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Buy this ASX share for its ‘undervalued’ lithium business: expert

There are not many cheap shares of any businesses involved in lithium production. But here’s a sneaky one, if you can get in quick.
The post Buy this ASX share for its ‘undervalued’ lithium business: expert appeared first on The Motley Fool Australia. –

ASX shares involved in lithium production have been so hot in recent years that it’s difficult to find cheap buys these days.

But Wilson Asset Management analyst Cooper Rogers reckons he’s found a major resources company where the market is materially undervaluing its lithium operations.

Mineral Resources Limited (ASX: MIN)’s a buy for us,” he said in a Wilson video.

“Their mining services division is underwritten for a 10% growth on their EBITDA line next year, along with that, we really do like the lithium business.”

Lithium, which is highly sought after for its role in modern batteries, could be a massive cash cow for the company in the coming years.

“We think [the lithium business] is undervalued versus its peers,” said Rogers.

“We think the MD Chris Ellison is going to come out of the full-year result and outline a really strong strategy for that division… that’s a catalyst for this stock to re-rate.”

The company’s preliminary results are scheduled to report on Wednesday.

The Mineral Resources share price has fluctuated widely in 2022, as mining stocks do. It is currently about 5.3% down from the start of the year.

(Almost) everyone reckons this stock is a buy right now

Rogers is not the only one bullish on Mineral Resources Limited.

According to CMC Markets, 10 out of 11 analysts recommend it as a buy. Nine of those 10 rate Mineral Resources as a strong buy.

Last week, The Motley Fool reported that Citibank analysts have a buy rating on the stock and a price target of $73.

That’s a nice 31.5% premium on the Thursday closing price of $55.50.

“Citi is positive on Mineral Resources due to its exposure to iron ore and lithium,” wrote James Mickleboro.

“Its analysts expect the price of the latter to stay higher for longer thanks to strong demand and tight supply.”

Bell Potter has a $75 price target for similar reasons to Rogers.

“Bell Potter is bullish on Mineral Resources due largely to its lithium business,” The Motley Fool reported last week.

“The broker is expecting this side of its business to start yielding increasing returns from FY 2023.”

The post Buy this ASX share for its ‘undervalued’ lithium business: expert appeared first on The Motley Fool Australia.

Should you invest $1,000 in Mineral Resources Limited right now?

Before you consider Mineral Resources Limited, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Mineral Resources Limited wasn’t one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

See The 5 Stocks
*Returns as of July 7 2022

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More reading

Top brokers name 3 ASX shares to buy next week
Brokers name 3 ASX shares to buy today
Here are the top 10 ASX 200 shares today
Mineral Resources share price on watch following Q4 update
How much has Mineral Resources paid in dividends over the last 5 years?

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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