Much to the delight of its shareholders, the South32 Ltd (ASX: S32) share price is one of the biggest movers on the market today.
In morning trade the mining giant has seen its share price rise a staggering 9% to $2.72. This gain means that South32's shares have now doubled in value in the last 12 months.
What caused the jump?
With no news out of the base metal and coal producer today, the jump is likely to be attributable to a research note out of investment bank Goldman Sachs overnight.
According to the research note Goldman Sachs' analysts have added South32 to the investment bank's conviction buy list with a $2.90 price target.
Its analysts believe that recent declines in South32's share price have created a buying opportunity for investors.
Furthermore, despite falling coal and manganese prices, Goldman Sachs still believes the miner is in a position to generate a strong level of cash flow.
Should you invest?
With its shares changing hands at a discount to peers such as BHP Billiton Limited (ASX: BHP) and Rio Tinto Limited (ASX: RIO), I would agree with Goldman Sachs that South32 could prove to be a solid resources investment.
Especially if the resurgent Chinese manufacturing lends support to weakening coal and manganese prices. Recent economic data out of China has been very promising in my opinion, which could be great news for South32 and its shareholders.
Whilst I think there are better options elsewhere in the market, investors wanting exposure to the resources sector could do a lot worse than an investment in South32. But due to the volatility of the industry I would suggest investors restrict an investment in the miner to just a small part of their portfolio.
