Owners of Rio Tinto Limited (ASX: RIO) shares might be in for a pleasant shock next week when the miner releases its earnings for 2021.
One broker has bought into the iron ore-focused resources giant on the belief its results will be better than expected.
Additionally, they think Rio Tinto’s current share price of $119.94 makes its valuation reasonable.
Let’s take a closer look at what the market might expect from Rio Tinto next Wednesday.
Could this help bolster the Rio Tinto share price?
Own Rio Tinto shares? Alphinity Investment Management portfolio manager Andrew Martin is expecting big things from the company’s upcoming full-year results.
The fundie told the Australian Financial Review (AFR) the investment firm decided to buy into Rio Tinto, saying “its earnings are likely to surprise on the upside”.
Additionally, Martin said the company’s reserves of the red metal are “supported by similar reasoning to [BHP Group Ltd (ASX: BHP)]”.
That reasoning, Martin outlined, was that higher Chinese demand for steel could see iron ore prices increasing.
Additionally, Rio Tinto’s exposure to aluminium will likely be bolstered by high energy prices, the fundie told the publication.
A limit imposed on Chinese smelter capacity and demand for decarbonisation could also see its aluminium leg outperforming.
According to Wood Mackenzie’s Julian Kettle, aluminium is necessary for low-carbon energy supply. However, producing the material has created one of the world’s most carbon-intensive industries.
Fortunately, Rio Tinto is making moves to lower emissions associated with aluminium production.
Its partnership with ELYSIS saw it successfully produce aluminium without direct greenhouse gas emissions in November.
It also invested US$87 million in upping its low carbon aluminium production in Canada last year.
Rio Tinto’s aluminium production for 2021 came to around 3.2 million tonnes – 1% less than that of 2020, the company announced within its fourth-quarter results. It predicts that will be relatively flat for 2022.
Its average realised aluminium price for 2021 came to US$2,899 – 49% more than in 2020.
Additionally, the company’s Pilbara iron ore production and shipments were also down 4% and 3% respectively for the full year.
Rio Tinto shares finished Thursday’s trading up 1.16% at $119.94.
The post Rio Tinto (ASX:RIO) earnings will ‘surprise on the upside’: fundie appeared first on The Motley Fool Australia.
Should you invest $1,000 in Rio Tinto right now?
Before you consider Rio Tinto, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Rio Tinto wasn’t one of them.
The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.
*Returns as of January 13th 2022
More reading
- Strap yourself in: Why ASX 200 shares could continue their wild ride in 2022
- Are ASX mining shares the place to be right now?
- The iron ore price is rising: Time to jump on Rio Tinto (ASX:RIO) shares?
- Could opening WA borders expose ASX 200 mining shares to production risks?
- Why IAG, Rio Tinto, Unibail, and Westpac shares are pushing higher
Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
from The Motley Fool Australia https://ift.tt/zKw3ypg
Leave a Reply