When it comes to investing in iron ore, most investors will immediately think of BHP Group Ltd (ASX: BHP) and Fortescue Ltd (ASX: FMG) shares.
While they may be among the biggest players in iron ore, they may not offer the biggest returns in 2026.
That's the view of analysts at Bell Potter, which believe that another ASX iron ore stock could outperform these giants this year.
Which ASX iron ore stock?
The stock that Bell Potter is tipping as a buy to clients is Fenix Resources Ltd (ASX: FEX).
The broker was impressed with the company's performance during the second quarter, noting that its production and sales were higher than expected. It said:
FEX reported record quarterly group iron ore production of 1.14Mt (BP est. 1.10Mt) and sales of 1.24Mt (up 40% QoQ, ~4.9Mtpa annualised; BP est. 1.10Mt). FEX realised an average CFR price of US$97/dmt (A$147/dmt), a 91% realisation to the 62% Fe benchmark index with higher fines sales vs lump (66%; Q1 FY26 53%).
Group C1 cash costs were A$75/wmt. FEX reported a $21m quarterly cash build, with strong operating cash flow of $43m, capex of -$5.7m and debt repayments of -$7.6m. At 31 December 2025, FEX had cash of $79m; we estimate debt (including leases) of around $81m, for net debt (including leases) of ~$2m. Group revised (Dec-25) guidance was reiterated (4.2-4.8Mt sales at a C1 cash cost of A$70-80/wmt).
Major upside potential
In response to the update, the broker has retained its buy rating and 70 cents price target on the ASX iron ore stock.
Based on its current share price of 48 cents, this implies potential upside of 46% for investors over the next 12 months.
As a comparison, Bell Potter has a hold rating and $19.30 price target on Fortescue shares (10% downside). It doesn't have a recommendation for BHP shares, but most brokers have price targets in the range of $48.00 to $50.00. This is broadly in line with where they trade today.
Commenting on its buy recommendation on Fenix Resources shares, Bell Potter said:
FEX has outlined a clear pathway to incrementally grow iron ore production to 10Mtpa at significantly lower unit costs, leveraging its integrated logistics network to underpin cash flows and fund its substantial organic growth outlook. FEX holds the largest storage position at the strategic and fast-growing Geraldton Port.
