Since this time in June, the mining and mining services company’s shares have risen a sizeable 20%.
This means Mineral Resources shares are now up 60% since the start of the year.
Why is the Mineral Resources share price up 27% in a month?
Investors have been bidding Mineral Resources shares higher over the last month after some positive comments by a leading broker.
According to a note out of Macquarie from last month, the broker reiterated its outperform rating and lifted its price target by 20% to $73.00. It then followed this up with a 4% increase to $76.00 earlier this month.
Based on the latest Mineral Resources share price of $61.79, this implies potential upside of 18% over the next 12 months even after its strong recent gains.
Why is Macquarie bullish?
Macquarie is bullish on the Mineral Resources share price due to the company’s exposure to iron ore and lithium.
In respect to iron ore, the company’s portfolio includes the Iron Valley Iron Ore project and the Koolyanobbing Iron Ore project in Western Australia.
Whereas for lithium, Mineral Resources’ Wodgina operation is one of the largest known hard rock lithium deposits in the world with a production life of over 30 years. It also has the Mt Marion Lithium project in its portfolio. This project is operated by Mineral Resources under a life-of-mine mining services contract and is jointly owned by it and Jiangxi Ganfeng Lithium.
Macquarie is also forecasting some big dividends from Mineral Resources, potentially making it an attractive option for income investors.
Its analysts have pencilled in fully franked dividends of $3.37 per share in FY 2021 and then $3.09 per share in FY 2022. Based on the current Mineral Resources share price, this will mean yields of 5.5% and 5%, respectively, over the next couple of years.
This stretches the total potential return on offer to over 23% for investors.