Vale (RIO)

rhallbick (28.78) Submitted: 5/06/08 9:44 PM : Start Price: $32.73 RIO Score: -28.33

VALE is finally breaking out after 6 months of doing squat. They have locked in 65% higher prices for their iron ore for the next year which gives some revenue visibility. They are also going to plow their profits and then some back into further capital expenditures, which is fine as long as commodity prices keep increasing. Which is like saying, everything will be fine as long as home prices keep increasing. I expect them to find a new higher price range based on 2008 expected earnings and settle in again. (Disclosure: I am wrong about 3 out of 8 times, so say you don't remember where you heard it) If it looks like it is at another plateau, I am going to close out both my CAP's pick and my real position. I have no idea where it will be because the P/E is so low and the analyst expected growth rate is so high (i.e. PEG of 0.38). Let's hope it's absurdly high.

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