It's not often that you see an ASX share skyrocket 36% in one month but is still considered undervalued.
It's an especially rare scenario during a year when most ASX shares have dipped, if not crashed.
But that's the situation investors face with mining contractor NRW Holdings Limited (ASX: NWH).
NRW shares rose 36% in the month of February, making it Celeste Funds Management's star performer during a volatile time of inflation, war and floods.
In a memo to clients, the Celeste team attributed the returns to favourable half-year financials.
"The company delivered strong headline numbers and improved margins, which restored sentiment around contract claims and labour constraints – previously an area of contention during the peak of COVID."
Investing in the new resources boom, without buying a mining stock
Despite the spectacular explosion in share price, Celeste analysts reckon this is just the beginning.
"We suspect the market's view of this stock will continue to improve, with NRW trading cheaply in the meantime," their memo read.
"As a quality operator with a breadth of capability, we expect the company will further bolster its growing order book."
Just last week, Fairmont Equities founder Michael Gable agreed, saying "the valuation remains cheap".
"The earnings outlook is strong for this mining services company," Fairmont Equities founder Michael Gable told The Bull.
"The share price had been consolidating for the past few months before breaking higher after its half-year results. We now expect the shares to trend higher from here."
Multiple experts have mentioned how the current inflationary conditions favour the mining sector.
Even though NRW is not a resources producer itself, Celeste Funds is confident it will ride that wave.
"It is also a beneficiary of the commodity environment, with a tender pipeline of $19.5 billion in the next 12 months, providing resources exposure with an asymmetric risk-reward skew."
NRW shares closed Monday at $2.12.
The company is now headquartered in Perth, but it was established in Kalgoorlie in 1994.
