It's fair to say the S&P/ASX 200 Index (ASX: XJO) is off to a strong start in 2026.
Australia's benchmark index is up approximately 2% already in January.
This has been led by resources and materials sectors that have both risen by roughly 10%.
Two strong performing individual ASX 200 stocks have been Alcoa Corp (ASX: AAI) and Lynas Rare Earths Ltd (ASX: LYC).
However, yesterday both companies endured a heavy sell-off, with share price drops of 9% and 5% respectively.
The question investors might now be asking is if this is a buy the dip situation or if these stocks have already peaked.
Let's find out.
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Alcoa Corp (ASX: AAI)
Alcoa is a vertically integrated aluminum company whose operations include bauxite mining, alumina refining, and manufacturing primary aluminum.
It is the world's largest bauxite miner and alumina refiner by production volume, and the eighth-largest aluminum producer. Profits are closely tied to prevailing commodity prices along the aluminum supply chain.
Its share price is up roughly 50% in the last 12 months, and remains up 5% in 2026 even including yesterday's heavy fall.
It has benefited from tailwinds over the last year including rising commodities, strategic decisions, and new capital flows into hard assets.
There was no price sensitive news out of the company yesterday, however the stock price tumbled almost 9%.
After hitting 52 week highs prior to releasing its full-year FY25 earnings, it appears this ASX 200 stock is now coming back down closer to fair value.
So should investors buy the dip?
Analyst ratings via TradingView suggest fair value for Alcoa Corp shares is around $87.86.
This is just 3% higher than yesterday's closing price.
Based on this price target, it seems there is limited upside potential for this ASX 200 stock.
Lynas Rare Earths Ltd (ASX: LYC)
Lynas Rare Earths have been another mining stock that has enjoyed a bull run in the last 12 months.
Its stock price is up almost 150% in the last 12 months, including 31% just in January 2026.
However yesterday it appears investors were profit taking as the stock price fell 5%.
The company is primarily involved in the exploration, development, and processing of rare earth minerals in Australia and Malaysia. It is one of few rare earth producers outside of China.
Expert ratings of this ASX 200 stock are mixed.
Morgan Stanley is the most optimistic, with a price target of $19.45 suggesting an upside of 21.49%.
However, Bell Potter believes that this ASX 200 stock has peaked.
The broker has a price target of $11.15, which indicates a downside of 30%.
