If you're looking for options in the mining sector, then read on. The team at Morgans recently named some of their top picks from this side of the market.
Listed below are two of the mining shares that the broker has on its best ideas list:
BHP Group Ltd (ASX: BHP)
The Big Australian could be a mining share to buy according to Morgans. Its analysts like BHP due to its strong balance sheet and the diversity of its operations across both commodities and geographies. Morgans feels this makes BHP a relatively low risk option for investors in the space. It explained:
We view BHP as relatively low risk given its superior diversification relative to its major global mining peers. The spread of BHP's operations also supplies some defence against direct COVID-19 impact on earnings contributors. While there are more leveraged plays sensitive to a global recovery scenario, we see BHP as holding an attractive combination of upside sensitivity, balance sheet strength and resilient dividend profile.
Morgans has an add rating and $48.00 price target on BHP's shares.
South32 Ltd (ASX: S32)
Another option for investors to consider in the mining sector according to Morgans is South32. Its analysts also like this BHP-spinoff due to the diversity of its operations.
South32 also gets a thumbs up for the work management has done reshaping its portfolio and boosting its ESG credentials. The broker explained:
S32 has transformed its portfolio by divesting South African thermal coal and acquiring an interest in Chile copper, substantially boosting group earnings quality, as well as S32's risk and ESG profile. Unlike its peers amongst ASX- listed large-cap miners, S32 is not exposed to iron ore. Instead offering a highly diversified portfolio of base metals and metallurgical coal (with most of these metals enjoying solid price strength). We see attractive long-term value potential in S32 from de-risking of its growth portfolio, the potential for further portfolio changes, and an earnings- linked dividend policy.
Morgans currently has an add rating and $5.50 price target on South32's shares.
