If you're looking for some exposure to the resources sector, then the team at Morgans has got your back.
Listed below are two of the best ASX resources shares to buy now according to its analysts. Here's what it is saying:
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Santos Ltd (ASX: STO)
Morgans is bullish on this energy producer and currently has an add rating and $9.00 price target on its shares. Based on the current Santos share price, this implies potential upside of 27% over the next 12 months.
The broker sees Santos as a great option in the energy space due to its diversified earnings and robust growth profile. It explained:
The resilience of STO's growth profile and diversified earnings base see it well placed to outperform against a backdrop of a broader sector recovery. While pre-FEED, we see Dorado as likely to provide attractive growth for STO, while its recent acquisition increasing its stake in Darwin LNG has increased our confidence in Barossa's development.
South32 Ltd (ASX: S32)
Its analysts also believe that South32 is one of the best options in the resources sector. Morgans currently has an add rating and $5.40 price target on the diversified mining company's shares. Based on the current South32 share price, this suggests potential upside of 29% for investors.
Morgans is positive on South32 due to the successful transformation of its portfolio and its positive long term outlook. It advised:
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.
