5 Beaten-Down ASX Stocks That Could Bounce in February

ASX Stocks That Could Bounce in February

The start of 2026 has been brutal for several quality ASX names. While gold remains at historic levels after testing record highs near US$5,600 per ounce in late January, before a sharp correction towards the US$5,100 mark as February began, a handful of stocks have been punished by short-term concerns rather than lasting damage to their business models. For investors willing to look past the noise, this disconnect between share prices and fundamentals could present attractive entry points as February approaches.

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Why These Selloffs May Not Stick

Market pullbacks often say more about investor psychology than company health. Profit-taking after strong runs, sector rotation, and overreaction to minor setbacks can all trigger sharp declines in otherwise solid businesses. The five stocks below share a common thread: their recent weakness appears driven by sentiment rather than fundamentals.

Northern Star Resources (ASX: NST) slipped after cutting FY26 production guidance by roughly 100,000 ounces following equipment issues at Kalgoorlie, Jundee, and Pogo. However, the stock has partially recovered and now trades near A$29. With gold at historic levels and the company maintaining a robust balance sheet with A$1.18 billion in cash and bullion and a net cash position of A$293 million, the long-term picture remains intact. While current levels sit near consensus price targets, some analysts see upside to A$35 if production execution improves.

DroneShield (ASX: DRO) has seen its share price slide from 2025 highs to current levels near A$3.30. Insider sales and a withdrawn announcement rattled investors in late 2025, but the defence technology company’s order book remains strong, including an A$49.6 million European military contract secured in December. With no debt and over A$200 million in cash, DroneShield appears well-funded to execute its growth strategy.

Lynas Rare Earths (ASX: LYC) dropped from highs above A$21 to trade around A$15. The selloff reflects concerns about US policy shifts under the Trump administration and CEO Amanda Lacaze’s announcement on January 13, 2026, that she will retire at the end of the current financial year. Yet Lynas remains the largest rare earth producer outside China at a time when Western supply chain security has never mattered more.

Critical Minerals and Consumer Plays Under Pressure

Iluka Resources (ASX: ILU) has fallen to around A$5.35, well below its recent peak. The mineral sands and rare earths producer continues progressing its Eneabba Rare Earths Refinery in Western Australia, a project that could transform Iluka into a key Western supplier of separated rare earths. With construction advancing and government support secured, the strategic value of this asset may not be fully reflected in the recent share price.

Temple & Webster (ASX: TPW) has been crushed, dropping from a 52-week high near A$29 to around A$12. Rate hike fears and softer consumer sentiment weighed heavily on the online furniture retailer. However, the company continues growing market share in the shift to online retail, and analysts maintain an average price target above A$20, implying substantial upside if consumer conditions stabilise.

The Investor’s Takeaway

Not every beaten-down stock represents a buying opportunity. These five warrant attention because their fundamentals remain largely unchanged despite the sell-offs. Northern Star benefits from elevated gold prices. DroneShield holds a strong order pipeline. Lynas offers an irreplaceable Western rare earth supply. Iluka operates a strategically important refinery. Temple & Webster continues to capture a significant share of the online market.

For risk-tolerant investors, these pullbacks could offer better entry points than buying at recent highs. However, timing market bounces is notoriously difficult. A measured approach of building positions gradually rather than betting big on immediate recoveries may prove prudent as February unfolds.