The likes of RIO Tinto (RIO) and Fortescue Group (FMG) have corrected ~8% in recent weeks even while iron ore has r emained firm, no great surprise considering their explosive rally since November. A further 5% pullback and we feel these stocks will look again very attractive with aggressive upgrades to earnings and dividends likely to flow through the market if the bulk commodity can maintain current levels i.e. the market is pricing in lower iron ore prices not current, or even higher levels.
NB: RIO reported production numbers this morning that look inline to a slight beat, however they have provided full year guidance which shows Iron Ore production for FY21 to essentially be flat on FY20. That may lead to some downgrades on FY22 production forecasts.
MM likes RIO & FMG into weakness.
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