Rio Tinto plc (ADR) (RTP)

Continuing high growth

major diversified mining companies ranked one of the largest multinational mineral mining company expected to profit in the long term from depleting assets and higher commodity prices.

In the short term I can see this stock under-performing. It has had a good run the past few months, but does have the advantage of being a very basic company (i.e. it's products are not fancy, but vital). I believe this will make it a long-term out-perform. Hopefully I don't get stopped-out in the interim (I usually place a trailing stop on my holdings, and today it came perilously close to it). DCF valuation says this stock is worth 335. There may be some additional room for contraction in the short-term until valuation catches up. That could become a buying opportunity.

CEO of RTP said their ability to produce faster was the holdup in filling orders. (on cnbc today) Buy the dip.

Gold is going to the moon

don't see how to lose here longer term. playing austrailia, declining dollar, asia, huge mongolian deal with ivanhoe, hard assets which protect against inflation. only market risk i see is that emerging economies stop emerging. wish i knew the leadership better. poor/dishonorable overpaid executives can botch up a company with the best products and markets. no indications to me that we have a problem with that here but dont know that they are top notch either. need to get to know them better.

MACD crossover looks like a good entry point for this metals leader.

TMFSinchiruna also pointed out that they're a good candidate for a takeover...

I am uncertain of this stock. I believe it will do well as metals return, but do not know when that will be. This stock may have a short and ugly future, but I believe it is more likely to find a balance point until commodities come back into favor. I believe financials will lead the stock recovery and commodities (except energy) will lag it. The stock recovery will lead the economic recovery.

So, long term, I believe RTP and FCX are solid plays. Short term, I am uncertain. FCX seems the stronger of the two stocks, so I added it first.

I don't read technical indicators or sentiment or whatnot but I like the diversified mining that this company does, and at this price, I'd be willing to get in on the business!

(Rejection of Chinalco deal and subsequent partnership with BHP looks like 2 good moves IMO otherwise their current debt would have disqualified them from interest for me)
Mkt Cap: 62.22B P/E: 13.87 Dividend: 2.72
52Wk High: 497.50
52Wk Low: 59.20
F P/E: -
Yield: 2.81
Beta: 1.50
Shares: 321.12M
Volume: 3.14M
Avg Vol: 1.10M
EPS: 13.97
Inst. Own: 5%
Company Industry Sector S&P 500
P/E Ratio (TTM) 18.54 36.78 2.29 108.30
Beta 1.54 1.11 1.09 1.01
Price to Sales (TTM) 1.21 6.04 1.50 1.79
Price to Book (MRQ) 2.82 3.17 1.28 3.60
Price to Tangible Book (MRQ) 36.09 6.58 4.62 11.90
Price to Cash Flow (TTM) 8.02 9.54 0.92 11.13
Price to Free Cash Flow (TTM)14.18 16.00 53.38 39.87
Beta 1.54 1.11 1.09 1.01
Price to Sales (TTM) 1.21 6.04 1.50 1.79
Price to Book (MRQ) 2.82 3.17 1.28 3.60
Price to Tangible Book (MRQ) 36.09 6.58 4.62 11.90
Price to Cash Flow (TTM) 8.02 9.54 0.92 11.13
Price to Free Cash Flow (TTM)14.18 16.00 53.38 9.87
Morn upgrade to 5* as a result updated analysis 6/5
Analyst Note 06-05-2009
Rio Tinto RTP has terminated the proposed $19.5 billion transaction with Chinalco, and the companies' discussions have ceased. Rio will pay Chinalco the agreed-upon $195 million breakup fee.

Rio has instead negotiated with BHP Billiton BHP a nonbinding agreement to establish a 50/50 joint venture encompassing both companies' Western Australian iron ore assets. BHP will pay Rio $5.8 billion at final closing as compensation for a mismatch in asset values. The proposal requires regulatory and shareholder approval. A $275 million breakup fee applies to both parties under certain circumstances. Rio says total cost synergies will generate $10 billion in net present value over the entire joint venture. Completion is expected by mid-2010. Separate marketing rights remain.

Further, Rio has announced a fully underwritten 21-for-40 renounceable rights issue at $22.94 per share. For holders of the LTD stock, the issue price represents a 47.2% discount to the theoretical ex-rights price and a 57.7% discount to the closing price of AUD 66.90 on June 4. For PLC holders, the equivalent discounts are 38.2% and 48.5%. Gross proceeds of $15.2 billion, in addition to the BHP payment, will enable Rio to meet debt obligations in 2009 and 2010, while freeing up expansion and investment potential. New shares of 674.4 million represent 34.4% of the enlarged issued capital. Rio's net debt will decline from $38 billion to $23 billion.
[...]
Rio Tinto is a top-tier global miner along with BHP Billiton BHP, Brazil's Vale RIO, and United Kingdom-based Anglo American AAUK. The rejection of a megamerger proposal from larger rival BHP appears to have been a mistake. However, a world-class asset base and capable management make Rio one of the few miners to earn more than its cost of capital through the commodity cycle. Geographic and product diversification give Rio relatively stable cash flows and lower operating risk than many of its mining peers. Most revenue comes from the relative safe havens of Australia, North America, and Europe, although operations span six continents.

Through selective acquisitions and grass-roots exploration, Rio has assembled a large portfolio of long-lived, low-cost assets. Operations include world-class hubs in aluminum, coal, copper, diamonds, gold, iron ore, industrial minerals, and uranium. This competitive resource base sets Rio apart from most of the rest of the pack and supports returns above average for both the resource industry generally and its more select diversified mining peers.

Rio's operating practices are geared toward creating long-term economic value; the company is constantly seeking efficiency improvements. Planning horizons and existing operations ensure average production levels should be sustained for at least 20 years. The company has a portfolio of quality projects under development or appraisal and a focused exploration program to seek out and secure new opportunities for profitable expansion. However, a recent focus on Alcan-related debt reduction will put much new investment on the back burner. The strategic partnership with Ivanhoe Mines IVN to develop its Oyu Tolgoi copper and gold deposit further enhances Rio's portfolio. Oyu Tolgoi is the largest undeveloped copper deposit in the world. Rio has limited pricing power over most of its products. The notable exception is in iron ore, where, along with BHP and Vale, Rio is a member of the global seaborne export oligopoly with 25% market share. Minimal pricing power is aggravated by the volatile and cyclical nature of commodity prices. However, we do ascribe a narrow economic moat to Rio, given the firm's large, low-cost, and nonreplicable operations. The lack of comparable mega-deposits and increasingly prohibitive capital costs are barriers to entry.
The Alcan acquisition in 2007 saw interest coverage plummet to 5 and leverage rise to 172%. Anticipated asset sales and strong cash flows should return debt to more manageable levels during the next three years.

Well managed and with a good predicction

Well managed and positioned for surge

Diamonds! Yellowknife Canada

In the long run, Earth is running out of resources. So, basic materials are going to become more valuable as time passes.Nice dividend is enough for me to see it through... Buy this ! You won't regret it in a year or so... !

commodities will only be in more demand as the world economy grows

Jubak's 50

Everyone needs the resources they produce - when manufacturing restarts, Rio will surge past

UNDERVALUED, STOCK PRICE 60% OF VALUE, TOP PICK

Steel is still on demand, especially from the exploding China.