Stock price when the opinion was issued
If you believe that the iron price doesn't fall further, then a pretty decent buy here. For those who believe in his natural resource thesis over 5 years, you have to own it. Need to pay attention to the global economy, but especially the Chinese economy.
He's less concerned about 20% fluctuations in the stock price over time, and more concerned about long-term value and the sustainability of the dividend.
As a leader of metal resources production, we reiterate RIO as a TOP PICK. Management is optimistic that a commitment to aluminum smelter development in Australia is supportive for the company's plans. We like that cash reserves are growing, while debt is retired. It trades at 9x earnings, under 2x book and supports a 20% ROE. The robust dividend is backed by a payout ratio of 70% of cash flow. We recommend trailing up the stop (from $49) to $58 at this time, looking to achieve $82 -- upside potential of 32%. Yield 6.2%
(Analysts’ price target is $81.93)