Although mining shares do fluctuate wildly according to the state of the global economy, energy transition is a stickier theme that could be a longer-term tailwind.
Baker Young managed portfolio analyst Toby Grimm this week revealed two S&P/ASX 200 Index (ASX: XJO) stocks that he would buy right now that will be major beneficiaries of a zero carbon future:
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'Increasing exposure to energy transition metals and commodities'
Grimm noted that the South32 Ltd (ASX: S32) share price has dipped more than 9% since 3 March.
"We believe this represents a buying opportunity, as we see attractive value in Australia's biggest mid-tier diversified miner with increasing exposure to energy transition metals and commodities," Grimm told The Bull.
If one goes back a year, the stock has actually dipped 14.5%.
But Grimm is not too worried, pointing out that the business momentum is there for all to see.
"The company posted encouraging first half 2023 results, in our view."
South32 shares also currently pay out a handy dividend yield of 6.48%.
The wider professional community generally agrees with Grimm.
According to CMC Markets, 11 out of 19 analysts currently rate South32 as a buy. Seven recommend it as a hold.
Lithium demand will be fine in the long run
Pilbara Minerals Ltd (ASX: PLS), like many lithium shares, has dropped almost 30% over the past six months.
But, with production going so well, the stock is "worth adding to portfolios", according to Grimm.
"The company produced more than 300,000 dry metric tonnes of spodumene concentrate in the first half of fiscal year 2023, up 83% on the prior corresponding period," he said.
"The board has approved the P1000 project to increase Pilgangoora production capacity by 47%."
Although producers of the important battery ingredient have all suffered from a crash in the commodity price, a recent acquisition attempt verifies the long-term thirst for lithium.
"It's worth noting that lithium company Liontown Resources Ltd (ASX: LTR) rejected a takeover proposal from Albemarle Corporation (NYSE: ALB) on March 28."
Grimm's peers largely agree with his bullish stance for Pilbara.
Ten out of 17 analysts currently surveyed on CMC Markets rate the stock as a buy.
