Could the Rio Tinto (ASX:RIO) share price be set to leap 25%?

Where next for Rio Tinto’s shares?
The post Could the Rio Tinto (ASX:RIO) share price be set to leap 25%? appeared first on The Motley Fool Australia. –

The Rio Tinto Limited (ASX: RIO) share price is having a subdued start to the week.

In afternoon trade, the mining giant’s shares are down almost 1% to $91.53.

Where next for the Rio Tinto share price?

One leading broker that believes Rio Tinto’s shares could be heading higher from here is Citi.

According to a note this morning, the broker has retained its buy rating and $115.00 price target on the company’s shares.

Based on the current Rio Tinto share price, this implies potential upside of over 25% for investors.

But it gets even better, with Citi forecasting a ~$11.00 per share fully franked dividend in FY 2022. If you include this, the total potential return stretches to almost 38%.

What did the broker say?

Citi is bullish on the Rio Tinto share price largely due to its exposure to aluminium. The broker expects the aluminium market to fall into a deep deficit in 2022. This is expected to be driven by growing demand and tight supply.

In addition to this, Citi sees Rio Tinto as well-positioned to benefit from demand for higher grade iron ore from China.

Anything else?

The broker has previously spoken about the company’s decarbonisation plans. While this led to a reduction in its earnings estimates to account for higher production costs, it wasn’t enough to put Citi off. This is due to its generous yield outlook and the attractive Rio Tinto share price.

Citi commented: “RIO has gone earlier than peers on decarbonisation commitments and set out capital cost estimates. Others will likely have to follow suite. That said, what caught our attention was the implied mid-term increases in Pilbara iron ore unit costs and higher sustained capex. We’ve reduced CY23/24E NPAT by 9%/10% and reduced our DCF. Nevertheless, RIO trades on CY23E EV/EBITDA of 4.5x at $80/t Fe for a div. yield of ~8% and at an 18% discount to our DCF. We stay Buy-rated.”

The post Could the Rio Tinto (ASX:RIO) share price be set to leap 25%? 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 nearly 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 August 16th 2021

More reading

These ASX 200 shares could be set to face fresh pressure over climate action

Leading brokers name 3 ASX shares to buy today

Why are ASX 200 resources shares booming again on Friday?

Fortescue (ASX:FMG) share price surges 9% to shrug off falling iron ore price

Why the Rio Tinto (ASX:RIO) share price underperformed the materials sector over the last 3 months

Motley Fool contributor James Mickleboro 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.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!