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Rio Tinto (full-year earnings 8 February)
The difficulties of the past few years appear to be behind Rio Tinto at last, with the firm expected to announce the first increase in annual earnings since 2013. Earnings per share are forecast to rise by 7.6% YoY, to £2.16 billion, while revenues are expected to fall 1.8% YoY to £27.5 billion. Iron ore is a vital part of Rio’s business, and the improvement here in both price and demand terms bodes well for Rio Tinto. A 4.3% dividend yield and a compelling forward PE of 11.8 means Rio is not yet overvalued, despite the remarkable rally in its share price.
Rio has seen its share price double in less than a year, but there seems little reason to think it will stop. The recent gap lower only knocks off the gains made since mid-January, and indeed those of a bullish disposition will be hoping for a further drop to make the risk-reward even more compelling. As long as the £30 level holds the uptrend is intact, with the share price having found steady support at the 50-day simple moving average over the past four months.
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