Fortescue Ltd (ASX: FMG) shares are a popular option for investors wanting exposure to iron ore.
But that doesn't mean the mining giant is the best way to do it.
Right now, one leading broker is tipping investors to snap up a different ASX iron ore stock following a strong update.
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Which ASX iron ore stock?
The stock that is being tipped as a buy is Fenix Resources Ltd (ASX: FEX).
On Thursday, its shares rocketed higher after the company unveiled its three-year production plan.
After delivering production of 2.4Mt in FY 2025, the ASX iron ore stock is now aiming to increase this materially over the next three years due to the Weld Range Project.
Fenix is guiding to production of 4.2 million to 4.8 million tonnes in FY 2026, 4.7 million to 5.3 million tonnes in FY 2027, and then 5.4 million to 6 million tonnes in FY 2028. It also reaffirmed its FY 2026 cost guidance of A$70 to A$80 per tonne, with sustaining capital for the three-year period estimated at $35 million to $45 million.
Bell Potter was pleased with the update. It said:
The staged production ramp-up provides a low-risk pathway towards 10Mtpa production, with ore sourced from adjacent hubs resulting in streamlined logistics and operational efficiencies. FEX holds mine plan optionality, with numerous Weld Range deposits across the Beebyn and Madoonga hubs.
The company is exploring several cost-reduction initiatives, including: Transition to owner-operator mining; development of private haul road to decrease mileage and increase haulage capacity; and use of transhippers to reduce shipping costs.
Forget Fortescue shares
Bell Potter currently has a hold rating on Fortescue's shares with a price target of $19.30. This is approximately 15% below where they currently trade.
Whereas this morning, the broker has reaffirmed its buy rating and 65 cents price target on Fenix shares.
Based on its current share price of 50 cents, this implies potential upside of 30% for investors over the next 12 months.
In addition, the broker is expecting a fully franked 2% dividend yield in FY 2026, sweetening the deal further.
Commenting on its buy recommendation, Bell Potter said:
FEX continues to grow its portfolio of low capital mining assets, leveraging its integrated logistics networks to underpin cash flows for growth and shareholder returns. The company holds the largest storage position at the strategic and fast-growing Geraldton Port. The expanded FEX-SMC agreement provides a clearer pathway to +10Mtpa iron ore production at significantly lower unit costs.
