Investors who are looking for mining sector exposure might want to listen to what Morgans is saying.
Its analysts have a number of ASX 200 mining shares on their best ideas list right now and are tipping big returns.
Two that have made the cut are listed below:
Pilbara Minerals Ltd (ASX: PLS)
Morgans has this lithium giant on its best ideas list this month. It believes the ASX 200 mining share has huge upside potential from current levels. It also sees scope for management to return a significant amount of money back to shareholders in the future. It commented:
We rate PLS as our best pick of the pure-play lithium stocks. It is well funded, has a long resource life and is an established Australian operator with multiple growth options ahead of it. We think FY24's starting cash balance of over $3.3bn combined with strong operating cashflow will allow the company to pursue a meaningful capital management program while simultaneously funding growth. Updates on the company's downstream growth strategy are expected later this half which will guide towards the potential scope of special dividends and / or buy backs.
Morgans has an add rating and a $5.60 price target on Pilbara Minerals' shares.
South32 Ltd (ASX: S32)
Another ASX 200 mining share the broker has on its best ideas list is South32. It is a diversified mining giant with a collection of operations that have exposure to the decarbonisation megatrend. The broker has been pleased with the transformation of South32's portfolio and likes it for its dividend policy. It said:
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 has an add rating and a $5.20 price target on South32's shares.
