The Mineral Resources Ltd (ASX: MIN) share price has been a very strong performer in 2022.
Since the start of the year, the mining and mining services company's shares have risen an impressive 38%, as you can see below.
This compares very favourably to the performance of the S&P/ASX 200 Index (ASX: XJO), which is down 6.25% year to date.
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Can the Mineral Resources share price keep rising?
The good news is that one leading broker believes the Mineral Resources share price can keep climbing from here.
According to a note out of Morgans, its analysts have initiated coverage on the company with an add rating and $94.00 target price.
Based on its current share price of $80.70, this implies potential upside of 16.4% for investors over the next 12 months.
But it gets better! Morgans is expecting the company to pay a fully franked $4.81 per share dividend in FY 2023. This represents a 6% dividend yield, stretching the total potential return beyond 22%.
'Formidable'
Morgans has been impressed with the company's transformation and notes that it is now a "formidable resource player with lithium clout." It commented:
MIN is a business that is transforming from being primarily leveraged to high-cost / shortlife iron ore operations to low-cost / long-life iron ore and lithium assets. […] MIN is the world's largest crushing contractor, a top five global lithium producer, a top five Australian iron ore producer, and the largest landholder in the Perth Basin (gas/condensate). It is a formidable founder-led business.
MIN has developed into a formidable player in the lithium market with lithium spodumene and lithium hydroxide production across its Mt Marion and Wodgina operations. Using the current lithium market strength to its advantage, MIN is working hard to expand all parts of its lithium business.
Very strong result expected in FY 2023
Morgans is expecting a very strong result in FY 2023 thanks to favourable iron ore and lithium prices. It said:
Riding the current upcycle in lithium and iron ore prices, we expect EBITDA to triple in FY23 to ~A$3.3bn. This would see the dividend yield jump to 6.1%, a significant increase on FY22 when MIN did not pay an interim dividend.
In light of this and thanks to its strong growth outlook, the broker sees value in the Mineral Resources share price at the current level. It adds:
Unlike the vast majority of its ASX-listed peer group, MIN is a growth story. This growth, from projects such as Onslow (iron ore), hydroxide growth, and Wodgina ramp up, will help to unlock value for MIN (or help offset any broader volatility).
