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Bull of the Day: Rio Tinto (RIO)

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When you see the word ‘Rio’ you probably think of the Olympics these days. But stock investors would be better off thinking about Rio Tinto ( (RIO - Free Report) instead, thanks to its impressive turnaround story and potential for additional gains in the future.

This is largely thanks to a big turnaround in not only commodity prices, but general sentiment over the space too. Due to these trends, RIO has managed to add about 32% in the past six months, easily trouncing not only the market at large, but the broader materials sector too. Let’s take a quick look at some of the company’s fundamentals below and discuss why this might be a promising pick for the future too.

Rio Tinto in Focus

Rio Tinto is one of the world’s largest miners and processors of metals and minerals. The company has massive operations around the globe, and mines everything from aluminum and copper, to precious metals and diamonds.

Many of these markets have bottomed out in recent months, allowing for RIO shares to bottom out too. And with a more bullish environment for commodities these days, analysts have begun to take notice and are upgrading their estimates for RIO stock.


In fact, if we look to full year estimates, we can see a pretty incredible estimate revision trend taking place over the past few months.

Just sixty days ago, RIO was expected to earn $1.18/share in earnings, but today it is looking to post earnings of $1.76/share for the full year. And with a positive earnings ESP, it suggests that the most recent estimates have been the most bullish on the company’s prospects.

Obviously, this represents a huge sea-change for RIO prospects, as estimates have increased by nearly one percent a day in the past two months. No wonder the stock has earned itself a Zacks Rank #1 (Strong Buy) and why we are looking for more outperformance from this name in the near future.

RIO TINTO-ADR Price, Consensus and EPS Surprise

RIO TINTO-ADR Price, Consensus and EPS Surprise | RIO TINTO-ADR Quote


If that wasn’t enough, investors should also consider the company’s strong value grade, which comes in at ‘B’. This solid rating comes thanks to a nice P/S ratio which is below 1.5, and a cash flow per share is positive territory too.

And let’s not forget that the positive story isn’t exclusive to Rio Tinto, as the mining-miscellaneous segment is currently ranked in the top 20% in terms of the Zacks Industry Rank as well. This suggests that investors are jumping into a very strong name in a top industry if they are looking at RIO these days.

Bottom Line

RIO is a top company in what is an increasingly in-focus industry. Analysts are really starting to pay attention to the prospects here too, as evidenced by the recent flurry of estimate increases. With these kinds of trends, it shouldn’t be a surprise that the stock has earned itself a Zacks Rank #1 (Strong Buy) and that we are looking for more good things out of this stock in the near term.

So while investors might be a bit worried about the recent run in RIO shares, it is worth noting that the stock still has a long way to go to get back to all-time highs, while fundamentals are keeping up with the share price growth. And with a solid value rank, all types of investors should feel comfortable taking a closer look at this name for top-notch exposure in the mining world right now.

Now, which stocks should you sell?

As a Zacks Rank #1 Strong Buy, this Bull of the Day deserves consideration. But today there are 220 Zacks Rank #5 Strong Sells that demand even more urgent attention. If any of these are lurking in your portfolio, they should be removed immediately. Since 1988, such stocks have actually performed more than 11X worse than the S&P 500. See all Zacks Strong Sells and Strong Buys absolutely free >>.

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