Buy Hold Sell: 5 stocks from the ASX’s hottest sector of FY26

There's no two ways about it. If you weren't holding materials stocks over the past 12 months, you missed a trick. 

The sector surged more than 45%, blitzing its nearest competitor (consumer staples up ~11%) and outperforming every other positive sector... combined. 

The sector was powered by insatiable demand for commodities from the AI infrastructure build-out. 

Gold, silver, copper, platinum and palladium all enjoyed significant price increases, whilst iron ore - still the backbone of the Australian mining sector - didn't suffer the price falls many were expecting. 

But the stellar performance begs the natural question - can the rally keep going?

To explore that question, run the ruler over some of the winners, and each pitch a stock they're backing for the year ahead, Livewire Tom Stelzer was is joined by Stephane Andre from Alphinity and Dougal Maple-Brown from Maple-Brown Abbott. 

Please note this episode was filmed on 1 July 2026.

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Edited Transcript  

Tom Stelzer: Hello and welcome to Livewire's Buy, Hold, Sell. I'm Tom Stelzer. If you haven't been holding Aussie mining stocks over the last 12 months, you've missed a trick. The sector's up 48%, but can the good times continue and what are the stocks worth holding for the next 12 months? To help answer those questions, I'm joined by Dougal Maple Brown from Maple Brown Abbott and Stephane Andre from Alphinity. Guys, thanks for joining us.

Before we get to the stocks, Dougal, I'm going to come to you with a question. Obviously, we've seen a really strong run. Is there any more juice left in the materials trade?

Is there further to run?

Dougal Maple Brown: Thanks, Tom. I'm not sure I'm qualified to talk about juice in the tank, but I can qualify to talk about value. And if you just indulge me for a minute, I'll explain to your viewers how we think about the commodity space and hence valuation in that. We have a price deck that goes out four or five years and it's anchored on a long-term price. We reappraise that regularly, but frankly, we rarely change it. The commodity stocks, from experience, shows they tend to follow the underlying prices up and down. An issue today is that most of the commodity prices that are relevant to the Australian stocks, in our view, are very high. So, that makes it a tricky time. Combined with the fact the sector is up 50%, as you alluded to, many of the ratings on many of the stocks have also expanded. So, stocks that were trading on 10 times a year ago are now trading on 15 or 16 times. So, don't know about the juice, but not much value left.

Tom Stelzer: Stephane, different question for you. I think Dougal's obviously touched on the elevated valuations there. We've talked about how well the sector's performed, but what would you say is the biggest risk here at the moment? What do you think could derail the momentum we're seeing?

What could derail the momentum?

Stephane Andre: I think there are two risks. The first one is a strengthening of the US dollar. We've seen what it does in June, a correction we've seen in the sector. And here, whatever happens in Iran could actually trigger that again with a higher fuel price, higher inflation, higher Fed and interest rates and therefore lower growth. So, that's something that we're watching. I like what Dougal said in terms of valuation, But when you mix it also with the earnings revisions, here too, I tend to agree that a lot of the fuel has actually reduced.

When we look at the sector, it has really run because earnings revisions surprised positively since September and it's because expectations were low after Liberation Day last year and some supply disruption, a weakening US dollar, everything started running and the sector was cheap. Now you look at it and you say actually earnings expectations have caught up for quite a few of the commodities. Now the spot price is sitting below expectations and that, for us, is a risk. So, it tells us that we have to be a bit more nimble and more selective in terms of what we go for.

Tom Stelzer: We're going to turn to the stocks now. Stephane, I’ll stay with you. We're going to start with one of the big names, Rio Tinto. Are you a buy, hold or sell there?

Rio Tinto (ASX: RIO)

Stephane Andre (HOLD): It's a hold for us. We own it, but have trimmed it a bit. In terms of commodities, we still are constructive on the commodities its extracts - iron ore, copper, aluminium, lithium. Some of them have more upside than others. In terms of production growth, the production growth of the company is reasonable for the next few years. We have a new CEO in place, which is going to have cost reductions and selling down of assets. So, all that is positive. So, why are we cautious? For two reasons. I think we're going to start seeing cost pressure now over the next reporting season. Everybody focused on the top line, but actually there was a lot of pressure on the various commodities that these guys need to actually extract what they sell. So, cost pressure is going to be there. And the second thing is we are actually a bit concerned about the Glencore deal coming back on the table. Quite a few investment bankers around town in the last few months have been trying to convince us that it's a great deal. Everything depends, at the end of the day, in terms of the value split, but there are some parts of the business there from Glencore, which we don't think will be well-managed in the hands of Rio.

Tom Stelzer: Dougal, we've seen strong demand for copper, aluminium. I think Rio's up 62% in a year. Are you a buy, hold or sell there?

Dougal Maple Brown (SELL): Yeah, thanks Tom. A bit like Stephane, we've owned it. We've been there longer and we've enjoyed the ride. But yes, we still own it, but yes, we're selling it. Again, I'll start with valuation. I agree with what Stephane said but a couple of additional points. So, Rio 12 months ago was on a single digit PE of eight or nine times. Again, depending on your commodity price deck, it's on 15 or 16 times. So, it's enjoyed a substantial rerating. On the commodities themselves, Rio's over 50% iron ore, copper, then aluminium, and I call ali a poor man's copper effectively, are all trading well in advance of our long-term prices.
There may be some downside to spot and analyst expectations, which Stephane's pointed out. We're less concerned about that, but they're all still trading rich compared to our long-term price deck. So, commodities trading high, valuation's been rerated, high earnings and high valuation normally leaves you in a dangerous spot. In addition to the Glencore deal, the thing that I worry about and it's been there forever and a day, but I still worry about it. It's a discount that the PLC line trades to the limited line or the premium that our line trades. You could wake up one day literally and that premium, which is blown out to over 20%, could compress in a trading session. So, the stock has had a great run. We still hold it today, but we've been selling.

Tom Stelzer: You mentioned commodities trading high, probably none more so than gold recently. Next stock is Northern Star; Dougal I’ll stay with you? Is that a buy hold, or sell?

Northern Star (ASX: NST)

Dougal Maple Brown (SELL): Yeah, at least I can spell it, I suppose Tom. So, that's a good start. But no, we're miles away from gold and hence all the gold shares. So, that's a clear sell for us.

Tom Stelzer: Stephane, what about you? Are you buy hold or sell on Northern Star?

Stephane Andre (SELL): Sell. I think the company has started to set expectations in the market in line with what they set internally, and stretch expectation, which is a recipe for disappointment. And we've seen these earnings downgrades, three earnings downgrade over the last year. Operationally, we still think that there is risk. The grades across the various assets have disappointed. CGM has to ramp up and that's another challenge in itself. And then the acquisition of Hemi might be more expensive to develop than expected. Also, new CEO coming in, rarely do you see a new CEO lifting the expectations, probably going to first clean the deck initially. And to the gold price, actually again, in terms of expectations, gold price is trading around USD4,000. Market expectations are USD4,600 for this year, USD5,000 next year. That means significant downgrades. So, downgrades top line, bottom line, i.e., it's a sell for us.

Tom Stelzer: Now, the third stock is Mineral Resources. I think it's up 14% this year. Stephane, I'll stay with you. Is that a buy hold or sell?

Mineral Resources (ASX: MIN)

Stephane Andre (BUY): It's a buy for us. It has had an incredible deleveraging story from six times EV to EBITDA a year ago to close to two times now. Part of it is luck because of the iron ore price holding well and the lithium price actually surging further, accelerated by the situation in Iran. But then also part of it is really them applying the operational and balance sheet levers, delivering well at Onslow, 35 million tonnes, and selling down 30% of the lithium assets to POSCO at a reasonably good price. The other aspect when we speak about mini resources is governance. And the new board, the new chair has actually de-risked a bit the governance of the company by stepping in strongly and putting, what we think, is better governance around it. What's next from here? Operationally, we still think that they have their mojo back. They can actually perform well on the volume perspective. We think there'll be also surprises on mining services, new deals announced in Australia as well as overseas, potentially Latin America. And the lithium price is still reasonable, I know it's high, but expectations are not too elevated. So, we see upsides across the various streams. It's a moderate buy for us because of the CEO succession risk, but it's good.

Tom Stelzer: It's got its mojo back according to Stephane. Dougal, what about you? Are you a buy, hold or sell on mineral resources?

Dougal Maple Brown (SELL): Thanks Tom. No, I'm a sell. We don't own it. If I'm nervous about the majors in the iron ore space, then yeah, I'm unlikely to be fishing in a low grade iron ore producer with the lithium price where it is and the corporate governance issues. Now to be fair, those corporate governance issues are definitely on the improve and that may provide an opportunity. But the fundamentals to us, as I say, of a lower grade iron ore business in the current climate is not for us. So, it's a sell.

Guest picks

Tom Stelzer: We've also asked our guests to bring a materials play they're backing for the next 12 months. Dougal, I'm going to come back to you. What do you have for us?

South32 (ASX: S32)

Dougal Maple Brown: Sitting pretty, but also looking pretty stupid. So, my pick was South32. As I record this today, the stock's up 10%, which is great obviously for investors. But part of the reason it's up 10% is it has sold one of the reasons I liked it. So, South32 has got a relatively diverse range of commodities and, more importantly, not iron ore. So, that was the attraction of the stock to us. The movement today is they've sold almost 40% of their earnings, which is in the alumina and aluminium value chain, to Alcoa - the big listed US player. I think they've got a pretty fair price, but going forward they've obviously lost some of that diversification. So, it will be a copper play primarily, bit of silver, a bit of lead, a bit of manganese. Don't ask me to spell that, Tom. But a reasonable valuation on a diversified suite of minerals that are trading there or thereabouts leaves us in South32.

Tom Stelzer: Stephane, what about you? What do you got for us?

Bluescope Steel (ASX: BSL)

Stephane Andre: We like BlueScope at this point in time. Management is very solid. New CEO, which was CFO and head of Australia beforehand is managing the company really well. And as you know, the company has had a takeover offer from Seven Group and Steel Dynamics. We think that she'll do everything she can in order to prove the value of the business as a defence. And so, that's an acceleration of the value proposal. But also operationally, there's quite a lot of upside of what's happening in the US. The US steel spreads there have increased by more than 50%. They're well exposed to it. The reason for that is because of the tariffs which have reduced the imports in the country. The demand has improved a bit because of the data centres. So, overall, that's a more sustainable business generating more cash flows over the longer term we think, but certainly for FY27 where we think that the guidance will be uplifted. So, yeah, it ticks quite a few boxes. It's a buy for us.

Tom Stelzer: That's all we have time for. Thanks to our guests and thanks for watching. For more buy, hold, sell, make sure to check out our YouTube channel.