LCE after 1,000 hours of operation but only indicated that 303kg LCE was produced after 600 hours in a recent update.

But it gets worse, according to J Capital. The investment firm believes that there could be issues with quality given that no shipments have been announced. It explained:

It appears there may also be a quality problem with the lithium concentrate produced at the pilot plant to date. We estimate the first 2,000 liters of lithium concentrate was produced by the end of October and still has not been shipped 30 days later. Lake has not provided an explanation for this delay.

Lake should be clear with investors about why they have delayed the first shipment of 2,000 liters and why it will take up to three months to process the lithium carbonate from the lithium concentrate that is currently being produced at the site. Is there a quality problem with the lithium concentrate being produced by Lilac that creates difficulty for processing it into lithium carbonate?

These certainly are interesting times for the Lake Resources share price and its shareholders.

The post Lake Resources share price lower amid fresh short seller attack appeared first on The Motley Fool Australia.

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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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The IGO Ltd (ASX: IGO) share price is in the red, down 1.77%, after the lithium miner reported both positive and negative news this morning.

IGO shares closed Friday trading for $16.34 and are currently changing hands for $16.05 apiece.

This comes following the release of two price-sensitive updates from the S&P/ASX 200 Index (ASX: XJO) lithium stock.

What did IGO report?

In news likely to offer some tailwinds for the IGO share price, the company reported that Tianqi Lithium Energy Australia declared commercial production from Train 1 of the Kwinana Lithium Hydroxide Refinery, effective 30 November.

Tianqi Lithium Energy Australia is the joint venture between IGO (49%) and Tianqi Lithium Corporation (51%).

IGO said this reflected “confidence in the capability of Train 1 to operate continuously and produce battery-grade lithium hydroxide”.

Train 1 will continue to ramp up production through 2023. Negotiations with potential off-take customers are ongoing.

In separate news, which looks to be dragging on the IGO share price today, the lithium miner reported it has temporarily halted all operations at its Nova Operation due to a fire.

On Saturday, a fire broke out at the 10MW Nova power station, owned and operated by the IGO’s power partner, Zenith Energy Pty Ltd. The fire was contained to the diesel engine room, which suffered extensive damage.

IGO reported that there were no injuries and all its personnel were safe. The miner is working with Zenith to get the power back online. It expects to be able to restart mining operations at Nova in two weeks. Restoration of the full power supply needed to run the processing facility will likely take four weeks.

Commenting on the fire, IGO’s acting CEO Matt Dusci said:

While this incident will result in the Nova operation being offline for several weeks, we are thankful that all of our people are safe and unharmed. I am also grateful to our Emergency Response Team for their quick and professional response and for restricting the fire to the engine room.

We have activated our contingency plans and are working closely with Zenith to re-establish operations at Nova as quickly and safely as possible.

IGO share price snapshot

The IGO share price has benefited from soaring lithium prices over the year. Over the past 12 months, IGO shares have gained 60%. That compares to a 1% full-year gain posted by the ASX 200.

The post IGO share price slides as fire incident overshadows commercial lithium production milestone appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben 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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Warren Buffett’s investing prowess has catapulted him to sit among the world’s richest people. Interestingly, however, the billionaire’s strategy for culminating wealth isn’t beyond the abilities of the layperson. Indeed, if I was 30 years of age with nearly no savings in the bank, I’d use Buffett’s methods to try to amass my own fortune by investing in ASX shares.

Buffett’s net worth sits at around US$109.5 billion at the time of writing, according to Forbes, making him the world’s fifth richest person. It’s no secret the ‘Oracle of Omaha’ made the majority of his fortune through value investing.

Here’s how I would look to build wealth through investing in ASX value shares if I were 30 with little to no savings.

Using Buffett’s method to try to get rich

Value investing is simple in concept, but it can be tricky to get right in the real world. The idea behind the strategy is to find shares that are trading below their intrinsic value.

By doing so, an investor can jump on board a quality company and wait for the market to realise the true value of their investment’s assets. The key point here is ‘quality’. Here’s a widely cited Buffett quote:

It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.

But what makes a company wonderful? The investing guru is said to look for companies with strong balance sheets and competitive edges. Such traits can often help a company battle through tough times and retain their hard-built business over the years to come.

Identifying quality stocks trading for cheap

Of course, deciding to follow Buffett’s investing mantra is easier said than done. Finding undervalued, quality companies can take time and patience.

Some of the simpler ways to assess a company’s true value include considering its price-to-earnings (P/E ratio), price-to-book (P/B) ratio, and debt-to-equity ratio.

Low P/E and P/B ratios might indicate an ASX share is undervalued. Meanwhile, a high debt to equity ratio may mean it’s heavily reliant on debt.

I would also consider how a company performs during tough times. As Buffett knows, a market crash could come at any time. Additionally, I would make a point to build a diverse portfolio of value shares, thereby reducing risk.

Next to no savings at 30? Time is on your side

The final factor I would consider when trying to build wealth at 30 with next to no savings is the market’s historical upwards trajectory.

The S&P/ASX 200 Index (ASX: XJO) was established in 2000 at 3,133.3 points. Today, it trades at around 7,300 – marking a 130% gain over that time.

While past performance doesn’t guarantee future performance, a 30-year-old investor has time on their side. Even if I had no savings at 30, I would prioritise investing a set amount each month to take advantage of compounding.

Over the 10 years to 2021, the ASX 200 grew an average of 6.6% annually. Assuming I invested $500 a month in ASX shares capable of providing similar returns, I could boast a portfolio worth $530,000 in 30 years. That’s despite only forking out a total of $180,000. And that’s before considering the potential compounding power of reinvesting dividends.

So, if I were 30 with no savings to speak of, I would follow Buffett’s advice to build future wealth. Indeed, even the oracle himself is said to have built 99% of his wealth after his 50th birthday.

The post With almost no savings at 30, I’d use the Warren Buffett method to try to get rich! appeared first on The Motley Fool Australia.

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Motley Fool contributor Brooke Cooper 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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The Metcash Limited (ASX: MTS) share price is starting the week positively.

In morning trade, the wholesale distributor’s shares are up 1% to $4.29.

This follows the release of Metcash’s half year results this morning.

Metcash share price higher on earnings and dividend boost

• Group revenue up 8.2% to $7.7 billion
• Group underlying earnings before interest and tax (EBIT) up 10.3% to $255.1 million
• Underlying profit after tax up 9.1% to $159.9 million
• Fully franked interim dividend up 9.5% to 11.5 cents per share
• Outlook: strong start to second half

What happened during the half?

For the six months ended 31 October, Metcash reported an 8.2% increase in revenue to $7.7 billion thanks to growth in all pillars despite cycling the impact of extensive lockdowns. Management advised that this was underpinned by continued strong demand, inflation and acquisitions.

On a three-year basis, which the company notes provides a comparison with pre-COVID trading, group revenue including charge-through sales increased 31.7% on a normalised basis.

Pleasingly, Metcash’s margins expanded, leading to a 10.3% increase in underlying EBIT to $255.1 million. The key drivers of this earnings growth were its Hardware and Liquor businesses.

Hardware EBIT increased 17.9% with growth in both IHG and Total Tool after underlying demand in the Trade and DIY segments remained robust.

Liquor EBIT increased 11.3% over the prior corresponding period. This was thanks to strong sales to retail customers and a recovery in sales to on-premise customers post-lockdowns and easing of other COVID-related restrictions.

The Food pillar delivered a more modest 3.2% increase in EBIT. However, this was achieved despite cycling the impact of extensive lockdowns in New South Wales and Victoria a year earlier, which led to demand for food being elevated. This reflects continued shopper support for local neighbourhood stores, underpinned by their differentiated offer and a further improvement in network competitiveness.

This increase in earnings and its strong financial position ultimately allowed the Metcash board to lift its interim dividend by 9.5% to a fully franked 11.5 cents per share. This dividend will be paid to eligible shareholders on 30 January.

Outlook

All pillars have continued to trade well in the first four weeks of the second half, with group sales up 6.2% over the prior corresponding period. This comprises Food sales growth of 4%, Hardware sales growth of 8%, and Liquor sales growth of 8.9%.

Management advised that this growth reflects consumers continuing to enjoy the improved competitiveness and differentiated offer of the network’s local neighbourhood stores.

And while sales growth rates have moderated compared to the very high levels during COVID, they continue to be driven largely by robust underlying demand and inflation, with volume growth remaining broadly positive.

However, management acknowledges that there is a lot of economic uncertainty which could impact its second-half performance. This could be holding back the Metcash share price a touch today. It concluded:

While supply chain challenges have improved, they continue to be a risk for all pillars in 2H23, as do additional fuel, freight and labour costs. There continues to be uncertainty over the level of inflation going forward, as well as how the impact of inflation and other cost of living increases may impact consumer behaviour in the retail networks of our pillars, and Metcash.

The post Metcash share price higher on dividend boost appeared first on The Motley Fool Australia.

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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 Metcash. 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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There has been a lot of damage done to a wide range of ASX shares. But, 2023 could be the year that some names surge higher if things go well.

ASX shares that are hoping to grow substantially in the coming years could get some traction next year.

Of course, just because a business is growing doesn’t necessarily mean that investors are going to recognise that potential within a 12-month time period, but I think underlying growth of the ASX share can indicate good things for the potential shareholder returns. That’s why I’ve got my eyes on these three ideas:

Healthia Ltd (ASX: HLA)

Healthia is a small cap ASX share with over 300 clinics. This healthcare share has three segments that are aimed at helping people across ‘bodies and minds’, ‘feet and ankles’ and ‘eyes and ears’.

I think that, over time, scale can greatly add to this business’ profitability as it grows the number of clinics through acquisitions and organic growth.

If the business can execute a steady pipeline of bolt-on acquisitions, it will naturally become a larger business over time.

The business already has a small presence in markets outside of Australia, in New Zealand and the USA, which gives it a longer growth runway.

According to Commsec, the business is valued at just 10x FY23’s estimated earnings with a potential grossed-up dividend yield of 5.7%.

Monash IVF Group Ltd (ASX: MVF)

This ASX share is about providing IVF services to help families have children. The company says that the maternal birth age has increased by two years over the last 20 years and is expected to further increase.

The IVF industry saw a 5% compound annual growth rate (CAGR) of volume between FY17 to FY22. After a disrupted period of COVID, 2023 could be a good year. It managed to slightly increase its market share in FY22.

It’s gaining “momentum” in south east Asia with five IVF clinics across the region. It is planning to open two or three new clinics each year. By FY26, Asia could be contributing 25% of the group’s stimulated cycles.

FY23 has started strongly – market share was up another 1.4% to 23.8%. According to Commsec numbers, it’s priced at under 16x FY23’s estimated earnings.

Volpara Health Technologies Ltd (ASX: VHT)

Volpara is a leading provider of software relating to screening for breast cancer and lung cancer.

It has built an impressive market share in the US. Of the women that are screened for breast cancer, at least one of Volpara’s products is used on 40.5% of women’s images.

The ASX share has an impressive gross profit of more than 90%, so extra revenue can help it power towards profitability. Its FY23 first-half result showed total revenue growth of 22% in constant currency terms.

I think a big step towards breakeven in 2023 will go some distance to quell investor concerns about potentially needing to do a capital raising.

Growth of average revenue per user (ARPU), geographic expansion and large client wins could be good tailwinds for the Volpara share price next year.

The US Food and Drug Administration (FDA) is expected to release breast density legislation, which could also be a boost for Volpara if it means more dialogue with patients about cancer risk.

The post 3 ASX shares I think are primed to break out in 2023 appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Healthia. The Motley Fool Australia has recommended Healthia. 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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Fortescue Metals Group Limited (ASX: FMG) shares are in my portfolio even though it’s one of Australia’s leading carbon emitters.

The iron ore company digs up a lot of raw material. But it takes a significant amount of fossil fuels to get the iron out of the ground, onto trucks and trains, and then onto boats.

Fortescue recently made an announcement that indicated it emits three million tonnes of CO2 equivalent emissions per annum.

It also means the business is exposed to fuel price volatility, currently costing Fortescue a significant sum of money.

But it’s the company’s plans relating to decarbonising and green energy that attracted me to the business.

Net zero by 2030

Fortescue has announced a US$6.2 billion plan to “eliminate fossil fuel use and achieve real zero terrestrial emissions (scope 1 and 2) across its iron ore operations by 2030″.

Management believes his initiative will avoid three million tonnes of CO2 per annum. Fortescue pointed to the displacement of approximately “700 million litres of diesel and 15 million GJ of gas per annum by 2030”.

The net operating cost savings are expected to be US$818 million per annum from 2030. Cumulative operating cost savings of US$3 billion are expected by 2030, with a payback of capital by 2034. That’s at market prices at the time of the announcement. This might be helpful for the Fortescue share price as it saves on operating costs.

The business also suggests this will establish a “significant new green growth opportunity by producing a carbon-free iron ore product and through the commercialisation of decarbonisation technologies”.

So while Fortescue is one of the worst offenders when it comes to emissions, it has a huge plan to eliminate those fossil fuels from the business.

I also appreciate the company’s plan to produce green hydrogen and green ammonia to help various parts of the economy to decarbonise. This includes areas such as aviation, boating, and machinery. I believe this can help the Fortescue share price over the long term.

Positive management commentary

Fortescue founder Andrew Forrest has a vision of what the business can achieve in the green space. When the decarbonisation plan was announced, Forrest said:

We are already seeing direct benefits of the transition away from fossil fuels — we avoided 78 million litres of diesel usage at our Chichester Hub in FY22 — but we must accelerate our transition to the post fossil fuel era, driving global scale industrial change as climate change continues to worsen. It will also protect our cost base, enhance our margins and set an example that a post-fossil fuel era is good commercial, common sense.

Fortescue, FFI and FMG, is moving at speed to transition into a global green metals, minerals, energy and technology Company, capable of delivering not just green iron ore but also the minerals, knowledge and technology critical to the energy transition.

Fortescue share price snapshot

Over the last month, shares in the iron ore miner have risen by 29%.

The post I consider myself an environmentalist, but I still bought Fortescue shares. Here’s why appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Fortescue Metals Group. 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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The Pilbara Minerals Ltd (ASX: PLS) share price is on the move on Monday morning.

At the time of writing, the lithium miner’s shares are up 2.5% to $4.98.

This means the Pilbara Minerals share price is now up over 40% since the start of 2022.

Why is the Pilbara Minerals share price pushing higher?

Investors have been buying this lithium miner’s shares this morning for a couple of reasons.

The first is a positive night of trade for lithium shares on Wall Street on Friday. This saw the likes of Albemarle Corporation, Livent Corp, and Sociedad Quimica y Minera de Chile record solid gains during the session.

Also giving the Pilbara Minerals share price a boost today has been the release of the quarterly index rebalance update from S&P Dow Jones Indices.

That update revealed that Pilbara Minerals will be promoted to the illustrious ASX 50 index when indices next rebalance on 19 December. It will join the index at the expense of engineering company Lendlease Group (ASX: LLC).

This wasn’t overly surprising. With the Lendlease share price down by almost a third this year, its market capitalisation was the lowest in the ASX 50 index. Whereas Pilbara Minerals’ market capitalisation has ascended to a level that puts it firmly in the top 50 companies listed on the Australian share market.

Is this good news?

This could be good news for the Pilbara Minerals share price as it potentially opens the company up to fund managers with strict investment mandates that only allow them to invest in shares in the ASX 50 index.

And while Mineral Resources Limited (ASX: MIN) is also in the blue chip index, Pilbara Minerals is the only pureplay lithium share in it. This could make it popular with any fund managers wanting exposure to the decarbonisation megatrend.

The post Why is the Pilbara Minerals share price charging higher on Monday? appeared first on The Motley Fool Australia.

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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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There are many ASX dividend shares that have gone through share price pain in 2022 as inflation and higher interest rates hurt valuations.

However, there are a few that have been sold off not just because of an interest rate valuation reset, but also for other reasons. Now they find themselves close to 52-week lows.

Time will tell whether they will be able to recover, though they are expected to pay sizeable dividends in the meantime.

Baby Bunting Group Ltd (ASX: BBN)

Baby Bunting is a leading retailer of baby products like prams, car seats, toys, furniture, and so on.

The Baby Bunting share price has suffered. It’s currently down more than 50% in 2022. In terms of its expected dividends, Commsec numbers currently suggest an annual dividend of 14 cents per share. That translates into a forward grossed-up dividend yield of 7.7%.

So what’s going on for the ASX dividend share? The sell-off accelerated after the AGM update. As at 7 October 2022, financial year-to-date total sales growth was 12%. But, despite that, the first quarter gross profit margin was down 230 basis points and the FY23 first-quarter pro forma net profit after tax (NPAT) was $3 million lower than the first quarter of FY22.

The business highlighted that over the last few years, it has made significant gross profit margin gains. It continues to emphasise value and maintain entry price points, despite competitors discounting top-selling items. There have been some unrecovered cost increases where input costs have risen faster than retail prices. The loyalty program has also caused a reduction in the gross margin.

Management says the business has plans to address the first half impacts and recover earnings over the full year. The company is also expected to open eight new stores during the year, with six in Australia.

Collins Foods Ltd (ASX: CKF)

KFC and Taco Bell franchisee business Collins Foods has seen its share price sold off by more than 40% in 2022 to date.

In FY23, it’s expected to pay an annual dividend of 25 cents per share. This would translate into a grossed-up dividend yield of 4.6% according to Commsec.

The ASX dividend share recently reported its FY23 half-year result which showed a 15% rise in revenue and statutory NPAT of $11 million, down from $26.4 million in the prior corresponding period.

The numbers included $11.9 million of impairments relating to eight Taco Bell restaurants. Management said it’s a challenging landscape as it suffers from inflation pressures. Margin pressures are also expected to remain for the rest of FY23 and it’s holding off on opening more Taco Bells beyond the planned five.

Medibank Private Limited (ASX: MPL)

The Medibank share price has suffered from a sell-off as the company told investors about a cybersecurity problem with hackers stealing important information.

The ASX dividend share is currently down 14% for the year as investors digest what this may mean for policyholder numbers and growth.

Commsec has an estimated the possible FY23 dividend at 14 cents for Medibank. This would translate into a grossed-up dividend yield of 6.8%.

Time will tell how much damage this does to the company’s profit, or if it does much at all.

Medibank is now heavily focused on improving its cybersecurity systems.

The post 3 high-yielding ASX dividend shares near their 52-week lows appeared first on The Motley Fool Australia.

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More reading

• The ASX 200 share to buy that just took a 24% dive: expert
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• The Collins Foods share price has been decimated this week, and 4 directors are buying the dip

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Baby Bunting Group and Collins Foods. The Motley Fool Australia has recommended Baby Bunting Group and Collins Foods. 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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The Rio Tinto Limited (ASX: RIO) share price jumped 24% last month. This compares to a 6% rise for the S&P/ASX 200 Index (ASX: XJO).

It was a very strong performance by the ASX iron ore share, though it helped that it was starting from an extremely low point in terms of share price at the end of October.

The thing for investors to remember with a business like Rio Tinto is that its fortunes are highly linked to commodity prices. How much it can sell its production for can make a big difference to its profit, considering the costs to produce 1mt of iron ore don’t really change much month to month.

Iron ore price rises

According to reporting by the Australian Financial Review, the iron ore futures in Singapore went above US$100 last week.

The apparent thinking behind the rise for investors is that China seems to edging closer to abandoning its COVID zero policies.

As reported by Reuters, COVID testing booths in Beijing have been removed and Shenzhen residents won’t need to present a negative test result to travel or enter parks, despite COVID cases being close to their highest level in the country. The change for Shenzhen is after Chengdu and Tianjin have made similar moves.

People no longer need to present a negative test to enter places like supermarkets, though offices and other locations still require testing.

Reuters also reported that “China is set to further announce a nationwide easing of testing requirements as well as allowing positive cases and close contacts to isolate at home under certain conditions, people familiar with the matter told Reuters this week.” Before, the guidance was that people need to go to “central quarantine”.

However, the news organisation referred to “many analysts” that don’t think a significant reopening will come until at least after March as the country works on a vaccine effort targeting the elderly.

An open economy could mean more economic activity, stronger demand for steel and iron, and better profitability for the iron ore miners.

Can the Rio Tinto share price rise further?

Brokers have different views on the ASX iron ore share.

For example, UBS is currently neutral on the business. But, the price target is $90, which implies a possible reduction of around 20%.

Macquarie is another broker that is neutral on the business. But, with a price target of $94, this implies a possible drop of around 16%.

One of the more positive brokers is Morgan Stanley, which has a price target of $121 – this implies a possible rise of 8%.

The post Why did the Rio Tinto share price rocket 24% in November? appeared first on The Motley Fool Australia.

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More reading

• The iron ore price just posted its biggest-ever monthly gain. What’s going on?
• Brokers name 3 ASX shares to buy today
• Why Coronado, IDP, Mayne Pharma, and Rio Tinto shares are dropping today
• Why Appen, Evolution Mining, Rio Tinto, and Xero shares are racing higher
• Rio Tinto share price lifts despite lukewarm iron ore outlook

Motley Fool contributor Tristan Harrison 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 Macquarie Group. 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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