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In a year when most ASX shares have lost value, mining stocks have been the lone light in the dark.
But even they have cooled off in the second half of 2022, due to concerns about recession around the globe. That’s because when economies slow down, commodity prices are the first to plunge.
So as we sit waiting for yet another interest hike on Tuesday, which are the ASX shares involved in the resources sector that are the best buys at the moment?
A panel of Wilson Asset Management analysts answered this question in a recent video:
‘Definitely a buy’ for early-stage miner
Equities dealer Will Thompson said that his team recently met with the management of Centaurus Metals Limited (ASX: CTM).
“It’s a really good company. We really like it,” he said.
“The ability to grow the resource… will then lead to financing discussions… and they’ll update the DFS [definitive feasibility study].”
With the share price down 36% since mid-April, Thompson reckons the valuation is attractive right now.
Centaurus acquired its current flagship project Jaguar from Brazilian giant Vale SA (BMF: VALE3) in 2020, and Thompson suspects that’s not the end of the story.
“They have some interesting relationships with Vale. You’ve got an offtake, and it’s still up for negotiation. At this stage [Centaurus] is definitely a buy.”
Gold miner ‘keeping costs down’
Thompson also rates Emerald Resources NL (ASX: EMR) as a buy.
He admitted gold stocks have been on the nose with the market in recent times.
“They’ve been able to keep their costs down — still keep producing at under $1,000 an ounce.”
Emerald has also acquired “a really interesting” new project named Bullseye.
“They’re also looking at developing a second mine in Cambodia,” said Thompson.
“So we think there’s some good valuation upside there. It’s a buy.”
The Emerald share price is down 4% so far this year, but has picked up more than 20% since a July trough.
Upside to 2023 guidance
Wilson senior equity analyst Shaun Weick likes the indirect resources exposure of NRW Holdings Limited (ASX: NWH).
“Mining services is back!” he said.
“FY 2022 results came in at slightly ahead of expectations and really reflects the worth of the COVID impact being behind these companies.”
In Weick’s view, the outlook for commodity demand remains strong.
“Order books are full, which provides good visibility. We see upside to the FY23 earnings guidance.”
In a tough year, the NRW share price is amazingly 29% higher than where it started in 2022.
Weick also feels the business is in a healthy state financially.
“The balance sheet is net cash, and valuation is screening compelling. We think it’s a buy.”