5 ASX Stocks Poised for a Strong Comeback in February 2026

The beginning of 2026 has been challenging for several ASX stocks. Despite the turmoil, certain companies present potential investment opportunities as February approaches.

Overview of ASX Stocks Poised for a Strong Comeback in February 2026

Investors often respond emotionally to market declines, resulting in short-term fluctuations. This creates a disconnect between stock prices and the underlying business performance. Below, we explore five ASX stocks that may rebound as market conditions stabilize.

1. Northern Star Resources (ASX: NST)

Northern Star Resources faced a downturn after reducing its FY26 production forecast by approximately 100,000 ounces due to equipment issues at various mining locations. Currently trading around A$29, the company holds a solid financial foundation, with A$1.18 billion in cash and bullion, and a net cash position of A$293 million. Analysts predict potential price growth to A$35 if production performance improves.

2. DroneShield (ASX: DRO)

DroneShield’s stock has decreased from its 2025 highs to approximately A$3.30. Investor sentiment was shaken by insider sales and a retracted announcement in late 2025. Nevertheless, the company enjoys a robust order backlog, including a significant A$49.6 million military contract in Europe. With no debt and over A$200 million in cash, DroneShield is well-positioned for future growth.

3. Lynas Rare Earths (ASX: LYC)

Lynas Rare Earths saw its shares drop from over A$21 to around A$15. This decline relates to uncertainties surrounding U.S. policy changes and the announcement of CEO Amanda Lacaze’s retirement at the end of the financial year. As the largest rare earth producer outside of China, Lynas plays a crucial role in enhancing Western supply chain security.

4. Iluka Resources (ASX: ILU)

Iluka Resources has experienced a fall to about A$5.35, significantly below its recent peak. The company is advancing its Eneabba Rare Earths Refinery project in Western Australia, which could position it as a vital supplier of separated rare earths. Government backing and ongoing construction efforts suggest that the strategic importance of this initiative may not yet be priced in.

5. Temple & Webster (ASX: TPW)

Temple & Webster’s shares have more than halved from A$29 to around A$12 amid rate hike fears and weaker consumer sentiment. Despite these challenges, the company continues expanding its online market share. Analysts maintain an average price target above A$20, indicating significant upside potential if consumer confidence rebounds.

Conclusion: Investment Opportunities in a Volatile Market

While not every underperforming stock signals a buying opportunity, these five ASX stocks exhibit resilient fundamentals. Northern Star thrives on high gold prices. DroneShield has a strong order book, Lynas secures critical rare earth supplies, Iluka pursues an essential refinery project, and Temple & Webster embraces online retail growth. For investors willing to take risks, these stocks present favorable entry points amidst market volatility. A gradual approach to building positions may be advisable as February progresses.