October is often referred to as the “crash” month. Will history repeat for the ASX 200? Well, the great crashes of 1929, 1987 and 2007 all happened in October. Already, stock markets have looked nervous the past few weeks.
Following a downturn for the broader market since the middle of August, the ASX looks to have shaken off the shackles once again as the ASX 200 is back on a positive momentum. Mining stocks are a huge part of the index and here are 3 great diverse options to consider.
BHP Group is arguably the most well-diversified mining and exploration company there is, and it is a part of every investor’s portfolio for different reasons – maybe for the stable dividends, or to decrease the overall volatility of the portfolio. It is also one of the best blue-chip stocks that trade on the ASX.
However, the BHP share price has come under significant pressure since last month. Although, on Friday, the mining giant’s shares jumped up by 3% to $37.74 per share.
For the last six months, the falling BHP shares kept the Australian market lower while investors could not avoid concerns about the troubled property giant Evergrande. The ASX has bucked a good lead from the US as investors look for confirmation that Evergrande paid a $US83.5 million interest payment on Thursday. Evergrande pledged it would. Although some investors say they are yet to see the evidence. The Chinese giant is struggling to pay about $418 billion in debts and investors fear a collapse could reverberate around the world.
Despite the recent event, BHP remains a solid play, especially for its lucrative dividend of US$ 3.01 per share representing a solid payout ratio of 89%. The record dividend was the result of operational excellence throughout the year. BHP exhibited solid performance that led to consistent free cash flow generation and an efficient margin of 64%.
Looking forward, BHP is also streamlining its business. Hence, we have seen Woodside Petroleum and BHP announcing their intention to enter a merger commitment to combine their respective oil and gas portfolios by an all-stock merger to create a global top ten independent energy company. This move from BHP will pave the way for the resource giant to move into the Potash business and further focus on developing a net-zero company.
BHP shares trade at $37.68 a share.
The Northern Star share price has leapt into the green since trade commenced this month and now trades at $9.22 apiece. NST has been crawling higher these past few days after hitting a low of $8.26 last week, but they have still marched lower from $10 back in July.
Gold miner, Northern Star is one of Australia’s leading ASX-listed precious metal producers. With a resource base located in the gold regions of Western Australia. NST is currently involved in the exploration, development, mining, and processing of gold deposits. The company also sell refined gold derived from the Jundee, Kundana, Kanowna Belle, Paulsens, and South Kalgoorlie operations.
Whilst there has been no market-sensitive information for the gold mining company, it is worth noting that the price of gold has popped higher since we started the month. After trending downwards lately, gold bottomed out at a low of US$1,723/oz on 30 September. As of today, gold is trading at US$1,755/oz.
The recent gain has certainly got investors’ attention and has pushed the ASX gold basket higher over these past few days.
If you want to play the gold rebound, do not look any further. Northern Star is an ASX resources share that is in a unique position, in that it is in the business of mining and processing gold deposits. As such, it must accept the spot and/or forward price of gold in the commodity markets and is considered a price taker. This means NST share price can fluctuate with the volatility in the underlying commodity markets.
The Northern Star share price has struggled this year to date and has missed its benchmarks completely.
NST shares now trade at $9.48 a share.
Orocobre is one interesting stock in the resource sector. It is an Australian mineral resources company based in Brisbane. ORE is a global supplier of lithium carbonate and boron. They have resources predominantly located in Argentina.
Orocobre has a solid partnership with the trading arm of Toyota. ORE has built the first commercial, brine-based lithium operation in ~20 years. The firm mainly produces and sells lithium to various industries. What we also like about this company is that it is one of the biggest and lowest-cost lithium producers in the world.
Besides, Orocobre is quite active. Hence, ORE is in the process of constructing a large-scale lithium hydroxide plant in Japan. This is the first of its kind for the country. The infrastructure will provide lithium-based products for the development of batteries.
Since the start of the year, the lithium miner’s shares have risen by an impressive 104%. ORE shares are currently trading at $9.14. It might seem overstretched given the year-to-date performance. But it is not the opinion of most of the analysts on the market. Actually, Citi has retained its buy rating and lifted its price target on ORE to $10.50 per share. In fact, based on the current share price of $9.14, this implies a potential upside of 14% over the next 12 months.