South32 shares (ASX:S32) have emerged as a top performer on the Australian Securities Exchange in recent days, surging 9.97% in the past 3 trading days to close at A$3.20. The rally marks a significant shift in momentum for the diversified miner, which has struggled to maintain momentum over the past year.
Today’s performance establishes a bullish short-term trend characterized by higher highs and higher lows. However, a longer-term perspective reveals a more nuanced picture, with S32 still down 15% over the past year and 7.5% lower than where it began the year.
Several factors appear to be fueling the renewed investor interest in South32, not least the upside moves seen across the materials sector as trade tensions ease a little between the world’s two largest economies. Another key driver is the company’s strategic repositioning towards commodities crucial for a low-carbon future.
This pivot aligns with growing global demand for materials like aluminum, manganese, and copper, which are essential for renewable energy infrastructure, electric vehicles, and other sustainable technologies. By focusing on these “green” commodities, South32 is aiming to capitalize on long-term growth opportunities and attract investors seeking environmentally responsible ventures.
Adding to the positive sentiment is recent insider buying activity. In June, Independent Non-Executive Director Jane Nelson purchased 40,000 shares at AUD 3.03 each, a transaction totalling approximately A$121,261. Insider buying is often interpreted as a signal of confidence in the company’s future prospects, as those with intimate knowledge of the business are putting their own capital at risk.
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Furthermore, South32’s ongoing share buy-back program is providing additional support to the stock price. By repurchasing its own shares, the company aims to return value to shareholders and potentially reduce the number of shares available in the market, thereby increasing earnings per share and boosting the stock’s value. This capital management strategy demonstrates a commitment to shareholder returns and reinforces the company’s financial strength.
Looking ahead, investors will be closely watching South32’s upcoming earnings reports. The last half-year earnings were in line with estimates at AUD 0.13 per share, but the next half-year estimate is slightly lower at AUD 0.11 per share.
While this projected decline is not drastic, it highlights the challenges facing the mining industry, including fluctuating commodity prices, rising operating costs, and geopolitical uncertainties.
While the near-term technical outlook is positive, investors should remain aware of the risks and challenges facing the company, including its historical underperformance, higher volatility, and vulnerability to external factors. The coming months will be crucial in determining whether South32 can sustain its upward momentum and deliver long-term value to shareholders.
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