When it comes to iron ore, many investors will look for exposure to the base metal with Fortescue Ltd (ASX: FMG) shares.
And that's not been a bad move this year. Since the start of 2025, the mining giant's shares have risen approximately 18%. And that doesn't include the dividends the ASX iron ore stock has paid to shareholders over the period.
However, with many analysts believing that Fortescue shares are now fairly valued to overvalued, better returns could potentially be found elsewhere.
Bell Potter certainly thinks that could be the case. It has a hold rating and $19.30 price target on Fortescue's shares, but a buy rating and sky-high price target on one of its rivals.
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Which ASX iron ore stock?
The iron ore miner that Bell Potter is recommending to investors is Fenix Resources Ltd (ASX: FEX).
The broker notes that it is aiming to unlock stranded mining assets across the Mid-West region of Western Australia through three wholly owned business pillars.
It is also in the process of growing its iron ore production to 10Mtpa by FY 2031 through its Weld Range Project.
What is the broker saying?
Bell Potter was pleased with the ASX iron ore stock's scoping study results. It notes that the company is positioned to grow its production and cut its costs materially. The broker said:
FEX has announced results of a Scoping Study (SS) outlining a 10Mtpa iron ore operation at the Weld Range Project in Western Australia's Mid-West. The study assesses production ramp-up from FY29, with the development of the Madoonga hub to produce in parallel with the Beebyn Hub, and construction of a 244km private road to leverage FEX's integrated logistics business. Key SS financial metrics (net to FEX) include: Development capex of $521m (including 16% contingency); average C1 cash cost $55/wmt; average annual EBITDA $235m; and pre-tax NPV10 $1.2b (assumed average iron ore 61% Fe price of US$85/t and AUDUSD 0.65).
In response, the broker has retained its buy rating on Fenix's shares with an improved price target of 70 cents (from 65 cents).
Based on its current share price, this implies potential upside of almost 50% for investors over the next 12 months.
Commenting on its buy recommendation, Bell Potter concludes:
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 clear pathway to 10Mtpa iron ore production at significantly lower unit costs.
