RIO has recently become several analysts’ preferred diversified miner, with BHP 3rd in some cases behind South32 (S32). However, with RIO generating ~56% of its revenue from iron ore in 2023, we see less earnings risk with BHP if the iron ore picture does deteriorate further through 2024. Like BHP, the stock will start to look attractive ~10% lower, back where it was trading in late 2023 when iron ore was ~$US100/MT, i.e. the correlation is tight, and the risk/reward is not exciting towards iron ore just yet.
- We prefer BHP & FMG over RIO, though risk/reward looks solid ~$110.
MM likes RIO around $110
Add To Hit List
