One ASX 200 dog stock of 2023 tipped to rebound in 2024

A fund manager has picked this stock as a fertile opportunity.

| More on:

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the 'five best ASX stocks' for investors to buy right now. We believe these stocks are trading at attractive prices and Scott thinks they could be great buys right now...

See The 5 Stocks *Returns as of 30 April 2025

man with dog on his lap looking at his phone in his home.

Image Source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The S&P/ASX 200 Index (ASX: XJO) stock Incitec Pivot Ltd (ASX: IPL) has been identified as an opportunity that could rebound strongly in 2024.

As we can see on the chart below, 2023 was a barren year for the chemicals and fertiliser business. It provides explosives for resource businesses and fertilisers for farmers.

Created with Highcharts 11.4.3Dyno Nobel PriceZoom1M3M6MYTD1Y5Y10YALL31 Dec 202211 Jan 2024Zoom ▾Jan '23Mar '23May '23Jul '23Sep '23Nov '23Jan '24Jan '23Jan '23Apr '23Apr '23Jul '23Jul '23Oct '23Oct '23Jan '24Ja…Jan '24Ja…www.fool.com.au

The fund manager Atlas Funds Management has picked the ASX 200 stock as one that has potential to recover.

Atlas points to a very simple reason for the Incitec Pivot share price falling 20% in 2023 – lower fertiliser prices.

Why the ASX 200 stock is an opportunity

The fund manager points out that investors could do well by looking at large businesses, which it calls dog stocks, that have fallen heavily but are still paying dividends.

The thought process for that is a large business improves the chance that the unloved company can have the financial strength to recover over time. If it's paying a dividend, it may suggest the business model is less likely to be permanently broken – a company's directors are "unlikely to authorise a dividend if insolvency is imminent."

Incitec Pivot could benefit after the ASX 200 stock sold its Waggaman Ammonia Plant in Louisiana in 2024.

Why does that help shareholders? It's because the company is expected to conduct a 26-cent capital return as well as a $900 million on-market share buyback.

If it does this, it would lead to a 15% reduction in the number of Incitec Pivot shares available and will "mathematically boost the company's share price", according to Atlas.

The fund manager also said additional capital returns could result from selling the Australian fertiliser operations if the company becomes a pure-play explosives company.

At the company's annual general meeting (AGM), it said its premium technology will provide a competitive edge in a market that is placing more focus on value over cost. It's also expecting profitability to grow due to "continued commercial discipline and a sharper focus on managing costs."

So far in FY24, the ASX 200 stock has also seen "solid results and reliable operations" across all of its manufacturing plants, apart from Phosphate Hill. The ammonia plant restarted on 2 December 2023, with plans for the plant to reach full production by mid-January 2024.

The distribution side of the fertilisers business is "targeting accretive market share gains, backed by strategic customer offerings."

Management said the company is in a strong position, and the business has "good momentum."

Incitec Pivot share price snapshot

Over the past two years, it's down by just under 20%.

Motley Fool contributor Tristan Harrison 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.

More on Materials Shares

A man wearing a shirt, tie and hard hat sits in an office and marks dates in his diary.
Materials Shares

Rio Tinto share price tumbles on CEO bombshell news

The mining giant is now looking for a new leader.

Read more »

a mine worker holds his phone in one hand and a tablet in the other as he stands in front of heavy machinery at a mine site.
Materials Shares

What's going on with the Fortescue share price today?

This mining giant is making changes to its leadership.

Read more »

Happy construction worker at a building site with a group of workers at the background.
Materials Shares

After its result, does Macquarie rate James Hardie shares a buy, hold or sell?

The company announced its FY25 earnings on Wednesday.

Read more »

Miner and company person analysing results of a mining company.
Materials Shares

Fortescue shares fall on Iron Bridge blow

Iron Bridge is taking longer to ramp up than planned.

Read more »

Three miners looking at a tablet.
Materials Shares

Buy Rio Tinto shares for a 23% return

Let's see which broker is tipping this mining giant as a top buy.

Read more »

A bricklayer peers over the top of a brick wall he is laying with a level measuring tool on top and looks critically at the work he is carrying out.
Materials Shares

Brickworks shares have surged 15% in a month. Are they still good value according to Macquarie?

Here's what this broker has to say about the stock.

Read more »

A man checks his phone next to an electric vehicle charging station with his electric vehicle parked in the charging bay.
Materials Shares

Are Pilbara Minerals shares too cheap to ignore?

A leading broker has given its verdict on this beaten down lithium miner.

Read more »

An unhappy man in a suit sits at his desk with his arms crossed staring at his laptop screen as the PointsBet share price falls
Materials Shares

Does Macquarie rate James Hardie shares a buy, hold or sell?

The company is set to report FY25 earnings this week.

Read more »