If you're not averse to investing in the resources sector, then you may want to look closely at the highly rated ASX mining shares listed below.
They have both been rated as buys recently and tipped to generate strong returns for investors. Here's what you need to know about them:
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BHP Group Ltd (ASX: BHP)
The Big Australian could be a top option in the mining sector for investors to consider. This is thanks to its world class, low cost, and diverse operations and favourable commodity prices.
The latter is particularly the case with iron ore and oil prices. Iron ore prices are currently trading within sight of record highs, whereas oil prices have just hit two-year highs. Based on BHP's costs guidance, it is generating significant free cash flow based on current spot prices.
Analysts at Macquarie are very positive on the company. The broker is expecting a record second half result in August, underpinning generous cash returns to shareholders.
Macquarie currently has an outperform rating and $63.00 price target on BHP's shares. This compares to the latest BHP share price of $47.60.
South32 Ltd (ASX: S32)
Another mining share to consider is South32. This diversified mining company has exposure to commodities including alumina, aluminium, energy coal, metallurgical coal, manganese ore, nickel, silver, lead, and zinc.
But the one getting analysts excited is aluminium. Analysts at Goldman Sachs are forecasting a major aluminium deficit by the middle of the decade. This is expected to lead to a significant increase in prices, boosting the company's earnings and dividends greatly.
Goldman said it has "little doubt that investors should view aluminium as in the early stages of a multi-year bull market."
In light of this, the broker currently has a conviction buy rating and $3.80 price target on South32's shares. This compares to the latest South32 share price of $2.91.
